INVESTORS and traders alike spent most of last week dazed and confused. Equity, bond, commodity and FX markets swung around wildly as they responded to headline news out of Greece and G20. There was no time available for detailed analysis, and even Theseus would have struggled to navigate the labyrinth that is Greek politics.
While outgoing Greek Prime Minister Papandreou’s call for a referendum was wildly disruptive, it provided a smokescreen for other issues.
Though final details of the country’s new coalition government will not be known until later today, it looks as if the Greek parliament has secured its next bailout tranche. So this week, Italy and France should come back into focus. Italian yields continue to rise and this is having a knock-on effect on French bonds. These are under pressure as the country’s banks have a significant exposure to Italian sovereign debt.
The FTSE 100 index is called to open up 33 points at 5,327. The German DAX is expected to open up 34 points at 6,000 and the French CAC 40 up 16 points at 3,140.
Following last week’s EU summit and G20, today sees EU finance ministers gather in Brussels for Ecofin meetings. We will also get an update on Eurozone retail sales and German industrial production. Tomorrow sees the latest updates on the UK’s Manufacturing and Industrial Production and the Swiss National Bank Chairman Philipp Hildebrand speaks later in the day. On Wednesday we have Chinese inflation data and the Bank of England’s MPC releases its Rate Statement on Thursday. We will also hear from Fed chairman Ben Bernanke and committee members Janet Yellen and Charles Evans as well.
The third quarter US earnings season begins to wind down now, although there are still nearly 700 companies reporting this week. Overall, earnings have been positive, but there have been significant misses, such as Apple and Wells Fargo. But it is the Eurozone debt crisis which should exert the greatest influence on markets again this week.
Martin Slaney is director of global product management at GFT