Greek yields surge as default fears increase

German and Greek bond yields continue to race in opposite directions, an arguably fitting analogy for their respective finance ministers’ viewpoints.

Alexis Tsipras
Source: Bloomberg

When you considering that neither the Conservatives nor the Liberal Democrats were present for last night’s debate, it was always going to be difficult to get an accurate reading from the event. Subsequently, IG’s political markets have seen the chance of no overall majority increase to 89%, and the most likely outcome at 35% is a Labour minority government.

Another day brings another story about Greece, and once again the inability of the Greek finance minister to employ a light touch has spooked markets. Bond markets, normally immune to the volatility that equities frequent, have seen Greek yields sky rocket as the chances of them defaulting grow ever more likely.

This morning will also see traders assessing UK unemployment figures along with eurozone and US inflation figures, ensuring that traders keep the focus all the way to the weekend. 

Bloomberg, normally a byword for dependability, has been hit with technical issues this morning and as a consequence trading volumes are a little lower in the early session.

Another of AstraZeneca’s experimental drugs has been given FDA approval once again, raising the question over Pfizer’s decision not to peruse a takeover further. Even without the tax advantages that were previously available, the company’s core business continues to perform.

Rio Tinto has acknowledged the tough iron ore markets and stressed that its objective is to ride out these market conditions by continuing to cut costs.

Hunting continues to feel the benefits of stronger oil prices as it has added another 6.5% in early trading, adding to an already impressive month that has seen the shares gain by 32%.

Ahead of the US open General Electric will be posting its first-quarter figures, and with news that it is selling off $26.5 billion of real estate assets and looking to embark on $50 billion worth of stock buy backs, the shares have hardly been out of the markets’ focus. Also announcing figures today will be Schlumberger and Honeywell.

The US banks have set some high standards for the other sectors to follow, and with the issue of the continuing strength in the dollar, we are still waiting to see which sectors struggle.  

Ahead of the open we expect the Dow Jones to start 24 points lower at 18,081.

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