FTSE's Greek-based surge slows

Heading into the close, the FTSE 100 is ten points higher, having failed to sustain the momentum of yesterday’s rally.

Source: Bloomberg

Traders await Greek deal

Those left out of yesterday’s strong surge in markets (based, of course, upon a Greece-related rumour that was swiftly denied) have been deterred from jumping in thanks to a Eurogroup heads of government meeting on Monday. It would be unwise to suggest that this is the last chance for Greece and its creditors to hammer out a deal, but with time running out it would certainly be beneficial for markets and for investors’ peace of mind if the two sides were to sort something out.

Alexis Tsipras has played the Russian card today, suggesting investment from Moscow, adding a little extra spice to the situation. However, given Russia’s own troubles, Vladimir Putin is unlikely to be able to find  the cash to solve the problem, leaving Mr Tsipras to sort a deal between now and Monday afternoon. The prospects do not look promising, but a political deal that hands Athens some face-saving concessions while confirming austerity measures is still the most likely outcome.

In London broker upgrades lifted FTSE 100 newcomer Hikma to the top of the board, propelling it on to the best-performing list for the week and helping to reverse some of the heavy losses sustained since the beginning of March and the firm’s incorporation into the top flight index.

Chip maker ARM gained over 2% today, thanks to speculation that Apple might be switching from Intel chips to ARM’s products, further boosting the attractiveness of ARM shares as a proxy for Apple shares for UK investors.

US stocks look positive for investors

Wall Street has opened marginally lower, but compared to Europe it is enjoying a quieter session. With the Federal Reserve meeting out of the way, and Greece a rather smaller concern than in Europe, US stocks look better set than they have for some time. The fresh highs in the Nasdaq are a sign that investors are still willing to get involved in stocks, especially with Fed rate expectations being pushed back to the end of the year.

Caution over Greek shenanigans will keep most investors from jumping in until the middle of next week, but I expect a general recovery in risk appetite assuming that Armageddon does not descend on the eurozone next week.

Gold eyes $1200

Ahead of key events for Greece, the ultimate safe haven, gold, is finding some buyers. Consolidation above $1200 is a good first step if the metal is to attempt to regain the May highs, and a deterioration in the Greek situation should provide some modest upward force for the metal.

Oil meanwhile continues to see sellers, with traders still sceptical that recent highs in the price can be supported.

Profit-taking in GBP/USD likely

The pound has clung on to its recent highs today, but the week ahead is relatively bereft of data for sterling, which makes a retracement of at least modest duration a definite possibility.

Having seen a near straight-line move in GBP/USD over the past two weeks, the time has now come for some degree of profit-taking, especially if US data comes in ahead of forecasts or Mark Carney takes an even more dovish line at next week’s Inflation Report hearings in Parliament. ‘Buy on the dips’ has been a workable strategy in cable since early April, and a pullback would not unduly undermine the longer-term rally here.

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