Greek malaise ignites the eurozone

Heading into the close the FTSE 100 is down thirty points, although it remains relatively unaffected by heavy selling in the US and Europe.

Alexis Tsipras
Source: Bloomberg

Eurozone against trillion-euro Greek demand

A resurgence of Greek woes has caught markets off guard, as the country finds its cash reserves slipping through its fingers. An attempt by the Athens government to recover €1.2 trillion that it believes was incorrectly handed over has been slapped down by the rest of the eurozone, and while the ceiling on emergency liquidity has been raised, this is perhaps the most temporary of temporary measures. It seems the eurozone is now determined to push Greece to the wall and ensure that Athens cooperates. Such very public falling-outs do nothing for investor confidence, which seems to be sapping despite an eight-month high in business confidence in Germany.

Over in London however the increased distance from Greece is providing a degree of insulation for UK markets, with the market giving its seal of approval to TUI's latest figures, but losing its appetite for SABMiller shares now that Kraft itself is now the subject of a possible tie-up.

Markets await US GDP and Yellen speech

Wall Street has failed to muster the strength for a rally this afternoon, despite a durable goods figure that was below expectations and thus took some of the fight out of the dollar. Investors are clearly starting to worry that the trickle of poor US data is turning into a flood.

Eyes now turn to the US GDP reading on Friday, and then a speech by Janet Yellen late on Friday evening. Until then, the risk lies to the downside, especially with month and quarter end looming, with the potential for markets in the US to eat further into their minimal gains for the year.

Brent continues to find buyers

Gold touched the magic $1200 level this afternoon, buoyed by the risk-off mentality that has taken hold over the past two sessions. Meanwhile crude prices continue to find buyers.

It seems difficult to imagine that such a run has much further to go if we are about to see risk appetite take a definitive turn for the worse. Rather, the stronger dollar that this would imply signals that the recent breakout in commodities has run its course and now threatens to turn lower.

German data supports Draghi's QE talk

The market has not yet run out of reasons to buy the euro it seems, in an almost total reversal of the universal doom and gloom seen last week. Then it appeared parity was just a short time away but now we talk of fresh gains for the single currency.

With German data on a strong upward trajectory it seems Mario Draghi can continue to crow about the impact of quantitative easing, but Greece still lingers like the ghost at the feast, threatening to return as a source of worry. 

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