Don't write off the Greeks just yet

In mid-morning trading the FTSE 100 is offside as Greece is due to make a repayment tonight and traders are holding their breaths. 

City of London
Source: Bloomberg

Stock markets are selling off this morning as Greece must make a €1.6 billion repayment, and dealers aren’t holding out much hope. If the Athens administration couldn’t cough up the €300 million at the start of the month, what are the chances it can afford this repayment?

The Greek referendum is on the horizon, and a ‘no’ vote would essentially mean an exit from the eurozone. The people of Greece are in a bind, either they vote ‘yes’ and accept austerity or the banks may stay closed for a prolonged period. Dealers are protecting themselves against a possible default, but deep down there is a sense that some sort of compromise will be reached before the deadline – it’s the eurozone way.

Ocado shares are in the red this morning even though the company is in the black, and the subdued outlook for the retail sector has taken the shine off the company’s strong earnings. Ocado is seeking to expand overseas, and talks are continuing, but there is no concrete plan as of yet, and the UK retail sector alone isn’t enough to go on.

Carpetright’s comeback is underway after the company rolled out a strong set of numbers. The company had a few shaky years as it was plagued by profit warnings, but the cost-cutting and the restructuring is finally paying off.

We are expecting the Dow Jones to open 55 points higher, at 17,655, as the US index futures market has pulled back from last night’s heavy losses, but the feeling is that it will be short-lived.

The Greek deadline is looming and New York will be paying close attention to Athens tonight. The US market has a short week as Friday is a holiday, and traders want to close out their positions ahead of the long weekend.

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