A familiar theme - markets off to a nervous start as tensions mount over Greece
The stock market is in for a negative opening session as traders follow a weak international lead and adopt a more defensive stance as risks mount in the Greek debt negotiations.
US Dollar strength is a dominant theme for markets at the moment. Last night’s economic data lent weight to the Fed’s view that the economy is improving after the winter slump. New home sales and house prices are benefitting from an improving job market; low interest rates and modest inventory levels. Markets were also encouraged by the pickup in machinery orders revealed by last month’s durable goods orders statistics.
While this good news is bad news theme heightened expectations of a Fed rate hike and helped push the US dollar higher, market action last night also bore some hall marks of flight to safety activity by traders. Equity markets were sold and bonds bought as traders pushed the dollar higher.
Australian bond yields are also lower in early morning trade. This creates the possibility that domestic, non-bank yield stocks such as the major supermarkets and Telstra could fare relatively well in today’s market as traders focus on yield stocks that might be relatively unaffected if the situation in Greece was to lead to heightened concerns about global financial markets.
For further comment from Ric Spooner please call 02 8221 2137.
Frequently Asked Questions about this Article…
The stock market is anticipated to open negatively due to a weak international lead and increased defensive stances by traders as risks mount in the Greek debt negotiations.
The US Dollar is strengthening, driven by positive economic data that supports the Fed's view of an improving economy. This has heightened expectations of a Fed rate hike, influencing market dynamics.
Recent economic data, including new home sales, house prices, and durable goods orders, indicate an improving job market and economic conditions, contributing to the US Dollar's strength.
The 'good news is bad news' theme refers to positive economic indicators leading to expectations of a Fed rate hike, which can cause market volatility as traders adjust their positions.
Traders are adopting a flight to safety approach, selling equities and buying bonds, as they anticipate potential global financial market concerns stemming from the Greek debt situation.
The Greek debt situation is causing Australian bond yields to lower, which may benefit domestic, non-bank yield stocks like major supermarkets and Telstra, as traders seek relatively unaffected yield stocks.
Yield stocks might perform well because they are seen as relatively stable investments, especially when there are concerns about global financial markets, such as those arising from the Greek debt situation.
For further commentary on the market situation, you can contact Ric Spooner at 02 8221 2137.
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