Greek deadlock extends market slide

Heading into the close the FTSE 100 is marginally lower, but once again eurozone indices are retreating thanks to Greece.

A Greek flag
Source: Bloomberg

FTSE 100 drifts as Greece drama persists

When, at last, the history of the Greek crisis is finally written, historians will wonder how anyone kept their sanity during the endless back-and-forth headline battles that have characterised each twist and turn. Today has been a repeat of previous sessions, with deal and denial following swiftly upon each other’s heels.

In London the FTSE 100 is drifting, while the mid-cap 250 has actually made small gains, but the action has been in eurozone indices, which have rallied and slumped on each successive headline. For all the drama of recent weeks, the actual situation seems to have changed very little, with a deal still apparently far off.

In London there has been a bonfire of dividend stocks, as US Treasury yields climbed for a second day. Tobacco names led the way, after a Canadian ruling that signals more pain for cigarette producers, but overall it looks like we are undergoing a mini-panic in high-yield names, one that could replicate itself throughout the summer if Fed tightening looks to be on the calendar by the end of the year.

Macro data unable to dent rate rise speculation

Trench warfare between bulls and bears has been the order of the day on Wall Street for some weeks now, with neither side able to gain the upper hand. The Greek crisis is playing its part here, but the focus is still on the US’ own long-running saga, that of interest rate hikes. Factory orders were weaker, but below-par numbers have not really been able to put a dent in the theory that a rate increase is on its way this year.

Q1 seems to have been, once again, an aberration, and with yields on the rise as well there is less incentive to hold on to stocks that have shown little inclination to push on beyond their recent highs. Friday’s non-farm payrolls number could be the moment that triggers a broader selloff, if it points towards further strength in job creation.

Oil maintains its rise higher

Crude oil continues to advance ahead of the OPEC meeting, as the traditional ‘buy the rumour, sell the fact’ trade rears its head once again. OPEC ministers continue to talk up demand as a reason for oil to go higher, and for the moment the market seems content to ignore the supply fundamentals. We may see a different story emerge post-meeting, when the market realises that OPEC’s words do not match the underlying reality.

AUD/USD rises following RBA decision 

One of the curious features of the Greek crisis is that the euro has always taken a sunnier approach to the situation. Perhaps markets think a Grexit will be euro-positive, removing the most troublesome member, or perhaps FX traders are more willing to believe ‘deal near completion’ headlines. Either way, EUR/USD breezed past $1.10 this afternoon, while against the pound the single currency continued its strong form.

A second winner of the day was the Aussie, which seems intent on reversing much of its recent downward move after the RBA stood fast and left rates unchanged, coupled with a monetary policy statement that rowed back on apparent determination to engage in further easing.

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Denne informasjonen er utarbeidet av IG, forretningsnavnet til IG Markets Limited. I tillegg til disclaimeren nedenfor, inneholder ikke denne siden oversikt over kurser, eller tilbud om, eller oppfordring til, en transaksjon i noe finansielt instrument. IG påtar seg intet ansvar for handlinger basert på disse kommentarene og for eventuelle konsekvenser som et resultat av dette. Ingen garanti gis for nøyaktigheten eller fullstendigheten av denne informasjonen. Personer som handler ut i fra denne informasjonen gjør det på egen risiko. Forskning gitt her tar ikke hensyn til spesifikke investeringsmål, finansiell situasjon og behov som angår den enkelte person som mottar dette. Det er ikke utarbeidet i samsvar med lovens krav for å fremme uavhengighet av investeringsanalyse og som sådan er ansett av å være markedsføringskommunikasjon. Selv om vi ikke er hindret i å handle i forkant av våre anbefalinger, ønsker vi ikke å dra nytte av dem før de blir levert til våre kunder.