A jump in Australian CPI saw Asian markets jump to their highest levels since 2008 however news about mining giant Bhp Billiton (NYSE:BBL) curbing iron ore production sent the ASX Ltd (ASX:ASX) and S&P 500 lower towards the end of the session. Yet again there is a lack of economic data out today, however the BOE meeting minutes will be released as well as new housing data out of the US this afternoon.
Of course the BOE minutes should be a non-event with no change expected in the voting. We also cannot ignore earnings season as over 140 S&P companies are reporting earnings this week.
Greece remains the biggest story as Friday’s self imposed deadline looms with no sign of any deal about to be made. Varoufakis imposed the 24 April deadline saying he expected deal to be done by this date, however we are still nowhere near a deal, and the Greeks are quickly running out of money . Even if a funding deal is agreed in the short term, in May and June payments of 2.4bn euro are due to the IMF and over 4bn euro is due to the ECB in July.
A late payment to the IMF is totally unheard of from a developed economy, and any hint that Greece are heading towards a default will be met with rumours of the Grexit. The two outcomes do not necessarily go hand in hand but there is the feeling that the rhetoric this time is far too strong from the IMF and ECB and that there is no longer any grace for Greece in the discussions.
However despite the negativity Dijsselbloem yesterday told Germany television that a deal could still be reached by the end of the month and that progress had been made on a deal.
Due to the Greece situation we are looking at our clients very much looking towards the short term. We currently have three huge questions hanging over financial markets, to which the answer to all three is uncertain. Will Greece default and leave the Eurozone? When will the Fed raise interest rates? Who will win the UK general election?
With so much uncertainty its making it incredibly hard for our clients to look to any medium to long term positions. So shorter term range trading in currencies is where we are seeing most of the flow, as clients trade the ranges of the markets. The old cliché is coming out again, but the markets hate the uncertainty, and when every major story dominating the markets is laced with it, that old cliché becomes very hard to ignore.
Ahead of the open we expect to see the FTSE100 open higher by 3 points and the German DAX higher by 41 points.