Equities are on a solid footing and the prices of safe haven bonds have slid as renewed optimism for a resolution to the Greek financial crisis has traders in a positive move. This optimism comes as Pierre Moscovici, EU economic commissioner, said he was convinced the two sides would reach an agreement. With time quickly running out, without a deal in place the Greek government is certain to run out of money before the end of the month, fears of such a default has propelled a run on Greek banks with depositors taking out more than 1.5 billion euros on Fridayalone. This has compounded the trouble in Greece , placing the Greek banking system in a precarious position with the ECB providing emergency funding to the Greek banking system outside of deal currently being work on between the Greek government and its creditors. Despite all this the has euro has maintained much of its resilience against the greenback with it down only 25 basis points in the last 24 hours while equity indices like the FTSE Eurofirst 300 and DAX surging 1.8% and 2.9% respectively.
The optimistic tone struck in Europe continued into Asia, with the Nikkei 225 adding 1.3 per cent, Australia’s S&P/ASX 200 adding 0.2 per cent and Hong Kong’s Hang Seng market climbing 1.2 per cent. Markets in Mainland China were closed for the Dragon Boat Festival public holiday, giving traders a respite as the exceptionally volatile Shanghai and Shenzhen markets fell on Friday which capped the worst week of performance for the indices since the financial crisis of 2008. On the currency front, today’s gains for the dollar index did not bode well for South Pacific and Asian currencies, with the yen, aussie and kiwi dollars losing ground to the greenback while the resumption in strength in the USD also pushed the commodity complex lower further fuelling weakness in the AUD and NZD.
Moving onto North America, with a potential deal in Greece on the horizon S&P 500 futures are indicating that the market is set to open higher within striking range of record closing set back in May. Also on a stronger footing today is the US dollar with the dollar trading index at 94.19 the buck is slowly retracing some of the ground it has lost since May. In absence of any significant data points to be released in the North American session outside of European consumer confidence and existing home sales in the United States, trading is likely to be dependent on whatever news or commentary continues to emerge regarding a potential resolution between Greece and it’s creditors.
Further reading:
How’s your broker’s spread in May? Detailed data for 100+ brokers
Greek crisis: Lower expectations for a deal today – maybe onThursday
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