Markets cruising towards Grexit, blissfully aware

Today has been something of a reprieve from the hysteria and anxiety surrounding global markets in recent weeks.

City of London skyline
Source: Bloomberg

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. 

With the Chinese A50 stock index gaining the most ground in six years, the DAX spiking circa 2.2% and oil regaining 3.5%, today was the day of the reversal. 

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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.