ECB resists Greek bailout revision

Wednesday, February 04, 2015

The ECB has proven unwilling to approve the new rescue plan put together by the Greek government with the central bank reluctant to raise the €15bn t-bill insurance to the €25bn threshold requested by Athens. Greece’s finance minister, Yanis Varoufakis proposed the indebted nation could raise as much as €10bn from issuing short term securities, a stop gap measure that would provide the necessary funding over the next three months while new bailout terms are agreed. However, with the plan relying heavily on cooperation and approval from the ECB a financial stalemate is fast developing with the danger of Greece running out of cash in the coming months. Hopes for a renegotiation of terms helped propel the ASE general index to an 11.27% gain yesterday as investors were encouraged by the anti-austerity approach, however, the latest developments may deflate investor sentiment somewhat and investors will be on tenterhooks ahead of the emergency meeting of EU finance ministers in Brussels on February 11th.

China’s services sector expanded at the slowest pace in six months as January’s HSBC services PMI reading slipped to 51.8 from 53.4 the previous month. With the slowdown now spreading to a sector which had been outperforming both the manufacturing and construction sectors and had been a bright spot in the Chinese economy as confidence in the property market also began to fade, market participants will be looking to policymakers and central bankers in the hopes that further easing measures will be taken to help support a flagging economy. The PBOC stepped up its intervention by moving its reference rate for the yuan outside of the daily 2% trading band for the first time in almost two years, forcing appreciation against the dollar as officials sought to limit volatility. The spot fixing against the dollar was increased to 6.1318, 2.06% stronger than Tuesday’s close as policymakers keep a close eye on currency moves, preventing further depreciation that could scupper the chances of a global market in yuan.

Asian benchmark equity indices ex-China rebounded overnight, as the positive sentiment from the US trading session carried on overnight, with energy stocks and materials leading the rally after strong gains in the price of crude oil improved risk appetite. Macroeconomic data was fairly mixed yesterday but investors are hoping that today’s releases will provide additional justification for an extension of the relief rally.

The ASE general index rallies strongly on bailout renegotiation hopes

ASE Index Athens Stock Exchange 2015 02 04 07 43 43

China's services PMI falls in January

MPMICNSA Index HSBC China Servi 2015 02 04 07 45 09

Events for today

0001

UK

Jan

BRC Retail Index

0135

JP

Jan

Services PMI

0145

CN

Jan

HSBC Services PMI

0855

DE

Jan

Markit Services PMI

0900

EZ

Jan

Markit Services PMI

0930

UK

Jan

Markit/CIPS Services PMI

1000

EZ

Dec

Retail Sales

1315

US

Jan

ADP Employment Change

1445

US

Jan

Markit Services PMI

1500

US

Jan

ISM Non-Manufacturing

1530

US

w/e

EIA Energy Stocks

 

Topics: ECB, PMI, CNY
More from: Kash Kamal