Market commentary: Greek deadlock continues

European equity markets opened lower for the second consecutive day after talks between Greek leaders and their fellow counterparts failed to reach consensus. The German DAX traded 0.44 percent lower to 11,422 while the French CAC index traded 0.57 percent lower to 5,013.

The Stoxx 50, an index of the fifty largest companies in Europe was also down 0.52 percent. Stocks in Britain also bore the brunt of the turmoil as the FTSE 100 traded 0.59 percent lower to 6,768 as of this writing.

In the rundown to the June 30 expiry of Greece’s euro-area bailout, hopes were raised then abolished by Greek Prime Minister Alexis Tsipras, who went to Brussels with a set of proposals only to push back when more cuts were demanded.

This cat and mouse game is appearing to rattle European leaders as their tone seems to be growing increasingly impatient with Greece, with German Chancellor Angela Merkel quoted saying “we don’t have the necessary progress” and that “one even has the impression we’ve regressed a bit”.

After closer examination by European officials earlier in the week, they found Greece’s plan too reliant on tax increases. Differences remain over the extent of pension reform, sales-tax increases and whether to include debt relief.

Euro-area leaders are convening in Brussels for a second day of talks today for a regularly-scheduled summit where Greek talks aren’t officially on the agenda. Rather than clinch the deal, EU leaders yesterday refused to discuss it in detail and only exposed the confusion and frustration at play.

Saturday is regarded to be the make or break day for Greece avoiding a default, as there is no more elbow room for negotiations. Merkel reportedly said that she “agreed that everything must be done to find a solution on Saturday,”

Even if Tsipras accepts an agreement with his European colleagues, he still faces the difficult task at home of winning support from his own lawmakers on a package that runs against his Syriza party’s pledge to end austerity.

Equity news

Among stocks moving on corporate news, ARM Holdings Plc dropped 3.2 percent after Sanford C. Bernstein cut its rating on the chip designer to underperform, similar to sell. Petrofac Ltd. declined 2.9 percent after Deutsche Bank AG recommended investors sell shares of the builder and operator of oil and gas facilities.

K+S AG soared 32 percent. People familiar with the matter said the German potash supplier is likely to reject a takeover offer from Canadian fertilizer producer Potash Corp. of Saskatchewan Inc. because it deems the bid to be too low.

Tesco Plc added 3.4 percent after the U.K.’s biggest supermarket chain posted a smaller-than-forecast decline in quarterly sales. J Sainsbury Plc rose 2.4 percent and Wm Morrison Supermarkets Plc gained 1.1 percent.

This article was issued by Simon Psaila, Trader/ Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.