Greek risk escalating

Yesterday’s market action

Greece dominated headlines throughout yesterday as Tsipras signed a decree forcing state bodies to transfer reserves to the Greek central bank. This should unlock circa €1.2bn, allowing Greece to maybe meet its 12th of May payment of €770mn to the IMF. The ECB’s Vice President has stated that he sees a Greek exit as unlikely as there is no legal ground for their expulsion from the Eurozone. Yesterday saw a light data calendar yield little in the scope of data-opportunities. The NASDAQ led the way higher in yesterday’s afternoon trade, allowing the S&P 500 to follow suit and lift European bourses also. IBM posted better than expected earnings for Q1, against some analysts expectations including my own. The strong-dollar excuse seems to have had little in the way of a negative effect this quarter so far as we see consistent good performance from many heavy-hitters. Halliburton announced a cut of capex by 15% and an acceleration of job cuts as it follows many of the other industry leading energy services providers. Data-wise we had the Chicago Fed National Activity Index which missed expectations but this presented little opportunity. The dollar remained on the front foot for the session, gaining 0.43% against the basket. This came in the wake of Fed’s Dudley reiterating his optimism for US economic growth over the medium term, into the end of 2015. Dudley did, however, make a stressed point of the weak March NFP report and his concern reflected that of many analysts. The April Non-Farm Payrolls data due at the start of May now becomes incredibly important.

Today’s View

This morning saw the German ZEW report enter the news space. The headline Expectations missed estimates by 2 points, printing 53.3 against the expected 55.3. However, there was a large beat on the Current Situation figure with a reading of 70.2 but market participants seemed to focus initially on the headline as European bourses returned to their established lows. We have seen these products retrace higher since but the initial move seemed certainly over-bearish. We have Lockheed Martin earnings at 1230BST today; this result will be interesting as it will affect Durable Goods later down the line. Watch out for Caterpillar, Lockheed and Boeing for good leading indicators for Durable Goods orders. We have API Crude figures overnight also which will provide a yardstick for the Department of Energy results due tomorrow at 1530BST. Last week saw a return to “normal quantities” and so traders should be looking for reactionary trades.