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.

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