Amid the market rout on Greek concerns, falling bonds and concerns about rising interest rates, only two FTSE 100 shares are now bucking the downward trend.
Experian, the credit checking agency, is up 13p at £11.90 despite reporting a 4% fall in full year profits to $1bn, hit by adverse foreign exchange movements including the Brazilian real. Investors took note of comments from the company that it felt it had passed “the peak rate of decline.”
Meanwhile Lloyds Banking Group has added 0.45p to 87.05p as the UK government sold another £500m worth of shares in the bank, taking its stake to 19.93%. The move, days after the Conservative victory in the general election, means that some £10bn has been raised by the sale of shares in the bailed out bank.
Overall though, the FTSE 100 is still floundering, down 121.35 points at 6908.50, although off its worst level of 6887. Worries about Greece running out of cash are part of the reason, especially as it appears it made part of the €750m payment due to the International Monetary Fund using cash held in reserve at the fund, which itself needs to be replenished within a month. Finance minister Yanis Varoufakis also said its liquidity situation was serious and needed to be resolved within the next couple of weeks.
David Madden, market analyst at IG, said:
European equity markets are sustaining heavy losses as Athens gives with one hand and takes with another. No sooner had Greece got back into traders’ good books after making a repayment to the IMF, a comment from Yanis Varoufakis about the country’s solvency sparked a new selloff. Greece has been living hand to mouth for the past five years, and now that the last bailout is due to expire next month there is the very real prospect of a default. The country scrapped together what little free cash it had to meet the latest repayment, and is now living on a shoestring budget. If the Greek government doesn’t meet the demands of its creditors over reform, a default is in the pipeline.
We are expecting the Dow Jones to open 85 points lower, at 18,020, as concerns over Greece have reached Wall Street. Not only is the US market spooked by the European equity selloff, but the remarks by John Williams of the San Francisco Fed about little or no warning over an interest rate rise is also applying pressure to the US market. Mr Williams is keeping traders on their toes and the fear of a sooner-than-expected rate rise is causing a stir across the pond.
As well as the prospect of dearer borrowing costs in the US, stronger than expected UK industrial production figures have renewed speculation of a rate rise by the Bank of England. The Bank’s latest inflation report is due on Wednesday.
On top of all that bonds in Europe continue to fall, as did US Treasuries overnight, as inflation expectations grow, especially with oil moving higher again.
