Greek bailout talks collapse

Tuesday, February 17, 2015

Yesterday’s meeting between eurozone finance ministers broke down and ended abruptly as efforts to strike a late stage deal between Greece and its creditors failed to reach a definitive resolution. The emergency meeting captained by European Commission’s president, Jean-Claude Juncker, failed to persuade both sides to agree to revised bailout terms with the majority of eurozone finance ministers seeking out an extended austerity programme in return for further financial aid. However, Athens rejected the terms which would see the indebted nation complete its €172bn rescue plan before any further assistance would be given. The euro lost 0.4% against the dollar, breaching immediate support levels and trading as low as 1.1320 immediately after negotiations crumbled.

Marking yet another hasty conclusion to negotiations between Greece and its creditors, after last week’s talks between the respective finance ministers of Germany and Greece failed to make any definitive progress, time is fast running out for policymakers in Athens. Public finances continue to deteriorate and the outlook for further European support under the current stalemate looks unlikely. With the current bailout programme due to expire at the end of the week, Greece has until Wednesday to agree to terms and seek an extension and with other members in the eurozone unwilling to offer further leniency we could see the Greek anti-austerity government forced to swallow a bitter pill in order to progress with the necessary reforms.

Asian markets experienced mixed trading overnight as uncertainty surrounding the situation in Europe prompted investors to put their foot on the brakes. Japanese benchmark stocks spent much of the session swinging between gains and losses as cautious investors pulled back on the threat of a potential expiry of the current bailout terms on 28th February. Despite sentiment turning lower across Europe and spilling over into Asian markets, mainland Chinese stock indices were extending the steady march higher as optimism ahead of the Lunar New Year holiday pushed the Shanghai Composite and CSI 300 towards their best pre-holiday performance since 2007. Consumer goods stocks led the charge higher with investors remaining hopeful that the positive mood will spread to the financial and real estate sectors. 

EUR drops after talks break down

EUR Curncy Euro Spot Daily 17 2015 02 17 07 43 06

Shanghai composite rallies for a seventh straight session

SHCOMP Index Shanghai Stock Exc 2015 02 17 07 43 27

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Topics: Equities, China, EUR
More from: Kash Kamal