FTSE 100 may have further to fall

Further jitters over Greece and its possible exit from the eurozone had traders seeking safety Thursday. The FTSE 100 fell as much as 111 points, or 1.6%, to its lowest since early May. Whether you think tough-talking Greek negotiators will eventually toe the line, or that its creditors - the Germans - will let it default on massive loans, the impact on share prices is obvious and likely to continue until there's a more permanent resolution.

Power transmission network National Grid went ex-dividend which accounted for 28p of its 40p decline. It's currently down over 4%. Ad giant WPP went ex, too, falling 3.5% after it began trading without the right to its final dividend of 26.58p.

Elsewhere, Johnson Matthey's numbers failed to impress, and the miners were scattered liberally among the biggest fallers. That said, the sell-off was reasonably broad, with just a dozen companies in the blue.

But what are the implications of today's fall from a technical perspective.

"It’s a bit of a shocker," said Alistair Strang, a chartist at Trends & Targets. "On the basis of this morning, if the FTSE now gets below 6,835 it will find a bottom at 6,740. And if that breaks the final 'it must bounce' bottom is at 6,642."

"The annoying thing is, when an uptrend is defended as strongly as the FTSE had been, experience suggests a near 200 point rise awaits once the fakery is over. Instead, I think it will find 6,740 which hints of a boring period until the start of September."

"FTSE needs better than 6,955 to escape the immediate drop cycle," adds Strang.

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Despite the short-term volatility, many in the City argue that the Greece story is largely written into share prices. What's more, decent yields and earnings growth prospects mean equities remain the only asset play in town.

"If Greece outright and unilaterally defaults, it is likely to have significant market implications at least in the short run," admits Alan Cauberghs, senior investment director, fixed income. "However, we believe that structurally, global financial markets look well shielded from the fallout of such an event."

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