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Markets started the week well, making gains in the first hour or so, but since then the mood has changed to a more cautious one. It seems hard to imagine that the Greek crisis could become any more dramatic, but with prime minister Alexis Tsipras threatening to emulate Samson and collapse the entire edifice of the eurozone with a Grexit, it looks as if we will have lots more excitement this week.
The weekend’s deadlines for progress were ignored as cheerfully as Greek austerity targets have been over the past five years. Thus, the new week begins as the last one ended, with Greece and its creditors still needing some sort of deal. The difference is we are 48 hours closer to the precipice.
Less than stellar China PMI numbers overnight have done little for the mining sector in London this morning, with the big names universally lower. China’s recovery always seems to be just around the next corner, but with export growth still sluggish it seems investors will have to draw more patience from their reserves and continue to wait for better times. There was further bad news for the pound as UK manufacturing failed to grow by as much as expected, with a fresh move lower in cable taking the currency pair to its lowest level in over three weeks.
The warm-up to Friday’s non-farm payrolls begins today, with US manufacturing numbers and personal consumption and expenditure figures on the schedule for the afternoon. We continue to look for signs that the Q1 slump in the US was an aberration, and any further good news could put further life into the dollar rally. Ahead of the open, we expect the Dow Jones to start 50 points higher, at 18,060.