Greece drama leaves markets offside

Heading into the close the FTSE 100 is down 60 points, as Greek worries knock markets back once again. 

A Greek flag
Source: Bloomberg

FTSE unable to hold 7000

It has been a day of headlines for Greece, keeping markets on the hop but doing little for the sanity of those condemned to watch every act of this drama being played out. Most of the policymakers involved agree that a default would be a ‘bad thing’ but this is as far as agreement goes. Various suggestions for new tax raising powers or debt consolidations have been aired, but they do little to advance the idea that Greece will manage to remain in the eurozone.

Collecting taxes in Greece has proven to be a Herculean task in recent years, and there is no reason to think a new tax will be any different, while getting all relevant creditors to agree a new repayment plan would make herding cats  look like the simplest of tasks.

A rout in commodity shares, which took their cue from declining raw material prices, hamstrung any attempt by the FTSE to remain above 7000, although easyJet shares did manage to rally thanks to the strong performance of its peer and arch-rival Ryanair.

US data rises

US markets remain highly sensitive to any further strength in the dollar, following Janet Yellen’s comments on Friday. Today’s data has gone some way to suggesting that 2015 will indeed be the year that sees a US rate hike, as consumer confidence, new home sales and core durable goods orders all rose. The latter, up for a second consecutive month, was enough to provoke further buying of the dollar, with a consequent push lower for stocks.

Time Warner’s deal with Charter was the main news of the day, but in the face of such major macro developments the news proved to be of limited effectiveness in stemming the selling.

Gold drags silver lower

Commodities have had little chance against the dollar today, especially with the US central bank chief now openly backing the idea of higher rates later in the year.

The staying power of gold above $1200 last week had always looked rather uncertain, and today’s sharp drop for the metal, which took silver with it, confirms that we are likely to see more downside into month end.

It was the dollar move, more than anything else, that hit oil prices, but news that the Iranians plan a production bonanza did not help matters. Oil continues to look highly vulnerable in coming weeks, even as the US driving season gets underway.

USD/JPY hits eight-year high

The dollar found the strength to push to eight-year highs against the yen during the course of the session, thanks of course to Janet Yellen’s Friday comments.

Set against the Bank of Japan, the Fed begins to take on a very hawkish aspect, prompting a breakout beyond Y122 that has held back the currency pair since the beginning of December last year.



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.