Good morning. Think that yesterday was the first day I haven’t have an order take in a very long time. After that initial rise to 6850 we stayed around that area the whole day as we await Greek news once again, though it looks quite positive at the moment that an agreement will be reached. I must admit, I don’t mind being on the sidelines too much while things are up in the air, and sometimes with trading I have found thats a good place to be!
Greece
Euro-area finance ministers will meet for the third time in a week on Wednesday to try to secure an agreement to avert a default in Greece.
With a week to go before the country’s bailout expires, a deal appeared within reach after Greek Prime Minister Alexis Tsipras signaled he was ready to end a bitter five-month standoff and reach agreement with creditors to unlock aid. While hurdles remain — including votes in the German and Greek parliaments, and figuring out how to pay the International Monetary Fund — analysts say a solution will be found.
“We have now seen enough progress for the finishing line to have become visible,” Erik Nielsen, a Unicredit SpA economist in London, wrote in a note to clients. “Failure from here is difficult to envisage. This means that various liquidity measures will be employed, as needed, until it’s all signed off — and the risk of arrears has significantly declined.”
Tsipras will fly into Brussels Wednesday to meet with European Central Bank President Mario Draghi, IMF Managing Director Christine Lagarde, European Commission President Jean-Claude Juncker and two top European Union officials to discuss further steps, an EU official said.
US & Asia Overnight from Bloomberg
Asian shares rose for a fifth day as Japan’s Nikkei 225 Stock Average headed for its highest close in more than 18 years.
The MSCI Asia Pacific Index added 0.2 percent to 150.15 as of 9:01 a.m. in Tokyo. The Nikkei 225 increased 0.4 percent, poised for the highest close since December 1996. The measure has climbed 20 percent this year. European and U.S. equities extended gains on Tuesday as investors weighed economic data for clues on the timing of higher interest rates amid optimism that a deal on Greek aid is within reach.
“The Japanese economy is improving and corporate earnings are doing well,” Hiroichi Nishi, a manager at SMBC Nikko Securities Inc. in Tokyo, said by phone. “As monetary policy in the U.S. moves toward normalization, we’ll have moderate rate hikes. We’ll continue to have to watch the situation in Greece carefully, but within the wait-and-see mood there’s increasing hope that they’ll come to an agreement.”
E-mini futures on the Standard & Poor’s 500 Index added less than 0.1 percent after the underlying measure advanced 0.1 percent on Tuesday. Purchases of new homes climbed in May to a 546,000 annualized pace, the strongest since February 2008, according to Commerce Department data. Another report from the agency showed orders placed with factories for business equipment rose last month for just the second time this year.
The chances are about 50-50 that the U.S. economy will improve enough for the central bank to boost borrowing costs in September, said Federal Reserve Governor Jerome Powell, who expects policy makers to move again in December.
Greek Meeting
In Greece, Prime Minister Alexis Tsipras is seeking to shore up support at home for proposals aimed at ending the indebted nation’s five-month standoff with creditors. Euro-area finance ministers meet Wednesday to try to secure an agreement to prevent Greece from defaulting. Analysts say a solution will be found. The Stoxx Europe 600 Index rose 1.2 percent on Tuesday.
Japan’s Topix index added 0.5 percent Wednesday. South Korea’s Kospi index rose 0.2 percent. Australia’s S&P/ASX 200 Index gained 0.3 percent, as did New Zealand’s NZX 50 Index.
Markets in Hong Kong and China are yet to open. The Shanghai Composite Index posted its biggest intraday rebound in eight years on Tuesday.
“Markets have now focused back on what they were focusing on prior to real concerns developing about Greece, and that is the adjustment for the potential for higher interest rates,” said Ric Spooner, chief market analyst in Sydney at CMC Markets. Despite the prospects for higher interest rates in the U.S., “equity markets have decided that bond yields are going to go up, but not enough to really do a lot of damage to the growth prospects or valuations at this stage.” [Ref]
FTSE Outlook
Though we are testing the top of the daily Raffs on both he FTSE and the Dax there is a palpable sense of relief that a Greek deal might finally be reached and Greece will stay in the Eurozone. I think if they left then it wouldn’t bode well for the future of the Eurozone. I expect we will get a similar day to yesterday with a rise and then tread water whilst we await confirmed news. We have the pivot at 6838 which we are at as I write this but despite the 30min chart going bearish overnight and also showing resistance at this 6838 there hasn’t been much bearish activity – bears done want to be caught on the wrong side of a rise from news. There is a pretty decent 30min channel in play, the top of which is at 6885ish and tallies with the top of the 10 day Bianca at 6873 – this area might get the bears interested if we rose there today. There is a bit of weak resistance at 6843 just above the pivot though I don’t think its strong enough to stop any early rise, though it will be interesting to see if the 20 day Raff at 6850 caps it initially. Above that we are looking at a trip to 6900 really, with resistance at 6933 and 6950. Support wise, the bottom for he 30 min channel and 200ema are at 6790, whilst a back test of the 20day Bianca at 6810 is possible, having broken above that channel recently. News regarding the Greek deal will also have an effect as it starts to be released. Stay nimble!