Markets still wary of Europe’s worries
City Index May 16, 2012 5:35 PM
<p> Markets are still uneasy around the political situation in Europe with Greece now expected to go back to the polls after elected […]</p>
German Finance Minister Wolfgang Schaeuble called the vote a referendum on whether the country stays in the euro.
Meanwhile German Chancellor Merkel and French President Hollande say they will consider measures to spur economic growth in Greece as long as voters there commit to the austerity demanded to stay in the euro.
So for now, the market is starting to accept the current Greek deal is unlikely to survive in its current form and a best case scenario would see more concessions.
A worst case scenario is not being priced into the market but a new dangerous level of political discussion is growing – Greece’s elected and increasingly popular left leaning politicians argue the Euro zone is unwilling to let Greece go and so better concessions should be negotiated.
The market might find this a little too overbearing, putting more pressure on risk assets in the near term.
The Euro is finding little support, last trading at 127.36 US cents. The Australian dollar remains below parity, last at 99.43 US cents.
Commodities continue to trend lower with copper leveling at US$3.50/lb while gold is yet to find any meaningful bounce, last struggling at US$1544/oz. despite the fall in gold.
The gold/silver ratio – which is market neutral in natural, is back above 55x, rising from around 51x over the past few months and now within its two decade average.
StoneX Financial Ltd (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.