Good morning. Well just when the bulls started thinking it was a one way street up, Greece throws a spanner in the works again,and we got the drop from the top of the 10 day Bianca at 6873 yesterday. 6825 is looking like the line in the sand – break below this and 6780 or lower looks possible. We are now back within the 20 day Bianca channel as well so if 6847 holds as resistance resistance (possible as its just above the pivot of 6841 for resistance too), we might see some more downside today.
Greece
Greece stumbled closer to default as another day of negotiations ended in the early hours without a deal to end the standoff over bailout aid.
With the Greek government saying it held firm in the flurry of meetings in Brussels on Wednesday, European Union officials said the talks yielded little progress and no breakthrough was in sight. Prime Minister Alexis Tsipras and the heads of the three creditor institutions agreed to reconvene first thing on Thursday after a few hours’ sleep.
The race for a deal is accelerating as Greece moves nearer to the June 30 expiry of its euro-area bailout without any agreement in place ensuring it can meet a payment of 1.5 billion euros ($1.7 billion) to the International Monetary Fund that falls due the same day.
“It’s going to the wire,” Finland’s Alexander Stubb told reporters after a meeting of euro-area finance chiefs in Brussels broke up early Wednesday. Ministers will resume at 1 p.m. Thursday, by which time “we hope to have a concrete proposal,” he said. “It’s important to keep the process going.”
US & Asia Overnight from Bloomberg
Asian stocks fell, following global equities lower, as Greece and its creditors broke off talks for the night in Europe without reaching a deal.
The MSCI Asia Pacific Index lost 0.1 percent to 149.58 as of 9:04 a.m. in Tokyo. Shares retreated in the U.S. and Europe on Wednesday as disagreement ensued over the terms of Greece’s bailout. Prime Minister Alexis Tsipras and his country’s creditors agreed to meet again first thing Thursday as each side pushes for an agreement. Futures on Chinese shares jumped after the government announced plans to scrap a bank-lending limit as it seeks to stoke growth.
“We’re in a market where we’re swinging from joy to sorrow over Greece,” Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo, said by phone. “I expect some adjustments.”
Technical teams will convene at 6 a.m. in Brussels, followed at 9 a.m. by the resumption of negotiations between Tsipras, International Monetary Fund chief Christine Lagarde, European Central Bank President Mario Draghi and European Commission President Jean-Claude Juncker.
E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent. The underlying measure dropped 0.7 percent on Wednesday. The Stoxx Europe 600 Index lost 0.4 percent.
FTSE China A50 Index contracts added 0.8 percent in most recent trading. China intends to remove a limit capping commercial banks’ loans at 75 percent of deposits, according to a draft law amendment posted online after markets closed Wednesday. The proposal, which needs to be approved by the legislature, boosts banks’ flexibility to manage lending.
Regional Gauges
Japan’s Topix index fell 0.5 percent. The Nikkei 225 Stock Average slid 0.4 percent after climbing Wednesday to its highest close since 1996.
Australia’s S&P/ASX 200 Index dropped 0.4 percent, as did New Zealand’s NZX 50 Index. South Korea’s Kospi index retreated 0.5 percent.
“I’m concerned about selling will accelerate over the session as investors locally start to anticipate further pressure on European markets tonight,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “What we’re looking at now is a classic European fudge. There will be some temporary bridging to get through the IMF payment next Tuesday. We then start anticipating the next major deadline.” [Ref]
FTSE Outlook
I imagine the market is going to keep its fingers crossed for a Greek deal, but if not and this 6825 area breaks (which looks to be fairly decent support at the moment as we have the bottom for he 30minute channel there) then the bears might get some momentum. Shorting a break of this level is probably wise. If it holds then I can see some optimistic buying to take us up certainly to the 6847 area where we have the top of the 20 day Bianca , though granted not that much upside from where we are as I write this. If the bulls among to break that then 6880 looks feasible and with that being just above yesterdays high as well, might see some bearishness there. As such, its all at the mercy of Greece as you saw again yesterday with the rise on positive expectations which were then suddenly dashed. I expect more of the same today and tomorrow. So, fairly simple plan for today, if 6825 holds then longs up towards 6880, maybe even 6918 where we have the top of the 10 day Bianca and top of that 30min channel – good shorting spot if so – and then treading water while we await Greece confirmation. Yesterdays news certainly scuppered that Dax rise, dropping from 11628 on Tuesday down to 11370 yesterday.