No Deal In Greece Talks
Greek officials failed to reach an agreement on a new financing deal with eurozone finance ministers, but investors remained largely unconcerned.
Tuesday, February 17, 2015
Instead, analysts felt that the two sides would ultimately reach a deal and maintain balance within the eurozone. As a result, European stock markets experienced little change. US stocks opened slightly lower, while Athens's main stock index fell 1.3%.
Markets avoid drop in the face of failed talks
Some analysts may have expected a failure by creditors and Greece to reach agreement would lead to a global market panic. However, no such issues arose, reported Bloomberg.
“The market is clearly betting on a solution being found,” Peter Kinsella, a senior foreign exchange strategist at Commerzbank AG in London, told Bloomberg. “It’s complacent beyond belief.”
Other analysts agreed. Christian Lenk of DZ Bank AG in Frankfurt explained that the contagion effect of Greek weakness is less troublesome than it once was. Investors are sure the two sides will reach a solution in the next few days.
Greece, creditors not close to solution
While investors are confident a deal will get done between eurozone finance ministers and Greece, the two sides are not close, according to The Wall Street Journal. Little progress has been made and more challenges lie ahead. Strategists at Rabobank compared the schism between the two parties to “a political Grand Canyon.”
On Monday, finance ministers for the eurozone cancelled a negotiation session before it began, claiming that Greece offered no hope of an agreement. Instead, the finance ministers demanded that Greece agree to the current offer – a €240 billion bailout – or lose the rescue loans Greece has come to rely upon.
Yet investors don’t see the latest setback as a serious threat to eurozone continuity. Paul Donovan of UBS told The Wall Street Journal that the market reaction yielded “an eye roll of exasperation, but no inclination to price in a euro collapse.”
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