German stock market is not affected by the Greek debt revolution while Athens is running out of time

Mario is pointing the figure to Greece today in Frankfurt. Mario Draghi, President of the European Central Bank (ECB audiovisual services, 2011)

Mario is pointing the finger to Greece today in Frankfurt.
Mario Draghi, President of the European Central Bank (ECB audiovisual services, 2011)

More than a week has passed since the Greek elections and the main European markets, except for the Greek one, do not seem to be influenced to a great extent by the victory of the left-party SYRIZA. The attempt of the Greek Prime Minister to calm down not only the markets but also the European leaders about his intentions not to exit the European Union and not to turn to Russia for financial aid has proved positive.

This climate is not just directed by Alexis Tsipras’ sayings but is more due to the announcement of Mario Draghi, the president of the ECB, about the implementation of the new monetary policy programme, Quantitative Easing (QE), that finally came to the light a few days before the Greek elections and it hasn’t been fully incorporated into the markets.

Furthermore, the President of the ECB doesn’t want Greece to spoil his efforts to revive the Eurozone economy and is not going to let a Greek bailout plan being promoted during his meeting today with the Greek Finance Minister.

Europe vs. Greece

The performance of the main European markets expressed by their respective European indices is slightly negative (except for the German index) in the period between 26 January and 02 February.

During this week, Deutsche Boerse AG Stock Index DAX (Germany’s main index- traded on the Frankfurt stock exchange) increased by 0.94%. However, CAC 40 which represents the French market dropped from 4675.13 to 4613.09 revealing a decrease of 1.33%. The same trend is followed by FTSE 100, the index that contains the 100 most highly capitalized companies traded on the London Stock Exchange, which closed at 6764.83 at the end of 02 February, thus decreasing by 1.28% since 26 January.

Looking things from a European level and perspective through the STOXX Europe 600, an index that represents large, mid and small capitalisation companies across 18 countries of the European region, we see that this index dropped by just 1% during this period; it is thus clear that the outcome of the Greek elections had rather small impact on the European markets.

However, the market that experienced the greatest drop and is by far the most volatile compared to the aforementioned markets is the Greek one represented by the Athens Stock Exchange General Index. More specifically, the Greek index dropped by 7.63% in only 7 days. This implies that the Greek market has been influenced by the elections more than the rest European markets.

The effect of QE in the European markets

The policy programme that the ECB announced has not yet been put into implementation but it has already affected the European investors positively and has not let the European markets drop dramatically due to a possible “GREXIT”. Moreover, the fact that it came and it came “big” (1.14 trillion euros) at a moment that deflation figures become apparent all over Europe brings hope and lowers the negative effect that the victory of Alexis Tsipras alone would have. This programme has substantial potential and is greatly appreciated by the European community that hopes to see inflation rates rising again up to the desired level of close but below 2%.

February 16: a crucial day for Europe

February 16 is a very important and crucial date not only for the markets but also for all the European citizens and especially the Greek ones. The Eurogroup will take place then in Brussels and the main discussions between the European nations will include Greece’s debt. Will the Greek government be able to convince the rest of Europe that they have a solution-restructuring debt programme that is viable and beneficial for both sides?

Till then, the Greek government is travelling around Europe to find allies to support its programme. The Greek Finance Minister Yanis Varoufakis has already visited Paris, London and Rome in order to discuss with his counterparts and reveal details of the plan that Greece is going to put on the table in a few days. The countries visited are well-targeted by the Greek government which is focusing on the fact that they also want to stop austerity measures as the only solution to the financial crisis.

However, the next stop is Frankfurt where Yanis Varoufakis will meet today Mario Draghi to discuss about Greece’s debt in an already strained climate. The ECB has already announced its intentions about the refusal of the Greek Finance Minister’s plan who wants to issue short-term Treasury bills of 10 billion euros in order to finance the economy for the next few months. His plan is going to fall short against Mario Draghi who knows that Greece greatly depends on ECB’s decisions and money and will be very “tough” against the Greek government’s representative. Nevertheless, it is quite certain that there will be some constructive discussions and possible alternative proposals between the two men.

Let’s just hope that our European leaders will be reasonable in the end and not let Europe drop into another recession. That would be a possible fruit of too long Greece-EU negotiations or Berlin’s lack of will to make a step back; please the new Greek government and most importantly convince Marine Le Pen’s and Podemos’ electorate that Europe does not work only as a multinational company but as a political construct as well.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Snowden is the “EU nomination” for this year’s Oscars

Four things Turkey did for business in the G20

Is the EU competent enough to fight human smuggling in 2015?

Legal Manager – 2050

Commission deepens criticism on German economic policies

Draghi: printing a full extra trillion non negotiable to help all borrow cheaply

“Only through energy policy we can trigger competitiveness”. The Sting live from #EBS2015: Energy Union – When will it happen?

The EU Commission openly repudiates the austere economic policies

EU-US trade agreement talks to be affected by American bugs

Should Europe be afraid of the developing world?

“Private” sea freight indexes hide Libor like skeletons?

South Eurozone urgently needs fairer distribution of taxation burden

Schengen is losing ground fast revealing Europe’s clear inability to deal with migration crisis

Eurozone in trouble after Nicosia’s ‘no’

The European Union’s Balkan Double Standard

Rising political extremism in Europe escapes control

Digital business is Europe’s best hope to get back to growth

Eurozone bank rescues ‘a la carte’ until 2015 then only bail-ins

The Eurogroup offered a cold reception to IMF’s director for Europe

GSMA Mobile 360 Series – Europe – 14 June 2016

Eurozone: A crucial January ahead again with existential questions

2016 crisis update: the year of the Red Fire Monkey burns the world’s markets down

EU: Protecting victims’ rights from cartels and market abuses

daniela-runchi-jade-president__

A Sting Exclusive: “Education in Europe, fostering skills development inside and outside the school system”

Mood changes in Europe in favour of growth and jobs

Is “Sustainable Development” a concept that integrates Health Literacy and Health Policy as a global health action?

EU Parliament raises burning issues over the FTA with the US

Spirit unlimited

Except Poland, can climate change also wait until 2021 for the EU Market Stability Reserve to be launched?

EU economic governance: More exploitation for the weaker countries

eGovernmnet for more efficiency, equality and democracy

Trump enrages the Europeans and isolates the US in G7

A Sting Exclusive: “On the road to Japan-EU Economic Partnership Agreement”, by Ambassador Katakami of the Japanese Mission to the European Union

ECB’s unconventional monetary measures give first tangible results

Trump ostracized by his party and world elites but still remains in course; how can he do it?

COP21 Breaking News_09 December: The Draft Agreement Updated

WEF Davos 2016 LIVE: “CO2 is not the problem, it is the symptom”, the pilots who crossed the world using solar energy cry out from Davos

EU: Centralised economic governance and bank supervision may lead to new crisis

The German banks first to profit from public subsidies of trillions

COP21 Breaking News_10 December:#ParisAgreement: Points that remain in suspense

Russia and the West to partition Ukraine?

COP21 Breaking News: “We must accelerate the process”, Laurent Fabius cries out from Paris

Ukraine undecided over a strategic partnership with the EU

The EU pollution rights trading system frozen

COP21 Breaking News_07 December: “The world is expecting more from you than half-measures”, UN Secretary General Bank Ki-moon cries out from Paris

G20 LIVE: World Leaders in Turkey for G20 Summit. Global Economy will be discussed in Antalya

Eurozone: How can 200 banks find €400 billion?

Greece to stay in the euro area but the cost to its people remains elusive

Will the Greek economy ever come back to growth?

Any doubt?

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s