FTSE hits five-month low on Greek fears

Uncertainty in Europe has dragged the FTSE down to a five-month low as a fresh standoff emerges between Greece and its creditors.

City of London skyline
Source: Bloomberg

It is almost impossible to go through a day without talking about Greece, and once again it is at the forefront of European traders’ minds. Last night’s poll in Greece on who is responsible for the lack of progress in discussions will ensure that there is limited pressure on Syriza to improve its last set of terms. The noises now coming out of Germany are inferring that Capital controls could be the next course of action should some compromise not materialise before the weekend.

With the viability of the eurozone as an entity under such scrutiny equity markets have buckled under the pressure and momentarily ignored the benefits of the ongoing quantitative easing being pumped into the region. The increased cost of filling up the car at the forecourts has helped ensure that UK inflation has edged a touch higher, but the standout figure was the collapse in the house price index, hitting lows last seen in 2005.

Following the UK government’s sale of a further 15% stake in Royal Mail at 500p, Ofcom has announced a regulatory review of the postal service, knocking the shares down by almost 3% to 490p.

Ashtead, the UK-quoted construction hire company, has posted record-high profits. However, the softening of dollar strength over the last quarter has seen the shine taken off the sizable profits that are derived from the American markets.

Whitbread has been able to meet market expectations of an increase in sales of 4.3% as its Premier Inn and Costa Coffee divisions posted good figures.

The run up to the latest FOMC statement has begun and the markets will be waiting to assess how much more momentum has been lost by the US as aspirations to increase interest rates continue to look more ambitious rather than practical. The key word previously used by Janet Yellen was ‘patience’, and this time she will no doubt be digging out a thesaurus to find a suitable replacement.

Almost 30 different countries and economic regions have cut interest rates this year, and the US continues to try to swim against the tide just a little less convincingly than earlier in the year.

Ahead of the open we expect the Dow Jones to start 80 points lower at 17,711.

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