Not that this news sparked much action in the market, other than in Diageo’s shares, of course. There has been a dullish tinge to trading recently, with investors doubtless weighed down by Greek uncertainty. A slowdown in China hasn’t helped, with the latest economic statistics indicating a soft consumer market and a sharp slowdown in imports. China’s growth looks likely to slip to sub 7% this year, but it is the immediate predicament Greece faces that is probably the greater influence.
The new government in Athens certainly raised the stakes by failing to meet a payment due at the beginning of June. All eyes will now be on the continuing discussions, with significant sums due back to the IMF by the end of the month. Without further bail out funding, Greece will not be able to make these repayments, but those in the European Union who will have to put up the cash remain anxious to see further reforms as a prerequisite.
So far the one aspect of all this that appears to have universal agreement is a desire to keep Greece in the single currency zone. Presumably the Greek leaders are worried that the fallout from an exit will be too painful for the population that has only recently placed them in a position of power. Other euro zone members, most notably Germany, will be concerned that the first country to leave the single currency bloc could undermine confidence or, even worse, encourage other nations to explore the possibility of life outside the euro.
There has been little else for investors to get their teeth into, with corporate news thin on the ground. The imminent Mansion House speech could spark some interest, though. Last year it was the Governor of the Bank of England who put the cat amongst the pigeons by suggesting interest rates may rise earlier than expected. A year on and there is still no sign of a raise taking place anytime soon. Still, the Chancellor of the Exchequer, George Osborne, could well take the opportunity to give forward guidance on his July budget. We’ll all know soon enough.
Brian Tora is an associate with investment managers, JM Finn & Co.
