Good morning. Well the saga rumbles on with the latest twist seeing the Greek threaten legal action to keep them in the EU! Yesterday saw the arrows play out quite well in the end, with a rise to the 6690 area in the end, before we fell right back down below 6600. Today is the due date for the Greeks to pay the IMF as their latest loan package expires. What a situation!
Greece
Greece closed its banks and imposed capital controls after Prime Minister Alexis Tsipras on Friday called for a July 5 referendum on austerity measures demanded by creditors. The country’s current aid package expires Tuesday, when a deadline to pay the International Monetary Fund is also due.
“This episode showcases the structural flaws in the euro project and the limits of political will to hold it together,” said Michael Ingram, a London-based market strategist at BGC Partners. “Absent a complete capitulation from the troika, Greece will default on the IMF tomorrow and emergency liquidity assistance should be withdrawn on Wednesday. I can’t see anyone stepping in before Wednesday ahead of ELA withdrawal.”
European Commission President Jean-Claude Juncker said voting no in the referendum “would signal that Greece wants to distance itself from the euro zone and Europe.” Leaders of France and Germany, the region’s biggest economies, offered no further concessions.
US & Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index climbing from a three-month low, as investors watched developments in Greece’s debt crisis.
The MSCI Asia Pacific Index rose 0.1 percent to 145.16 as of 9:01 a.m. in Tokyo after closing Monday at the lowest since March 17. The gauge is on course to fall 4.1 percent this month and 0.8 percent for the quarter. The Standard & Poor’s 500 Index sank 2.1 percent on Monday, while the Stoxx Europe 600 Index dropped 2.7 percent.
“All eyes this week will be on the ECB, which has the potential to announce a front-loading of its QE program,” said Matthew Sherwood, Sydney-based head of investment strategy at Perpetual Ltd. “That should help stabilize things.”
Greece plunged into financial turmoil as Prime Minister Alexis Tsipras decided to put creditors’ demands to a referendum. After the nation imposed capital controls and shut its banks, the focus Tuesday shifts to whether it will default, with $1.7 billion due to the International Monetary Fund. As 12,000 people gathered in Athens’ Syntagma Square with banners that read “our lives do not belong to the creditors,” Tsipras struck a defiant tone, saying European leaders don’t have the nerve to kick Greece out of the euro.
Markets will be looking to the European Central Bank for measures to contain the crisis, Mohamed El-Erian, chief economic adviser at Allianz SE and a Bloomberg View columnist, said in an interview from New York.
Regional Gauges
Australia’s S&P/ASX 200 Index retreated 0.2 percent on the final day of the financial year. Japan’s Topix index advanced 0.1 percent, extending its gain for the second quarter to 5.3 percent. South Korea’s Kospi index added 0.1 percent, as did New Zealand’s NZX 50 Index.
Futures on Hong Kong’s Hang Seng Index dropped 0.1 percent and contracts on the Hang Seng China Enterprises Index declined 0.4 percent in most recent trading.
The Shanghai Composite Index sank 3.3 percent on Monday as signs of an exodus by leveraged investors overshadowed the central bank’s effort to revive confidence with an interest-rate cut. The measure has fallen 22 percent from a June 12 peak.
E-mini futures on the S&P 500 climbed 0.2 percent today. [Ref]
FTSE Outlook
Going to be another interesting day thats for sure. We start with resistance at the daily pivot at 6594, and the 20 day Bianca support at 6576, a level which I think might well hold, especially if the FTSE follows the ASX (it had a dip on open then rose for most of the morning). The 10 minute chart is actually bullish to start the day with an uptrend and support at 6586, while the 30minute chart isn’t quite as strong but has a decent channel in play with support at 6491 and resistance at 6673 – will be interesting to see if we hit either of those levels, with the bulls needing to break 6599 initially to push higher. Also on the 30min we are just tracking a rising PRT line overnight with the Asia strength. I am thinking a little dip to start things off, most likely to 6576 support then hopefully another rise. Its all volatile and depends on the evolving Greek situation.