Familiar friends return to stalk markets

Greece and China are back at the top of the news agenda, with the latter hitting UK mining stocks hard.

City of London skyline
Source: Bloomberg

The reopening of the Athens stock market this morning, after a period of some five weeks, is the main show today; the sharp drops seen so far are dramatic, but really reflect investors playing catch-up following the remarkable events of the past month. Having been shut out for so long many will simply be keen to escape from Athens as quickly as possible and find havens for their money that do not require being on ‘crisis watch’ all the time.

Meanwhile, fresh falls in China and weak PMI figures from that nation act as a reminder that we should now expect volatility as standard in China, both in stock market and economic terms. Throw in downward-trending GDP numbers and an interventionist  government that is actively hunting short-sellers, and investors could be forgiven for being as unenthusiastic about China as they are about Greece.

Judging by the calm reactions to the slew of data we’ve seen this morning it would seem that the markets have moved firmly into the languid summer period. HSBC shares are providing a modicum of excitement, but with most of the big news already in the price most investors are content to sit back and await developments. Having seen a modest bounce last week the mining sector has taken a distinct turn for the worse today, with big names under heavy pressure thanks to the dire news from China.

Last week saw the FTSE 100 comfortably outpace its rivals, but reality has struck back today as the raw materials index looks to make fresh lows for the year. US PMI numbers this afternoon should provide  some direction, but the drift lower in US indices looks set to continue for the time being. Ahead of the open, we expect the Dow Jones to start at 17,686, just a shade lower from Friday’s close.  

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.