Good morning. Well not so much luck with those 2 shorts yesterday and we had a pretty strong day on the FTSE overall, hitting a high at 6828, just shy of the 200ema on the daily. Positive vibes about Greece, though still awaiting a definite deal, mean that the bulls had something to cheer about, and took the Dax with them. Sense of relief probably. They will now be hoping that a deal does actually get done – 48 hours to go.
Greece
European leaders gave Greek Prime Minister Alexis Tsipras’s government 48 hours to make the final push needed to satisfy creditors and end a five-month standoff over aid that risks splitting the euro.
Leaders from Greece’s 18 fellow euro-zone countries agreed that Tsipras’s government was finally getting serious about striking a deal after it submitted a set of reform measures that began to converge with the terms demanded by creditors. They agreed to step up the pace of negotiations to secure a breakthrough on Wednesday that leaders can sign off at the end of the week.
The package of proposals represents “a certain step forward, but it was also said very clearly that we’re not yet where we need to be,” German Chancellor Angela Merkel told reporters in Brussels after an emergency summit Monday night. “Hours of the most intensive deliberations lie ahead of us.”
US & Asia Overnight from Bloomberg
Asian stocks rose, following a rally in global shares, as Greece’s new measures to appease its creditors fueled optimism a deal will soon be reached.
The MSCI Asia Pacific Index added 0.1 percent to 148.71 as of 9:00 a.m. in Tokyo after jumping the most in two months on Monday. Stocks in Europe and the U.S. gained on Monday after Greek Prime Minister Alexis Tsipras presented a fresh set of austerity proposals. European leaders gave Greece’s government 48 hours to make the final push needed to satisfy creditors and end the five-month standoff.
“They’ve got a short-term resolution,” said Mark Lister, Wellington-based head of private wealth research at Craigs Investment Partners Ltd., which manages about $7.2 billion. “We head for the edge, all the brinkmanship plays out, then there’s a deal at the last minute and there’s a relief rally. Then we do it all again for the next deadline. That will continue to be the way things work until you hit breaking point.”
European leaders agreed that Tsipras’s government was finally getting serious about striking a deal with the new set of measures, which included steps eliminate early retirement, raise the sales tax, increase surcharges to middle and high-income earners, and introduce levies on profitable companies. They agreed to step up the pace of negotiations to secure a breakthrough on Wednesday that leaders can sign off at the end of the week.
Besides evaluating Greece’s new proposals, European creditors also focused on the nation’s debt burden as a second step in the aid talks. Finance chiefs are divided whether the current bailout should be extended for a short period to cover the disbursement of aid, or for a longer time to allow more discussion of follow-up arrangements, including a possible third bailout, an EU official said.
Market Reaction
South Korea’s Kospi index climbed 0.8 percent, while Japan’s Topix index added 0.6 percent. Australia’s S&P/ASX 200 Index increased 0.2 percent. New Zealand’s NZX 50 Index gained 0.2 percent.
Markets in mainland China reopen Tuesday after a holiday. Hong Kong’s Hang Seng China Enterprises Index, a gauge of mainland equities listed in the city, rose 1.5 percent Monday.
HSBC Holdings Plc and Markit Economics will release a preliminary June reading on their China manufacturing purchasing managers index Tuesday. Economists surveyed by Bloomberg are projecting a fourth month of contraction in the sector amid uneven global demand and a slowdown in Asia’s largest economy.
E-mini futures on the Standard & Poor’s 500 Index added 0.2 percent after the underlying measure advanced 0.6 percent on Monday. Data Monday showed U.S. homes sold at the fastest pace since 2009 in May. [Ref]
FTSE Outlook
We are just hitting the top of the daily Raffs around the 6820 area as I write this, and we have the top of the 10 day Bianca at 6828, coinciding with yesterday high. As such I think we might get a dip down to the pivot to start with at 6785 which could well hold as support. The other reason that we might get a dip is that we have the 200ema at 6831 on the daily, which can often act as resistance/support. So, this 6820/6830 area is pretty key – if the bulls break above that today, and fuelled by the hope of finally reaching some agreement on Greece, they could do later on (next 48 hours is pretty key regarding this) then a rise to 6950 is distinctly possible. Might even see 12000 on the Dax again soon at this rate! There is a pretty decent 30min channel in play for today with support below the pivot at 6750, and resistance at 6855 and then 6920ish (actual values are slightly different depending on when it would hit those channel lines, but you can see them in the chart below. So dip and rise really for today, with a long at 6785, which would also tally with a back test of the 20 day Bianca channel that we broke above yesterday.