Good morning. Hope you had a good weekend. Looks like the Greek banks are finally going to open today after being closed for 3 weeks, though eyes have moved to China now – Gold has started off the week by dropping 4% after China revealed they held less Gold than expected and the prospect of US interest rate rises. Carney mentioned interest rate rises in the UK last week but it probably just doing another one of the rhetorics to see how the market reacts and get people semi prepared.I very much doubt rates will rise here before they do in the US, as they are doing better than the UK at the moment. I’d wait for the rhetoric to increase in frequency before even thinking about a rate rise.
US & Asia Overnight from Bloomberg
Asian stocks outside Japan dropped as materials and information technology shares led declines after a regional benchmark index posted the biggest weekly advance since April.
The MSCI Asia Pacific Excluding Japan Index fell 0.1 percent to 463.99 as of 8:03 a.m. in Hong Kong. The measure last week posted its biggest weekly advance since April as Chinese shares rallied amid speculation banks will support the market and as the increased likelihood of an end to Greece’s debt crisis bolstered global equities.
“Investors have to be more discerning on how they play these markets,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Ltd., which manages about $21 billion, said by phone. “Valuations are looking stretched. They need to find markets with compelling value, good earnings upside and continued policy support.”
South Korea’s Kospi index and Australia’s S&P/ASX 200 Index were little changed. New Zealand’s NZX 50 Index lost 0.1 percent. Markets in Japan are closed for a holiday, while those in China and Hong Kong have yet to open.
The Shanghai Composite Index jumped 3.5 percent on Friday amid speculation the government is boosting funds to support the world’s second-largest equity market.
China Securities Finance Corp., a state-backed agency that provides margin finance and liquidity to the market, has between 2.5 trillion yuan and 3 trillion yuan ($483 billion) on tap to support stocks, people familiar with the matter said. Funding will be used to offer liquidity support to brokerages and to purchase stocks and mutual funds, the people said.
Selling Ban
The latest measure comes after policy makers banned large shareholders from selling stakes, ordered state-run institutions to buy equities and suspended initial public offerings to halt a rout that cost investors almost $4 trillion.
E-mini futures on the Standard & Poor’s 500 Index were little changed. The U.S. equity benchmark index added 0.1 percent on Friday in New York as the Nasdaq Composite Index jumped to a record close.
German Chancellor Angela Merkel held out the prospect of limited debt relief as crisis-ravaged Greece prepares to reopen its banks three weeks after they were shut.
Merkel told German broadcaster ARD that she’s prepared to discuss the matter once Greece successfully completes the first round of a new bailout. While the remarks don’t go beyond pledges already made by euro-region governments, they signal that the topic could be considered by the end of the year. She ruled out any haircut on Greek debt. [Ref]
FTSE Outlook
I am looking at 2 levels today – 6752 for support and 6810 for resistance. Both worth trading off, and will be an interesting open with a weak Asia but the FTSE futures holding their own. The moving averages are actually bullish still, on both the 10 and 30min, with the latter showing support at 6782. If that holds initially then I can see a rise towards the recent highs and the first fib resistance level t 6810. If it breaks then a dip to the 10 day Bianca at 6752 looks likely for first thing. I have plotted the arrows for 6782 to hold initially but be prepared to switch stance on the open if it starts to break 6782. If it gets really bearish today then there is a possible swing long opportunity at 6710ish where we have the bottom of the 10 day Raff and the 25ema on the daily. If this holds then we could be on for a bullish remainder of July. There is also a possible swing long on the S&P at around 2100. Shame we banked the gold short at 1137 though!
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