Spread Betting: FTSE 100 Rises as the Final Greek Deadline Approaches
Risk continues to remain attractive to investors who seem happy to add to their equity portfolios as they feel that a deal on Greek debt is imminent.
As negotiation deadlines slipped once again, the final 'last minute' deadline continues to approach. In order to ratify any deal with bond holders, and to get through the further austerity measures being demanded by the troika, votes have to be passed in the Greek parliament before 15 February.
It comes as little wonder that negotiations have taken so long given that all the options have to be discussed. Not only that but the existing Greek administration is a mix of three different political parties, all with their own ideas and ambitions in the coming months with Greek elections due in April.
Despite what some in the markets think about a Greek default and exit from the euro, political resolve from the likes of France and Germany has never been stronger. That means that the pressure is really mounting on the Greek government.
Today the troika is due to speak to all three coalition leaders individually. This could be enough to push the deal making over the line and that's what investors are thinking, which is pushing the indices higher.
Word in the bonds markets is that the private bond holders will take a 70% hit on their Greek bonds. However, the other key variable is to pass the next round of austerity through the Greek parliament in the face of continued, and mounting, opposition from the Greek population.
Today's one-on-one meetings might just achieve the latter and, for the bond holders, they have to appreciate that they are lucky not to be seeing an outright 100% write down and default.
So if the deal is actually achieved, what does that mean for the likes of Portugal and Ireland? Surely, they'll be thinking if Greece can take such a big write down why can't we?
Thankfully Portugal and Ireland are very different cases to Greece. They have already had quite a bit of success in getting their houses in order. As a result, the other bet that CFD trading
and financial spread betting
investors and are making is that contagion will be averted.
So at the time of writing the FTSE spread betting
market is a few points in the black this morning, above the 5,900 level. However, our spread trading account
holders continue to oppose the upward trend in the belief that the rally has to come to an end at some point.
The feeling is that, as they continue to creep higher, the markets are just building themselves up for disappointment at some point. Any correction when it does come could be even more severe.
For the bulls however the grind higher is only going to build. For now with the 5,900 hurdle being overcome, the major psychological 6,000 level isn't all that far away.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.
By Simon Denham, 8 February 2012