Good morning. The big news is that the Greek parliament have approved the bail out (like they had any choice really) and the next stage will be seeing what the future holds – i..e how far they have kicked the can down the road! The bill was passed against a backdrop of rioting which is never a good thing. In its Thursday meeting, the ECB will discuss whether to increase the level of so-called emergency liquidity assistance it provides to Greek lenders, which have been shut for more than two weeks to stem withdrawals. Greece also needs to secure bridge financing to cover immediate needs that include making a 3.5 billion-euro payment to the ECB due on July 20. The European Union has proposed a facility worth 7 billion euros to tide the country over until implementation of the full bailout begins. Euro-area finance ministers are due to hold a conference call on Greece on Thursday morning.
In the US Yellen’s speech yesterday was pretty upbeat on the economic outlook but inferred rate rises this year, assuming its forecasts for stronger growth and lower unemployment are realised.
US & Asia Overnight from Bloomberg
Asian stocks rose after Greek lawmakers passed a bailout agreement that keeps the country in the euro for now as the European Central Bank weighs whether to pump more money into Greece.
The MSCI Asia Pacific Index gained 0.2 percent to 143.71 as of 9:03 a.m. in Tokyo. Greece’s parliament endorsed the bailout without the support of Prime Minister Alexis Tsipras’s Syriza bloc, as riot police tussled with protesters outside. The new austerity measures are a precondition for as much as 86 billion euros ($94 billion) in aid. Federal Reserve Chair Janet Yellen was upbeat on the economy and repeated that the Fed will probably raise its main interest rate this year.
“It looks like we could put Greece on the back burner for a while,” Keith Poore, who helps manage $131 billion as head of investment strategy at AMP Capital Investors Ltd. in Wellington, said by phone. “There’s more upside to risk assets given the fundamental backdrop of improving global growth over the next six months. There’s still a little bit of uncertainty on Chinese equities but ultimately its much more important for investors that China’s economy is improving.”
China’s economic growth proved resilient in the second quarter as policy makers stepped up support and a stock market boom — since soured — spurred services. Industrial output in June rose 6.8 percent, while fixed-asset investment increased 11.4 percent in the first half, beating estimates, the National Bureau of Statistics data also showed. Retail sales increased 10.6 percent in June, topping a median forecast of 10.2 percent.
China Shares
Chinese stocks fell for a second day on Wednesday after better-than-expected economic data failed to boost investor confidence in the world’s worst-performing equity market over the past month. The Shanghai Composite Index slid 3 percent on Wednesday, while the Hang Seng China Enterprises Index declined 1.8 percent.
Japan’s Topix index rose 0.5 percent. Australia’s S&P/ASX 200 Index gained 0.3 percent. New Zealand’s NZX 50 Index advanced 0.2 percent. South Korea’s Kospi index was little changed. Markets in China and Hong Kong have yet to open.
E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The underlying gauge slipped 0.1 on Wednesday.
The probability of the Fed raising rates at its September meeting slipped to 27 percent, down from 35 percent on Monday, futures data compiled by Bloomberg showed. For December, the odds of a hike fell to 63 percent from 69 percent. Fed officials in June forecast the central bank would raise borrowing costs twice this year. [Ref]
FTSE Outlook and prediction
Be interesting to see how the market plays out today not the deal has been approved. The initial spike up to 6810 faded away a bit so it might not be a one way street to 7000 just yet. We are still hitting some daily resistance at 6800, as well as the top of the Bianca 20 day at 6816, with the 20 day Raff at 6843ish. Todays pivot is 6759 so likely to be a bit of support there, at least initially as the moving averages are all pretty bullish to start the day off, with the 30min showing support at 6770. If that holds then i can see a rise to the top of the 20 day Bianca at 6816 this morning. We are also getting an EMA cross not he daily today if it stays bullish so that might get locked in for a push higher over the remainder of July. As an aside, article in the paper yesterday saying that someone had £250k of shares and should they sell – the “experts” said they should so thats a bullish signal!!
We have a pretty decent rising 30min channel for today with support at around the pivot area depending on when any drop might hit the bottom of that channel. I imagine the markets will be relieved that Greece has approved the deal and hopefully we can get back to a bit of normality rather than news and rumour driven moves. So, looking at the pivot holding for support at 6759, and resistance at 6816 as least initially.