Even though hope only occasionally springs eternal and let’s face it we still have no concrete evidence that Greece will be in a position to agree a meaningful deal with its creditors, the IMF, the European Commission and the ECB until later in the week, if at all. Consequently European equities rather surprisingly held on to their early morning gains, particularly the DAX and CAC – both up about 2.8% on the day at 1.30pm. I still fail to understand the irrational exuberance of equity geeks. This saga will probably run longer that ‘Peyton Place’ or ‘Eastenders’ and the problems associated with not only Greece but the EU as a whole are likely to be compounded in the years to come.
I suppose the DAX has rallied as much as it has, due to the fact that if this is a genuine relief rally, Germany and France on a pro-rata are into Greece more than other countries; therefore the relief should be that much greater. The betting is that we might see some peace accord agreed overnight – just breathing space mind you – so don’t be surprised if some of the cream is skimmed off the top. The FTSE 100 is in fact only up 1.3% at 6798 (+87 points) at 2.00pm. Most of sectors have been marked up by the market makers on no business. Resources and mining have been somnolent. The oil sector is up 1.5%. Utilities are 2% to the good on the back of the bid for Severn Trent – +4%. Media is 1.5% to the good, thanks to inflated gossip about Sky getting involved in M&A – +3.2%. Banks are about 1% to the good. The market is showing all the classic signs of not getting caught on either side of the spread with ‘coach and four’ prices. Tomorrow is another day!