Traders exit markets as potential Grexit looms

In mid-morning trading the FTSE 100 is rattled by Greece as the nation is one day away from a potential default.

Source: Bloomberg

Greece’s day of reckoning is nearly upon us and traders can’t get out of the market fast enough. We are back to the bad old days of the eurozone debt crisis, when equity markets around Europe are selling off hard and fast.

Only the brave stay long in the stock markets and it is difficult to keep your nerve when you are facing a sea of red trading screens. Athens is doing its best to grind down its creditors and unlock the next round of the bailout without giving too much away in concessions.

A deal over Greece’s finances isn’t in sight yet, and even though the European Central Bank has a track record of brokering an agreement at the last minute it is confident enough to buy into the market now.

Mining stocks are being crushed by the news that one Chinese broker is cutting back on margin trading, and this signals the strain the second-largest economy in the world is under. China’s economy is too dependent on credit and it feels like the pressure cooker is about to blow.

Johnson Matthey is in the red this morning as its cautious outlook for the metals market has taken the shine off the strong emissions numbers. Rising cars sales in Europe and tighter regulation on fuel discharges drove profits higher, but the dreary outlook for the metal business has put pressure on the stock.    

We are expecting the Dow Jones to open 76 points lower, at 18,000, as dealers are driven out of the market by Greek default fears. All eyes are on Athens at the moment and US traders are no exception. Until a default is definitely avoided it will be difficult to find buyers. The jobless claims report at lunchtime will give us an indication of what to expect in tomorrow’s non-farm payrolls report, and the US market is coming around to the idea that the rate won’t be hiked in the near future. 

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