Europe
Sentiment in Europe dropped on Thursday amidst heightened concerns of a Grexit after Greece reportedly asked for extension from the IMF over its next debt payment, and got declined. Neither the desperation from Greece in asking for an extension, nor the hard-line approach from the IMF in denying it bode well for a resolution.
These latest concerns follow Greece’s debt downgrade and suggestions from German finance minister Schauble that no deal will be reached in next week’s Eurogroup meeting.
Adding to woes in European equities was a rebound in the euro, caused by nothing new from the ECB’s monetary policy meeting yesterday, and poor data from the United States sending the US dollar lower.
The German DAX fell over 1.5% in one of its biggest sell-offs this year but traded off the lows just before 12,000.
UK
UK stocks retreated from all-time highs in the FTSE 100 after a mixed batch of earnings just weren’t enough to justify higher prices in the context of sharp falls in European markets.
The latest polls for the general election have put The Labour Party marginally ahead. Labour’s best chance to form a coalition would probably involve the Scottish National Party. While business could breathe a sigh of relief over no EU referendum, the risk of business-unfriendly policies and a renewed threat to the Union would hardly be welcome.
Publishing Group Pearson (LONDON:PSON) was once of the worst performers over an escalating spat with the Los Angeles Unified School District over its botched efforts at supplying schools with iPads.
The day after its highest share price since September, Sainsbury’s slumped on Thursday on news it plans to convert 1.5m square foot of food space to non-food stores.
US
Another drop in Oil prices hit the energy sector in US stock markets and alongside Grexit concerns, acted to undo positivity from a number of better than expected earnings reports.
A big cut in expenses helped Citigroup (NYSE:C) beat earnings estimates despite difficulties with trading revenues whereas it was trading that was the bright spot for Goldman Sachs which helped it to report numbers higher than estimated.
Etsy, the shopping website specialising in handmade goods had a big first day of trading, opening at $31 per share after being priced at $16 on Wednesday.
FX
The US Dollar weakened as unemployment and housing data missed expectations, adding to a recent run of poor data that is displaying a slowdown in the US economy on multiple fronts.
Australian employment data was much better than expected, with the economy demonstrating resiliency to the slowdown in the mining sector. AUD/USD traded to a two-week high at 0.78 since the better employment situation reduces the likelihood of an imminent rate cut by the Reserve Bank of Australia.
The euro sank in early trade over Grexit fears but EUR/USD later reversed course back through 1.07. Even though European yields are falling, the recent run of poor US data has sent US yields down by more and narrowed the differential.
The pound extended its gains over the past four days with GBP/USD gaining over 300 pips after a spell of better economic data contrasted with weakness in the United States.
Commodities
Having failed to close below $2.70 per lb in the past two days, copper got a nice 2% pop higher with yesterday’s spike in oil meaning higher input costs while potential stimulus in China may generate extra demand.
Oil undid some of Wednesday’s spike higher, hovering around $61 per barrel in Brent and $55 in WTI as Saudi Arabia boosted output under a backdrop of slow Chinese demand.
Silver found some buyers at $16 per oz, pushing prices back to $16.50 as Greek concerns sent traders toward safe-havens
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