Greece concerns still not resolved
Fiona Cincotta November 21, 2012 4:34 PM
<p>The markets suffered a disappointment this morning following the lack of agreement on Greece at the latest Eurogroup meeting yesterday evening. After 12 hours of […]</p>
The markets suffered a disappointment this morning following the lack of agreement on Greece at the latest Eurogroup meeting yesterday evening.
After 12 hours of discussions, eurozone ministers, the IMF and ECB failed to reach a deal to reduce Greece’s debt and release the next tranche of payment from its bailout package. It had been widely expected that a consensus would be reached but instead the decision has been postponed until Monday, 26th November, at yet another meeting. Despite the expectation investors are not overly surprised by the lack of an agreement and believe that an agreement will be reached within the necessary time period, for this reason falls in the markets were slight.
Until we receive more clarity on the situation in Greece and especially with the Thanksgiving weekend starting tomorrow, trading is expected to be quiet. By mid-morning the FTSE had shed 0.18%, the DAX was trading flat and the CAC was down 0.1%.
Here in the UK mining stocks were putting pressure on the FTSE whilst the banking sector was trying to push the index higher. Lloyds gained over 0.7% after Morgan Stanley raised the bank to equal weight from underweight, sector peers also rose on the news. Glencore and Xstrata bucked the trend of miners, both gaining 1% and extending gains from yesterday’s approval of the merger between the two firms.
On the downside, Johnson Matthey was the biggest faller on the FTSE after posting a 6% fall in first half pre-tax profits on the back of lower metal prices. News that the company expect the second half of the year to be similar to that of the first did little to encourage investors who sold out of their positions, resulting in the company losing 6.3% in early trading.
Turning to economic data, Bank of England minutes released this morning showed that the MPC voted 8-1 against expanding stimulus, perhaps suggesting that they are starting to doubt the impact of the policy tool. This was despite the fact that spending on quantitative easing is likely to be finished in the coming weeks. The minutes also confirmed that the Bank was not looking to cut interest rates further at any point in the near future.
With no more domestic economic data due, attention will turn to the University of Michigan Confidence data out from the US this afternoon.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.