Athens has pledged to draft a set of reforms but we have yet to see any action, and this is fuelling the selloff in London and the eurozone. The Greek government has a history of saying one thing and doing another, and the market is becoming more impatient. If it wasn’t for the FTSE 100’s large element of energy stocks the losses would be even worse, with the jump in oil providing some brief respite for this embattled sector.
Across the English Channel the bounce back in the euro has hindered continental equity markets, which goes to show there is a first time for everything.
Shares in Supergroup have surged 8% this morning after the fashion house announced plans to start paying a dividend next year. The company is tightening its grip on the US by buying out the licence for distribution across North America, and this is the same business model Supergroup rolled out in continental Europe. Supergroup has shaken off its reputation for profit warnings, and now that dividends are in sight investors’ interest will increase.
AMEC Foster Wheeler’s revenue stream is being hit by capital expenditure cuts at major oil and gas companies, and even though the engineering firm is feeling the pinch the worst is yet to come.
easyJet shares have been struck by profit-taking this morning after the low-cost airline raised its profit forecasts. The financial markets have been kind to easyJet, and the weak euro combined with the depressed oil market composed a large component of the raised guidance, but the airline can’t depend on these factors forever.
Across the pond we are expecting the Dow Jones to open 140 points lower, at 17,578, as US index futures are feeling the fallout of the declining European markets. The sharp fall in US durable goods yesterday hammers home the point that the US recovery is not what is seems, while the strength of the greenback has yet to be felt by large US companies.