FTSE 100 preview: Greek default threat weighs on sentiment

on Apr 17, 2015

Investor sentiment is expected to be subdued today, as markets become increasingly nervous about the escalating crisis over Greece. According to trading platform IG, the FTSE 100 will start today’s session just two points higher at 7,098, with no scheduled corporate releases to provide direction.

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Britain’s benchmark index closed 0.51 percent, or 36.33 points, lower at 7,060.45 yesterday, retreating from a record high, as bonds yields in Athens soared on the back of concerns over a potential default.Greece was at the forefront of investors’ minds after the country’s deteriorating economic situation led ratings agency Standard & Poor’s to cut its credit rating to “CCC+” from “B-“.
Greek Prime Minister Alexis Tsipras told Reuters yesterday that he was “firmly optimistic” his government would reach an agreement with its creditors by the end of April despite friction over issues such as pension and labour reform. The Eurogroup of finance ministers is due to meet on April 24 to discuss reforms in return for aid but some officials, such as German Finance Minister Wolfgang Schaeuble, remain skeptical the meeting can yield results.
Greek Finance Minister, Yanis Varoufakis, met US President Barack Obama yesterday, and is due to meet US Treasury Secretary Jacob Lew today, along with European Central Bank President Mario Draghi and International Monetary Fund (IMF) officials.
On the data front, Eurozone consumer price data will be released today as the European Central Bank (ECB) tries to bring the bloc out of deflation through its stimulus measures. Analysts predict Eurostat will confirm the consumer price index (CPI) fell at a 0.1 percent year-on-year pace last month. The US also publishes CPI figures today, with estimates pointing to one percent growth in March.In the UK, the Office for National Statistics releases its last labour market data including the change in employment numbers, the unemployment rate, weekly earnings and jobless claims.
US markets closed lower yesterday as stocks struggled to hold gains from higher oil prices, amid investor focus on earnings. The Dow Jones Industrial Average closed 0.04 percent, or 6.84 points, down at 18,105.77, the S&P 500 ended the session 0.08 percent, or 1.64 points, lower at 2,104.99, while the Nasdaq fell 0.06 percent, or 3.23 points to settle at 5,007.79.
Asian equities have been trading mixed today. By 05:53 BST, MSCI’s broadest index of Asia-Pacific shares outside Japan had climbed 0.19 percent, or 1.20 points, to 636.30, slipping slightly after earlier touching its highest level since January 2008, but was still on track for a weekly gain of over one percent. Meanwhile, Tokyo’s Nikkei 225 lost 0.93 percent, or 190.4 points, to 19,696.06, poised for a weekly loss of around 0.6 percent. After breaking the 20,000-point level for the first time in 15 years a week ago, the Nikkei has wobbled below it, with investors wary of Japanese corporate earnings reports slated for release from next week.


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