Investors are stubborn in their expectations that Greece will reach a last-second deal with its creditors over a new financing strategy.
Friday, February 20, 2015
This attitude comes despite the lack of visible progress between the two sides.
As a result, European markets have wavered near recent highs, failing to gain or lose much ground. The Stoxx Europe 600 was little changed Friday morning, while the German DAX was down 0.2%, the French CAC 40 was 0.3% lower and the UK’s FTSE 100 added 0.2%.
Germany had rejected Greece’s latest bailout proposal, forcing finance ministers to work against the clock in coming up with a better alternative. The two sides have until the end of the month to determine a plan of action, or else Greece would be facing a possible exit from the eurozone.
“The market bias appears to be for a constructive outcome. However, unless there is an agreement by the end of this week on Greece, the risk of capital control and exit talks is likely to increase significantly,” analysts at Barclays told The Wall Street Journal.
Greece is not the only entity that will feel the effects of a failure to procure a new financing deal. According to one analyst, the euro may also be on the hook. If a deal gets done, this analyst believed the euro would push through $1.15, otherwise it could break down and collapse.
Greek exit may be on the horizon
The German-led bloc seems to be resigned to the possibility of a Greek exit from the eurozone, reported Bloomberg. According to Maltese Finance Minister Edward Scicluna, the bloc is will to let Greece walk if it comes to that.
“I think they’ve now reached a point where they will tell Greece ‘if you really want to leave, leave,’” Scicluna told Bloomberg. “And I think they mean it because Germany, the Netherlands and others will be hard and they will insist that Greece repays back the solidarity shown by the member states by respecting the conditions.’’
No matter what happens, investors will be watching with baited breath to see where the market will turn next.
Don’t let the waiting get you down
Investors may be tired of waiting for the market to tip its hand. In that case, binary options can provide the short-term contracts necessary to trade on flat markets until the big moves take place.
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