Greece has given the green light to its third bailout package and stock markets have welcomed the decision, but the excitement may not last for long as there’s speculation the Greek government will have to withstand a vote of confidence test. The Greek government overwhelmingly voted in favour of accepting the bailout, but there are concerns that a number of politicians who voted in favour of the deal will turn on the government when it comes to the confidence vote.
Whatever bullish sentiment equities have at the moment is being restricted by the possibility of a snap election. Syriza was swept to power in January, and even though the recent Greek growth numbers were good, there is still a lot of discontent within the country. European equity markets have made no serious attempt to recoup the losses that were sustained at the beginning of the week, and if sentiment can’t be boosted on the back of the Greek deal, I suspect we are in for another move lower. Oil stocks are suffering today after WTI slumped to a six-and-half year low yesterday, and any relief rallies will provide another opportunity to go short.
We are expecting the Dow Jones to open unchanged at 14,410, and the US index futures market is expected to be quiet today as there is little in the way of corporate reporting to get traders excited. Beijing has thrown a spanner in the works for the Fed, and the US central banks may have to push back their rate rising plans as the sudden appreciation of the US dollar versus the yuan this week will hammer US exports in the coming months.