Market Comments

Heading into the close the FTSE 100 is down 10 points, while eurozone markets suffer a renewed round of Greek crisis fatigue.

UK markets

Welcome to day three of the interminable Greek drama. Just when we thought the crisis couldn’t become more trying, the endless series of headlines is making investors even wearier with a problem that just won’t go away. No sooner does a headline appear than it is swiftly denied. The net result is that we have seen see-saw action across indices, especially in Europe, but with markets ending the day in the red it looks like people are still preferring to believe the eurozone and Greece’s creditors, rather than the government in Athens. A big loser on the FTSE 100 during the day was equipment hire firm Ashtead Group, which slumped by over 3% following a report from US peer United Rentals, whose shares fell over 6% after it said that May activity was particularly weak. Ashtead’s success, rising over tenfold since 2010, has been built on the strength of its US operations, and while the news does not dent the upward trend, it will cause some investors to wonder whether the shares are still compelling value at around 20 times earnings.

US markets

It was a day dominated by moves from the internet giants of Amazon and Google. The latter will be doing its best to burn some more holes in everyone's wallets by introducing a ‘buy it now’ button to search results, the better to encourage impulse purchases and increase the attraction of the search engine giant as a one-stop shop for everyone’s needs. Meanwhile Amazon has taken just 24 hours to strike back at Wal-Mart’s new ‘Shipping Pass’, designed as a challenger to Amazon’s Prime service, with expanded same-day delivery. Amazon has always been keen to stifle competition as quickly as possible, but it has never really taken on a firm of Wal-Mart’s size before. This battle between two titans will be one to watch. US economic data continues to tend towards the good end of the spectrum, with pending home sales strong and only a modest increase in initial jobless claims. It appears that Q2 will be much better than Q1, lending force to the idea that a rate hike by the Federal Reserve is on its way later in the year.

Commodities

Declines in oil prices are threatening to turn into a rout, as the commodity endures yet another down day. Hopes have been dashed that OPEC will take any action at its meeting next week, and having seen the price rally hard over the course of 2015 so far, the cartel’s members will be even more disinclined to cut output than they were at the last general get-together. Supply is slowing, as is capital expenditure, but it will have to stay on this trend for months to come to really eat away at the vast overhang that has been built up.

FX

It has been a tough day for sterling after UK GDP revisions failed to live up to their billing. There was no upward revision to growth, the number having been expected to rise to 0.4% from 0.3%, with a downward revision to service sector growth offsetting improvement in other areas. Investors duly reworked their expectations on a UK rate hike, and then found reasons to buy the US dollar once again. The dollar continues to motor on against the yen, as markets once again woke up to the stark divergence in monetary policy between the Fed and the BoJ.