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LONDON (Alliance News) - UK stock prices are called lower Tuesday as Greece looks set to miss the month-end deadline for its debt payment to the International Monetary Fund.
Greece and its creditors have failed to reach an agreement on a deal to release bailout funds in time for Greece to meet a EUR1.6 billion debt payment to the International Monetary Fund due later Tuesday. Greek Prime Minister Alexis Tsipras reportedly said on Monday that his country will not make the payment to the IMF by the deadline.
Meanwhile, Greek Finance Minister Yanis Varoufakis threatened to take legal action against the EU if his country is thrown out of the euro, as Athens said it may not make the major debt repayment. "The EU treaties make no provision for euro exit and we refuse to accept it," Varoufakis told The Daily Telegraph in an interview published late Monday. He said that Greek membership of the euro was not negotiable.
Michael Sawicki, senior economist at Lloyds Bank, says the Greek situation will be closely watched by investors for any signs of a return to negotiations, or of any change in sentiment around the European Central Bank's ongoing support to the Greek banking system.
"With expectations already widespread that Greece will not remit payment to the IMF of the EUR1.55 billion due at the end of the month, thus entering arrears, any signal that the emergency ECB support could be withdrawn would be the most likely impetus prompting an intensification of risk-off sentiment," Sawicki says.
IG says futures indicate the FTSE 100 will open lower at 6,581.0. The blue-chip index fell 2.0% on Monday to 6,620.48 as investors reacted to Greece's decision to hold a referendum on the debt bailout proposals by its creditors and to impose capital controls on its banks.
On Monday in the US, the DJIA ended down 2.0%, the S&P 500 closed down 2.1% and the Nasdaq Composite ended down 2.4%.
Asian stock indices are rebounding Tuesday. The Japanese Nikkei closed up 0.6%, while the Hang Seng trades up 1.4% and the Shanghai Composite is up 4.2%.
Ocado Group reported a small decline in profit in the first half of its financial year even though sales grew, as it booked costs associated with investments, distribution and administration. The online grocery business, which last year teamed up with Wm Morrison Supermarkets to be its online delivery company, said pretax profit in the 24 weeks ended May 17 slipped to GBP7.2 million from GBP7.5 million in the same period the year before, despite revenue rising 18% to GBP507.7 million from GBP429.7 million.
Ocado said that sales were driven by continued growth in its retail business and benefited from its agreement with Morrisons, with the number of loyal customers increasing. Average orders per week grew to 191,000 from 161,000, although this was partially offset by a decline in the average order size to GBP111.68 from GBP114.43.
Galliford Try said it has signed a deal with the Greater London Authority to secure planning and then construct the Silvertown Way development in Canning Town, East London. The proposal involves building more than 1,100 homes across a series of individual blocks at the site and the scheme is valued at around GBP380 million, making it the largest standalone housing project Galliford has undertaken.
Also in the corporate calendar, there have been full-year results from specialist in light commercial vehicle hire Northgate, microchip maker Imagination Technologies Group, and carpet retailer Carpetright.
In the economic calendar, German unemployment is at 0855 BST, ahead of first quarter UK GDP and current account data at 0930 BST. Eurozone unemployment rate and inflation is at 1000 BST, while in the afternoon there is US Chicago Purchasing Managers Index at 1445 BST and consumer confidence at 1500 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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