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.