Although a final resolution of the Greek problem has remained tantalisingly out of reach, Greece came thundering back into the financial headlines with the reopening of trading on the Athens Stock Exchange after five weeks of being closed. It was not a pretty sight. Shares plummeted by nearly a fifth in early trading, despite having already fallen by 75% this year alone. While they recovered some of earlier losses, sentiment has remained very fragile.
Not that the Greek stock market is that big. Valued at less than several companies listed in our own FTSE 100 Share Index, it is dominated by banks. These had already been sold off dramatically as investors strive to divest themselves of institutions that are unlikely to be able to survive without the support of the European Central Bank. Much of the downward pressure on the market was a continuation of this trend.
Fortunately there have been a few good news stories around at home to take ou r minds off the trials and tribulations elsewhere. HSBC reported a useful leap in profits and announced the building of a new HQ for its domestic retail banking business. As this is based upon the old Midlands Bank, all this did was to renew speculation that the UK’s largest bank will spin off its domestic retail business and move its centre of operations back to Hong Kong to concentrate on the more lucrative Asian markets.
There has been better news on our manufacturing industry recently, despite the strength of sterling while insurer RSA reawakened general takeover speculation as a potential bid approach was revealed. We even had a hostile bid announced from one of our pharmaceutical companies for a rival US concern and the government has started the process of selling its RBS stake. Even so, the overall tone has been generally muted and trading thin, but then we are right in the middle of the holiday season.
With the Bank of England publishing both the minutes from the last monthly Monetary Policy Committee and its quarterly Inflation Report, there will be much to consider over the rest of the summer. What is of most interest, of course, is the appearance of signs that might indicate when interest rates start moving upwards. As important as these are, it remains influences from abroad that are likely to prove crucial for the time being.