Given the possibility of further negotiations over the weekend we may see sharply increased levels of volatility in the coming days. You may wish to reduce or hedge your market exposure in advance of any potentially significant events, or deposit additional funds onto your account to provide extra cover for your positions.
Markets expecting a dealIt all hangs on Greece once again. Markets find themselves playing ‘piggy in the middle’, as was the case during the previous iteration of the crisis, awaiting announcements from politicians. What is interesting is that, even now, most indices remain near recent highs. This is a sign both that markets still expect a deal of some sort and of the realisation that Greece’s relatively small size means the immediate consequences can be managed more effectively than would have been the case two or three years ago.
Options expiry-related volatility sent the DAX soaring to fresh highs, with the index eventually coming to rest near 11,000 once again. We could be in a very different position come Monday, but for now the market still anticipates the politicians to come to their senses.
Bouncing oil stocks and a post-results gain for Standard Life meant that the FTSE 100 was still able to hold on to the 6900 zone, and a deal in Europe could mean the all-time high is but a session or two away.
Can the NASDAQ gain for an eighth day?
In the US Greece is looming on investors’ radar but the more interesting question is whether the NASDAQ can gain for an eighth day. It is an odd world when tech stocks seem to offer a safe haven to turmoil in government bond markets, but even such a high-growth play as technology stocks are looking like a much more prudent place for funds than a troubled currency union.
An early tumble for indices was swiftly reversed, repeating a pattern seen in recent days and underscoring the general belief that a deal is on its way. We’ve seen this film before, and we know how it ends.
Commodities awaiting Eurogroup developments
It’s been a day of drift for commodities, thanks mainly to the Eurogroup meeting. Precious metals will command attention should no deal transpire by the time markets open on Sunday, but for now the default position is to sit and await developments. The $1200 level continues to provide technical support although even a bounce from current levels would face hurdles in the direction of $1240.
EUR/USD balance returned to the euro
The battle between the optimists and pessimists has been playing out in EUR/USD today. The latter had the upper hand in the morning, taking the currency pair back to month lows just below $1.13, but those of a cheerier disposition took over as the Eurogroup meeting got under way.
Politicians entering the meeting were tight-lipped, but the prospect of losing a member should no deal come to pass should be enough for ministers to concentrate on the task in hand and find a suitable face-saving deal.