Good morning. Two days of decent rises scuppered by the IMF after they said that its team negotiating with Greece left Brussels after failing to make progress on a deal. Still the longs that we got on Wednesday and Thursday worked out well with those one way rises for most of the day. The IMF cited “major differences” for the withdrawal of its team, although it left the door open for further debt talks. The decisioncomes amid increasing criticism from creditors at the Greek government’s refusal to bow to their demands, risking a default and ultimately an exit from the euro area.
“European equities are good value, investors are more fearful then they should be,” said John Haynes, head of research at Investec Wealth & Investment in London. “We are relaxed with the Greek risk and we will end the year higher than where we are now, which makes Europe a decent place to invest.”
Greek Prime Minister Alexis Tsipras has promised Germany and France that he will step up efforts to find a package of reforms and budget fixes to release financial aid. He has until the end of the month to reach a settlement before the country’s bailout agreement expires.
US & Asia Overnight from Bloomberg
Asian stocks rose for a third day after data on retail sales bolstered confidence in the strength of the U.S. economy and a weaker yen sent Japanese shares higher.
The MSCI Asia Pacific Index gained 0.2 percent to 147.81 as of 9:01 a.m. in Tokyo, headed for a 0.1 percent decline this week. Japan’s Topix index added 0.2 percent after the yen slid 0.6 percent against the dollar Thursday. The Standard & Poor’s 500 Index climbed 0.2 percent as sales at U.S. retailers picked up in May and applications for unemployment benefits remained below 300,000 for a 14th straight week. The International Monetary Fund said its team negotiating with Greece left Brussels after failing to make progress on a debt deal.
“The U.S. numbers were quite strong,” Tony Farnham, an analyst at Patersons Securities Ltd. in Sydney, said by phone. “Some investors are starting to realize that U.S. growth is OK and that should help justify the Fed normalizing rates later this year. The Greek problem needs to be fixed. It could cause a bit of dislocation in markets if Greece defaults.”
European Union President Donald Tusk told Greece’s Alexis Tsipras to stop maneuvering and decide whether to accept the conditions on financial aid. Tusk abandoned his neutral position as a broker of EU compromises to signal Greece’s creditors are preparing to hand Tsipras an ultimatum.
South Korea’s Kospi index gained 0.6 percent. New Zealand’s NZX 50 Index rose 0.1 percent. Australia’s S&P/ASX 200 Index lost 0.1 percent. Markets in China and Hong Kong have yet to open.
The Shanghai Composite Index closed 0.3 percent higher on Thursday, rising for the first time in three days as higher-than-estimated growth in industrial output and the broadest gauge of credit as well as a jump in new home sales signaled the nation’s economy may be stabilizing.
E-mini futures on the S&P 500 slipped 0.1 percent today. [Ref]
FTSE Outlook and Prediction
Thought we might have had a bit of respite from Greece in the news but they still managed to put the cat amongst the pigeons yesterday. The Dax had risen up to the 25ema on the daily as well (and a little bit more) at 11424 and has since dropped back, but the FTSE didn’t manage to reach that 6910 area. Yesterdays long ran well – nice to be on a trending day pretty much from the beginning. For today we have the pivot at 6838 so I think we may see some bears enter there, though there is a pretty wide 30min channel in play, resistance at 6855ish, support at 6812ish. The 30min chart has gone bearish overnight, so I think we may well see a bit of a dip this morning. That said I don’t think we will have large range (famous last words) as we await news on Greece. Next week could be quite choppy though as we continue with Greece, FOMC and Option expiry on Friday.
If we manage to exceed the pivot today then 6851 is the top of the 10 day Bianca and also tallies with the top of the 30min channel and top of the 10 day Raff. Support is at the 200ema at 6013, where we also have the bottom of the channel, with the daily channels quite further down at 6709 for the 20day and 6677 for the 10day. As such I think 6838 and 6850 look good areas for shorting today, with a long off the 200ema at 6814