Good morning. Well that was a bullish day yesterday with the rise from 6500, unfortunately not quite dipping down to the 6485 area to trigger the long order, but rising all the same. It even managed to break the Bianca 10 day for the first time in a while. All due to Greece again, and having been told off by the USA, the hard line was softened somewhat. Overnight, another “new” proposal has been put forward which saw us add another 100 to 6660 as I write this.
Greece
The government of Greek Prime Minister Alexis Tsipras sought a three-year bailout loan of at least 53.5 billion euros ($59.2 billion), in a last-ditch effort to keep the country in the euro.
In exchange, it offered a package of reforms and spending cuts, including pension savings and tax increases, similar to the one presented by creditors last month. The proposal was submitted to European institutions late Thursday and will be presented to the Greek Parliament Friday. It is set to be discussed at a summit of European Union leaders Sunday to determine whether Greece gets a new bailout, or be forced to leave the single currency.
Greece offered measures that almost mirrored a proposal from creditors on June 26, which was rejected by voters in a July 5 referendum. In return, it asked for its long-term debt to be made more manageable to allow it to rebound from a crisis that has erased a quarter of its economy. It is unclear if the proposal is enough to clinch a deal with creditors amid signs of economic deterioration since banks were closed and capital controls imposed 12 days ago.
US & Asia Overnight from Bloomberg
Asian stocks rose, following gains in global equities, after Greece submitted a bailout proposal similar to that proposed by its creditors.
The MSCI Asia Pacific Index climbed 0.1 percent to 140.85 as of 9:00 a.m. in Tokyo, trimming its decline this week to 3.8 percent, which would be the largest weekly drop since 2012. Greece’s package includes pension savings and tax increases as part of its bid to remain in the euro. European Union leaders will discuss the proposal Sunday. The Stoxx Europe 600 Index jumped 2.2 percent on Thursday, while the Standard & Poor’s 500 Index added 0.2 percent, as a rebound in Chinese equities also boosted sentiment.
“Signs that the proposal Greece has put together has concessions on longstanding issues and is similar to tabled proposals is reducing risk aversion,” Sam Tuck, a senior currency strategist in Auckland at ANZ Bank New Zealand Ltd., said by instant message. “The fact that China managed to close up across the board has certainly reduced market fear, but it’s still very much in the forefront of people’s minds.”
The Shanghai Composite Index surged 5.8 percent on Thursday as China ramped up measures to stem the equity rout. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong climbed 3.1 percent, while the city’s benchmark Hang Seng Index advanced 3.7 percent. Futures didn’t trade overnight in Hong Kong because of a typhoon.
China’s Steps
China’s securities regulator this week banned major shareholders, corporate executives and directors from selling stakes in listed companies for six months, its latest effort to stem an equities slump that’s erased more than $3 trillion of value.
Taiwan’s stock and bond markets are shut Friday as a typhoon approaches the island. Schools and government offices will be closed in five cities in Taiwan, including Taipei and Taoyuan.
The International Monetary Fund cut its forecast for global growth this year, citing a weaker first quarter in the U.S., and expressed confidence financial-market turbulence from China to Greece won’t cause widespread damage.
Japan’s Topix index added 0.4 percent as the yen weakened. New Zealand’s NZX 50 Index also gained 0.4 percent. Australia’s S&P/ASX 200 Index rose 0.2 percent. South Korea’s Kospi index climbed 0.3 percent. Markets in Hong Kong and China are yet to open.
E-mini futures on the Standard & Poor’s 500 Index advanced 0.7 percent. [Ref]
FTSE Outlook
Fairly big rise on the futures overnight off the back of the latest Greek proposals, so we shall see the markets reaction once trading starts at 8am. I have put an initial dip, mainly as we are hitting the 25ema resistance on the daily at 6662, so may well get a dip down towards the pivot and bottom of the 10 minute channel at 6600. We have the top of the Bianca 20 day at 6687 today, as well as both the Raffs in that area so I think a short is worth a go from this area. However, with the whole Greek thing everything a bit up in the air still. IG and others have increased the margin requirements again for the weekend and any open trades owing to expected increased volatility. Make or break time (again!) for Greece on Sunday. This time is definitely, yes definitely, your last and final chance, absolutely, yes no more after this, definitely!
I am not sure that it will drop to 6600 off the back of a strong open but you never know – bit of a gap close with Thursdays close and a drop off resistance, and as its Friday be prepared for anything! If we break the daily resistance levels at 6690 then 6748 looks possible and a Greek resolution could see us back up at 7000 before the end of July.