Good morning. Well the old adage that its never easy seems to be applying this week, with prices headline and news driven. The Greeks scaremongering bluff about not being able to pay seemed to work as a deal appears to have been done, hence that rise that messed up my 7005 short. Still, at least it had a very tight stop. The S&P seems to be playing the game a bit better this week, though the US are getting a little bit annoyed with Europe by the sound of things and the ongoing “Greek tragedy”. Equities extended gains after an official with knowledge of the matter said Greece and its creditors will start drafting a staff level accord to solve its debt crisis. Stocks held gains even as European Commission Vice President Valdis Dombrovskis later denied an agreement is near. “Everyone was scared Greece was close to leaving the euro zone,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “We had bad news on Greece today and people now got excited by this, so just some hope is pushing the market up. They seem to be trying to do anything possible to keep Greece in the euro zone.” Earlier, four international officials familiar with the matter said Greece will likely miss a deadline for a deal with creditors by the end of the week as the two sides make little progress in their talks. Time is running out for the Mediterranean nation to secure an agreement that will unlock more bailout funds before it needs to make payments to the International Monetary Fund in early June, so expect the next market surge then, coupled with interest rate rises being back in the news.
US & Asia Overnight from Bloomberg
Asian stocks rose after U.S. and European shares rallied amid gains in technology shares and optimism about a Greek debt deal. Japan’s Topix index climbed as the yen traded near an almost eight-year low against the dollar.
The MSCI Asia Pacific Index added 0.3 percent to 152.47 as of 9:02 a.m. in Tokyo. The Nasdaq Composite Index closed at a record on Wednesday. Greece claims an agreement to unlock bailout funds is near, while the European Commission says a deal isn’t done.
“There was some hope that the Greek situation would sort itself out,” Tony Farnham, an analyst at Patersons Securities Ltd. in Sydney. “There’s going to be a bit of holding pattern in the market as investors await pending home sales and jobless claims data tonight in the U.S. The Federal Reserve will probably move on rates in the next few months as the economy improves.”
Fed Chair Janet Yellen has said the central bank will raise borrowing costs this year if the economy improves as she expects.
Greek officials were set to meet late Wednesday with the Commission and International Monetary Fund. Time is running out for the nation to receive funding ahead of almost 1.6 billion euros ($1.74 billion) in IMF payments scheduled for next month, with the first of the transfers due June 5.
Japan’s Topix rose 0.4 percent as the yen slid for a fifth day to trade at 123.73 per dollar. South Korea’s Kospi index added 0.4 percent. Australia’s S&P/ASX 200 Index increased 0.2 percent. New Zealand’s NZX 50 Index advanced 0.2 percent. Markets in China and Hong Kong have yet to open.
China Rally
Chinese stocks rose for a seventh day on Wednesday, with the Shanghai Composite Index approaching the 5,000 level for the first time since 2008 on gains for commodity and power producers.
The Shanghai Composite has surged more than 140 percent in the past year, the most among major indexes tracked by Bloomberg, on speculation the central bank will add to three interest cuts since November to spur growth and widen access to capital markets in the mainland.
E-mini futures on the Standard & Poor’s 500 Index were little changed today. The Nasdaq Composite rose 1.5 percent on Wednesday as semiconductors rallied, while the S&P 500 gained 0.9 percent. [Ref]
FTSE Outlook
We have the top of the 2 Bianca channels likely to come into play today, the 10day at 7069 for initial resistance and the 20 day at 7082. Looking at the moving averages initially I think we might get a rise and dip day, with the bull needing to break yesterdays high at 7055 to try for those channel areas. Above them the next resistance is 7094 and 7127 for the top of the 10 day Raff. Don’t think we will get that high unless the Greek deal is actually confirmed. Support is at the daily pivot at 7013 where we also have, roughly, the 200ema on the 30min chart, so I have plotted that to hold as support , but below this then 6973 for the bottom of the 10 day channel should hold. As mentioned above its all headline and rumour driven again while the Greek debacle rumbles on which currently makes things harder! I am tempted to short the rallies for the moment, so a short off the 7069 area looks tempting, probably with a stop above the 20day channel. We have UK GDP out at 9:30 this morning, then some US jobs data at 13:30 so expect a bit of movement around these times. Bear in mind if the Greek deal is confirmed then the market will breathe a sigh of relief and most likely push higher.