There would be no prizes for guessing that stock markets would open lower this morning, given that traders headed to their desks with news that the Greek negotiators and their counterparts had barely spent enough time in the same room to exchange pleasantries last night. Contact between the two sides appears to be getting more and more infrequent — a certain fatalism seems to have gripped the Greeks, as their exit from the eurozone appears more and more likely. Stock markets however would still rather see a deal, even if it were only to postpone the inevitable.
If the Greek government is planning to leave the eurozone, it had better make sure that it approaches it in a more thorough fashion than it has shown in negotiations over the past five years — the perils of a default and exit are great enough without making it any worse through a lack of planning.
As it is Federal Reserve week, with Janet Yellen and her committee meeting on Wednesday, every piece of data in the run-up will be fed into the matrix. Today’s Empire manufacturing index and industrial production figures will be a pleasing warm up, with any sign of improvement boosting the cause of those that believe a rate hike is on its way. Friday proved that Greece has the power to drag down US indices as well, so these twin concerns, which have been with us for so long now, will continue to cast their shadow over today’s session.
Ahead of the open, we expect the Dow Jones to start 64 points lower, at 17,834.