Greece woes hinder FTSE

Heading into the close the FTSE 100 is in the red as the market has been offside for the majority of the trading session.

Canary Wharf
Source: Bloomberg

FTSE in the red

The London market has been shaken by the latest rumblings out of Greece regarding the terms of the bailout. Greece was granted an extension to its bailout programme less than fortnight ago, and yet again the nation is back in the news for all the wrong reasons. Greece seems to think it can have its cake and eat it too, and while Athens is unwilling to play ball with Brussels it will hold the FTSE 100 back from retargeting its record high.

Continental Europe welcomed the beginning of the European Central Bank’s bond buying scheme, and even though it is the German market that is reaping the majority of the rewards some much needed stability has been brought to the region.

It came as no surprise that the eurozone sentix investor confidence indicator jumped to a seven-year high, as the report coincided with the start of the ECB’s quantitative easing scheme.

Alcoa in takeover bid

The Dow Jones is in the black as the US market has overcome the fear of an interest rate rise, and traders are now seeing Friday’s jobs report as the positive news that it is. The US stock market has relied on rock-bottom interest rates for too long, and now the prospect of a rate rise will take some getting used to. Ultimately, good news for the economy is good news for the equity market, and dealers are taking advantage of the drop to ‘buy on the dips’. 

RTI International Metals has surged 40% after Alcoa launched a takeover bid for the company in an effort to diversify its divisions and gain exposure to the automotive and aerospace industries. Alcoa’s share price has suffered because of the slump in the aluminium market, and today’s announcement hasn’t won traders around with the stock off 4%. Going on the expansion trail when your own core business isn’t on form could be a costly mistake for Alcoa.

Copper lifted by Chinese data

Copper climbed higher throughout the trading session as a record trade surplus from China gave hope to traders that the Asian giant isn’t down and out.

The trade balance figures were boosted by strong exports, and particularly high demand in the US contributed to the rise. The imports’ reading was worse than expected, but this was partially down to the weak commodity prices. The recovery in the US economy will keep Chinese exports high, but it won’t be enough to negate the downward trend that copper has been in for several months. 

Gold is doing its best to remain in positive territory after the enormous sell-off it encountered on Friday. As the Federal Reserve edges closer to increasing interest rates  the metal will continue to lose its attractiveness. One positive from this is that Greece’s bailout package terms may provide a reason to bring the bulls back into play.

Dollar gives up gains

The euro has pulled back most of the losses that it endured last week, but the next wave of political uncertainty in Greece will ensure that gains by the single currency will be short-lived. Greece may be content to stay in the currency union but only on its terms, and this is weighing on the euro.

The dollar eased against most major currencies as momentum waned following last week’s surge; however, this is just the pit stop before the next move higher for the dollar.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.