Europe
European stock markets stalled on Wednesday, drifting mostly lower ahead of the Eurogroup meeting in Brussels in which Greek Finance Minister Yanis Varoufakis will put his case for debt reform to other Eurozone ministers.
Hopes have been raised and dashed in equal measures in the two weeks since the Greek people elected the anti-austerity Syriza party. Varoufakis will supposedly suggest a bridging loan to bide time until a long-term solution can be agreed upon but his main creditor Germany doesn’t seem keen.
European markets have the rocket fuel of European Central Bank quantitative easing behind them and appear ready to charge higher as soon as the situation in Greece can at least be patched over.
Shares in part-owner of Luton airport Aena Aeropuertos SA (MADRID:AENA) surged on the airport operator’s IPO on Wednesday with the Spanish government set to sell its 49% stake in the company worth more than €3.5bn. It is the biggest listing in Spain since the financial crisis and symbolises a new appetite for investing in Spain as the economy progresses.
UK
There’s little expectation of a resolution resulting from this evening’s Eurogroup meeting but the uncertainty has left cautious UK markets in the red alongside most of Europe on Wednesday in case there is an outcome, be it good or bad.
The first loss in 15 years and a scrapped final dividend from Tullow Oil Plc (LONDON:TLW) alongside a ridiculous overbid from Sky for Premier League football TV rights that could easily damage the broadcaster’s margins were hurting the FTSE 100 share index on Wednesday.
Better than expected demand for ARM Holdings’ chips after record profits at Apple that helped the UK tech company beat earnings expectations as well as better than forecasted results from Reckitt Benckiser Group Plc (LONDON:RB) were not enough to pull the FTSE higher.
US
Greece is still having an impact on US stocks on Wednesday despite better than expected earnings from PepsiCo, AOL and Time Warner.
News that may start to garner move attention from markets once the impact starts to be felt is that Nobel peace-prize winning US president Obama is seeking authorisation from congress to deploy troops back into Iraq to fight ISIS. US troops in Iraq could at least in the short-term add to instability in the region and provoke further terrorist attacks both of which add to the potential for oil and stock market-shocks.
There could be a volatile open for US markets tomorrow following any news from the Eurogroup meeting and numerous quarterly results released overnight from the likes of Cisco, Tesla, AOL, Baidu and Trip Advisor
FX
The US Dollar was broadly stronger on Wednesday as crude oil dropped with the only economic news of note that the number of mortgage applications dropped by 9% on a seasonally adjusted basis.
USD/JPY regained the 120 handle for the first time since early January on the back of dollar strength that began with the recent US jobs report.
AUD/USD fell alongside gold prices after disappointing Australian employment data which saw the economy lose jobs in January against expectations of a gain. Having shown a sharp reversal higher last Tuesday, the currency pair is now edging down again towards multi-year lows at 0.76.
GBP/USD was steady ahead of the Bank of England inflation report on Thursday.
With all the back-and-forth over the Greek debt debacle, EUR/USD is sitting fairly flat in the middle of its recent price range at 1.13.
Commodities
Both Brent and WTI extended declines on what turned out to be accurate speculation that US inventories will climb again more than forecast on Wednesday, adding to the supply glut. 4.9M barrels of crude oil were held in inventory during the past week, below the 6.3M last week but more than the 3.7M forecasted.
Oil prices have been recovering thanks to a big drop in the US rig count but while that will eventually curtail production, at the moment it is still increasing and overwhelming demand. Data demonstrating weak economic prospects from China on Monday and Tuesday has dampened hope of an increase in global demand.
A recovery in global equity markets and a return to form of the US dollar since the latest US jobs numbers are sending Gold and Silver lower on Wednesday. $1,220 per oz in gold is a 50% pullback from the rally that began in November; a drop through there suggests a move back to $1,200.
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