Date: Monday 18 Jun 2012
City sources predict the FTSE 100 will open up 80 points from Friday's close of 5,479 after pro-bailout parties won the Greek elections over the weekend, giving a strong indication that the country will remain within the Eurozone, at least for now.
Several analysts, however, are warning that they expect a muted reaction from financial markets to the election results in Greece. That is to say that any surge in risk appetite could soon peter out. A case in point are those from Barclays who this morning were telling clients to expect several weeks of limited uncertainty as Greek politicians attempt to form a coalition and then try to renegotiate parts of their rescue with the ‘troika’ of international creditors. Barclays adds that, “market reaction to these 'negotiation' headlines is unlikely to be too dramatic. If anything, the election results should be taken positively: other things being equal, they limit the risk of an accident (a disorderly exit from Greece) and reduce uncertainty, especially once the negotiations are concluded.”
Of great interest, they also point out that the next big hurdle for markets may come towards the 21st of June, when markets may learn the results of the private audits of the Spanish financial system. More specifically, once the amount of aid required is known investors will be looking to learn the modalities of any loan, such as interest rates, maturities and so forth. In particular, it will be interesting to see if European authorities will require (as some reports were pointing to in the wake of the Spanish rescue announcement) that new capital to Spanish banks be injected at penalizing rates, which some believe would be self-defeating given the low returns on equity that some of those financial institutions have, comment analysts at Digital Look.
Acting as a backdrop, G-20 leaders are reportedly preparing to announce new loans for the International Monetary Fund.
Kevin Hayes, Finance Director at under-fire hedge fund management outfit Man Group, has quit the firm. Jonathan Sorrell, currently Man's Head of Strategy and Corporate Finance, is taking over as Finance Director with immediate effect.
Hayes, who joined Man Group as chief number cruncher in 2007, is leaving the group to pursue "other professional and personal interests," according to the company statement.
Engineering buy-out firm Melrose has confirmed speculation that it is in discussions to buy German group Elster. Reports said the deal could be worth over $2bn, but the firm is so far keeping the terms of any deal to itself. However, Melrose did say that any transaction would be funded through a combination of new debt and a fully underwritten rights issue to it's existing shareholders.
Salamander Energy has started drilling the Bualuang Far East-1 (FE-1) exploration well in Block B8/38, in the Gulf of Thailand. The well will be drilled by the Ensco-53 jack-up rig and is expected to take around 20 days to complete. Salamander has a 100% interest in, and is the operator of, the B8/38 production licence. This contains the Bualuang oil field and East Terrace oil discovery.
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