Greece was put off to the weekend (better that way so as to limit any damage to markets?) – or to put it another way, instead of kicking the Greek can down the road to later this year or in 2016, it had been nudged forward a whole 36 hours or so.
Local investors would be better served keeping an eye on Shanghai where the market lost a surprisingly large 3.5% in value yesterday after being up in early trading.
The deadline for the 1.6 billion euro limp sum payment on Tuesday, June 30, remains on the table and the IMF made it clear it won’t be changing its approach to the repayment – it will have to be made.
The delay has confused markets – they didn’t know whether it was good news or bad – and went with the knee jerk response and put it in the bad news column and marked down shares in Europe (except Germany and Italy which rose).
Wall Street ended up lower, but for mostly domestic factors (the usual short term fears about oil prices, the chances of an interest rate rise and a sharp fall in the value of the Dow Industrials subindex which fell into correction territory overnight (a fall of 10% or more from its most recent peak).
The subindex is the most important in the Dow and investors are wondering if this is sending a message about a big fall for the wider market.
Our market will start with a small loss this morning as a result of the mixed trading in on Wall Street – the share price futures contract is down around 6 points. Not helping will be the half a per cent fall in iron ore prices overnight to $US61.19.
That will go with falls in gold and oil prices as the US dollar edged higher as more investors sought safe havens ahead of the weekend.
The US dollar is likely to strengthen further today and tonight ahead of the weekend – although the Aussie dollar was a third of a cent higher at 77.40 this morning compared to where it was 24 hours ago.
The Financial Times reported that the Greece talks had hit multiple roadblocks and the outlook was “bleak”.
“The talks collapsed on Thursday morning after the bailout monitors — the European Commission, International Monetary Fund and European Central Bank — demanded Mr Tsipras (The Greek PM) accept a compromise proposal or have the plan presented as a “take it or leave it” offer before the finance ministers.
“Creditor plans were thwarted, however, by Yanis Varoufakis, the Greek finance minister, who presented his own proposal — described by officials as the creditors’ plan with edits — which the ministers then agreed to assess before cutting off talks completely.
“The bleakness of the situation was underlined during the finance ministers’ meeting on Thursday when a handful of participants, led by Wolfgang Schäuble, the German finance minister, told colleagues they believed the creditors’ compromise plan was too lenient, leaving no more room for concessions to Athens,” the FT reported.
The 28 EU leaders, in Brussels for a two day summit ending tonight, our time, will have something to say and their finance ministers have been told to hang around over the weekend to consider any new proposals and the chances of an agreement.
American sharemarkets were more interested in the health of the US economy in early trading after a spate of weekly and monthly figures which confirmed the economy is still growing, raising the chances of a rate rise later in the year. That fall in the transportation subindex is a worry though.
The worsening outlook for the Greek bailout in fact had little impact in the US, except at the margins.
The main US indexes fell for a second session with the S&P 500 down 6.27 points, or 0.3%, to 2,102.31. The Dow fell 75.37 points, or 0.4%, to 17,890.360, while the Nasdaq Composite shed 10.22 points, or 0.2% at 5,112.19.
In Shanghai the market rose 0.7% in the morning, then plunged 4.4%, and rose a touch to end a nervy day off 3.5% In the previous three sessions, the trading range was 3%, 7% and 6.5%.
In Australia the market fell with the All Ords losing 0.9% to 5619.9 and the ASX200 0.9% as well, to end on 5632.7.
