Markets don’t move in a straight line and so we were always expecting to see some form of respite soon enough, but it’s the size of the resurgence that has caught many off guard.
Greek affairs somewhat took a back seat, as the eurozone edges closer to a final showdown on Sunday. With rhetoric having hardened on both sides, it seems unlikely that a solution exists that will appease all involved. Yet with three days left, it’s the possibility of an orderly resolution being found which is keeping markets calm right now. Today represents the deadline for a new proposal to be submitted to the creditors, which would form the basis of any possible deal on Sunday. Even if the Greeks do remember to bring it with them this time, the likelihood that it will be enough of a compromise seems decidedly low given the months of fruitless negotiations so far.
The decision from Chinese regulators to freeze stock sales from those holding 5% or more is just the latest in a long line of political meddling from a country that is naive to the concept of free markets. The worry for the Chinese is that its overwhelmingly retail-focused investor base means that every percentage point lost on Shanghai's equities will have a disproportionately adverse effect upon domestic consumption. The shift towards a consumption-based economy was proving tough enough without the problem of the stock market wiping out a generation's worth of savings.
Today's resurgence in oil prices marks a final moment of respite for a market that has seen US light crude fall for 10 out of the last 11 trading days. A combination of rampant US production, falling strategic Chinese demand and the expectations that Iran could flood the markets in the event of a nuclear deal, means that we may not have seen the bottom just yet.