Stock markets have been shaken by Greek fears again, and as the clock keeps ticking traders will become more and more nervous. The standoff between Greece and the European Central Bank continues and there is still no sign of an agreement in sight. The word ‘default’ is being bandied around the trading floor even more so, and there are only so many times dealers will stare at the sea of red screens before they jump ship.
The left-wing Syriza is determined it will not be the first one to blink and the ECB continues to stand its ground, but playing chicken with people who have nothing to lose is a dangerous game. The pressure is intense, even by Greek debt crisis standards, and one by one dealers are ducking of out the market. Many traders are wishing they had sold in May and gone away, as it is shaping up to be a long and painful summer. Even if Athens manages to make the repayment at the end of the month, the nation still has a series of repayments on the horizon, and eventually something will give.
We are expecting the Dow Jones to open five points lower, at 17,930. Janet Yellen stated the Fed is on track for an interest rate hike this year provided the economy keeps moving in the right direction. The update from the Fed struck the right balance as it sent a message to the market that a rate hike is coming, but it is also dependent on certain economic conditions, and this gives Ms Yellen room to manoeuvre. Traders are not afraid of an interest rate increase, it is the timing of move that plays on their minds, and the Fed don’t want to rush in.