European markets are mostly lower today, taking a hit as concerns about what's next are uppermost in investors' minds. Worries about Greece, Spain, and Italy are all weighing on European stocks.

Spread bets and CFDs on European indices should consider that Greece is still in political turmoil, but those likely to eventually win out are not fond of the austerity measures. In Spain, the banking sector continues to struggle, bond yields continue to rise, and rumours of a downgrade for Spain swirl. And Italy remains in the background, struggling with higher bond yields.

With all of this going on, it's no surprise that European indices are lower. The FTSE 100, DAX and CAC 40 are all losing ground today, and it appears as though US stocks are following suit as they fall in early trading. 

Oil prices are starting to turn a little higher today, after earlier losses. Oil futures dropped as concerns about the eurozone continued to cause worries about the global economy, and global demand.

However, oil prices are heading a little bit higher right now with better than expected data from Japan and Singapore. Even though inventories in the United States are on the rise, there are hopes that demand from Asia can help buoy oil prices.

Oil prices have been below the $100 a barrel level for some time now, and they are just above $93 a barrel for now. Trading is likely to remain a bit choppy, but spread betting and contracts for differences on commodities can look to some hope. 

Commentary for Wednesday 17^th May 2012

by Andrew Taylor

Financial Markets Strategist

twitter: @ATaylor_GFT

Top Headlines

· Greek exit path becoming clearer > withdrawal of EUR700 million from Greek banks to safer shores.

· Merkel tries to calm markets commenting on Germanys desire to have Greece remain in the EU.

· Rumours that ECB is cutting its funding to some Greek banks.

· Fed officials stimulus bandwagon grows in numbers

· Singapore’s Non-Oil Exports rose faster than expected in April

· Singapore equity market to open marginally higher as SIMSCI cash contract shows

Global equity markets continue its downside run after a weak attempt at a relief rally was knocked on the head with continuous negative news form the euro zone. The Dow shut its doors for the day posting a 33 point loss (-0.26).

This morning has seen NZX50 up 5pts (0.6%); ASX200 up 6pts (0.1%); Nikkei up 20 pts

If overnight markets were made into a drama novel, it would see Greece as its central character. The one thing that markets do not like is uncertainty and to test trader’s metal we had it in bucket loads.

With the election set for mid June one would have hoped that things may have calmed but this could not be further from the case. As the ‘Anti Austerity’ movement gains an election winning majority, and the EU remain staunch on austerity requirements that must be met, this polarisation has bookmakers reeling in the price of Greece leaving the EU even though the majority of Greeks wish to remain part of the zone albeit without measures.

It seems all that will save Greece from an exit will be compromise. As it stands traders are preparing for the worst as this seems unlikely to occur. I just hope for Greece’s sake that this is not a high stakes game of chicken to see who will cave first.

Greece’s banking system took a big hit on two fronts.

1. Locals withdrew EUR700 million from banks due to solvency fears, as well as, knowing that they would prefer to hold Euros if the exit did occur. The value of the Euro would be much higher of that of the drachma.

2. News also surfaced that the ECB has cut its Money Market operations to Greek banks as it fears that the liquidity provided to them in Euros would never be seen again. This pushed Greece further down Struggle Street with Grexit Avenue in its site.

Being Greece’s largest holders of their debt, France and Italy would now be calculating on the losses that would be incurred should Greece leave. This strain on two major players within the Euro Zone will be keenly watched as their Solvency will also come into question.

With 4 weeks until the Greek elections volatility will be the only certainty. Rumours will have immediate effect as traders do not want to be caught out. This will make for choppy trading for next few weeks until certainty of what will happen (good or bad) enters the market.

This Mornings Data Released

Main economic events in the Asian zone today are:

JP Prelim GDP figures released - occurred at 7:50am (Singapore Time).

Key numbers:

Qtr 1 (QoQ) - Prev: -0.2%% Forecast: 0.9% Actual: 1.0%

GDP Price Index YoY – Prev: -1.8% Forecast: -1.4% Actual: -1.2%

There are two versions of GDP released in Japan – Preliminary and Final. Prelim is considered the ‘heads up’ call and is why it tends to have more of an impact.

For the first quarter of this year Japans GDP reversed its growth on Q4 of last year by around 1.2%. The market was looking for a 0.9% quarterly print and improved on that to reach 1.0% which confirmed that Japan is in a continuing uptrend. The positive growth numbers bode well with officials who see this steady growth continuing through Q2

The Dow futures are trading 44 points higher after the closing bell. Expect market leads to remain Euro zone focused and some may see the ‘out of sync’ time zone in Asia a good time to consolidate before an expected volatile session when early Europe step in. We currently see the SIMSCI up marginally on yesterday’s close.

Follow me on twitter: @ATaylor_GFT

Commentary for Wednesday 17^th May 2012

by Andrew Taylor

Financial Markets Strategist

twitter: @ATaylor_GFT

Top Headlines

· Greek exit path becoming clearer > withdrawal of EUR700 million from Greek banks to safer shores.

· Merkel tries to calm markets commenting on Germanys desire to have Greece remain in the EU.

· Rumours that ECB is cutting its funding to some Greek banks.

· Fed officials stimulus bandwagon grows in numbers

· Much needed Relief Risk rally short lived as nervousness continues to grip markets.

· AU equity market to open 2 pts lower

Global equity markets continue its downside run after a weak attempt at a relief rally was knocked on the head with continuous negative news form the euro zone. The Dow shut its doors for the day posting a 33 point loss (-0.26).

If overnight markets were made into a drama novel, it would see Greece as its central character. The one thing that markets do not like is uncertainty and to test trader’s metal we had it in bucket loads.

With the election set for mid June one would have hoped that things may have calmed but this could not be further from the case. As the ‘Anti Austerity’ movement gains an election winning majority, and the EU remain staunch on austerity requirements that must be met, this polarisation has bookmakers reeling in the price of Greece leaving the EU even though the majority of Greeks wish to remain part of the zone albeit without measures.

It seems all that will save Greece from an exit will be compromise. As it stands traders are preparing for the worst as this seems unlikely to occur. I just hope for Greece’s sake that this is not a high stakes game of chicken to see who will cave first.

Greece’s banking system took a big hit on two fronts.

1. Locals withdrew EUR700 million from banks due to solvency fears, as well as, knowing that they would prefer to hold Euros if the exit did occur. The value of the Euro would be much higher of that of the drachma.

2. News also surfaced that the ECB has cut its Money Market operations to Greek banks as it fears that the liquidity provided to them in Euros would never be seen again. This pushed Greece further down Struggle Street with Grexit Avenue in its site.

Being Greece’s largest holders of their debt, France and Italy would now be calculating on the losses that would be incurred should Greece leave. This strain on two major players within the Euro Zone will be keenly watched as their Solvency will also come into question.

With 4 weeks until the Greek elections volatility will be the only certainty. Rumours will have immediate effect as traders do not want to be caught out. This will make for choppy trading for next few weeks until certainty of what will happen (good or bad) enters the market.

Outlook

Main economic events in the Asian zone today are:

JP Prelim GDP figures released - due at 9:50am (AEST).

Key numbers:

Qtr 1 (QoQ) - Prev: -0.2%% Forecast: 0.9%

GDP Price Index YoY – Prev: -1.8% Forecast: -1.4%

There are two versions of GDP released in Japan – Preliminary and Final. Prelim is considered the ‘heads up’ call and is why it tends to have more of an impact.

For the first quarter of this year Japans GDP is expected to reverse its growth on Q4 of last year by around 1.1%. The market is looking for a 0.9% quarterly print which if in line with expectations should see another reason for Yen strength outside of its safe haven applications.

If the data prints well below expectations any sell offs in the yen will be short lived as risk off traders will be happy to step in.

The Dow futures are trading 10 points higher after the closing bell. Expect market leads to remain Euro zone focused and some may see the ‘out of sync’ time zone in Asia a good time to consolidate before an expected volatile session when early Europe step in. We can expect to see the ASX200 benchmark to open 2 points lower on yesterday’s close.

Follow me on twitter: @ATaylor_GFT

US housing starts information has helped move stock futures into positive territory today. Concerns about Greece have been overshadowing the markets, but good news out of the United States is helping put a little risk appetite into the markets.

US stock futures are pointing to a modestly higher open as housing starts show an increase of 2.6% in April. Additionally, an upwardly revised March is helping the case. Investors are being diverted from the Greek drama for now, and that is helping lead to higher US stocks.

In Europe, stocks are paring earlier losses, even though some of the stock indices are still in the red. Asia, however, ended lower across the board, since Greek concerns dominated the Asian session. If things go well today, Asian indices might see some gains in a later session. 

Bank of England is revising its growth and inflation forecasts, indicating that recovery in the country is slowing down. Concerns about the situation in Greece are taking the upper hand, and worries about the British economic recovery are increasing.

The BOE revised its growth forecast down to +0.8%, a decrease from +1.2%. The change represents difficulties to the British economy, and concerns about the impact Greece will have on the entire world.

As a result, markets in Britain are struggling. The UK pound is lower against the US dollar and the against the euro in forex trading. Additionally, the FTSE 100 is slightly lower, while the DAX and the CAC 40 actually see gains today. Spread betting and contracts for differences should consider that the BOE might expand asset purchases if it feels that growth is threatened too much. That could further weaken the pound, and more difficulties in the economy are likely to weigh on British stocks.