Good morning. Another day and still Greece rumbles on. Not much to say really as its either going to be today or tomorrow when the deal is done or they default. A deal is near though apparently. As per usual its down to the wire. Anyway, the ECB left rates on hold and Draghi’s speech at the press conference was the precursor to the FTSE giving up the mornings gains. Gains that very nearly managed to reach the optimum sell at 6995 where we had the daily 25ema for the entry but fell just short, but keeping the daily chart bearish. A lot will depend on Greece as if a deal is suddenly announced I expect a spike upwards, especially as Greece’s PM is in Brussels today to meet Jean-Claude Juncker, the head of the European Commission.
US & Asia Overnight from Bloomberg
The global bond rout gathered pace, with Japanese notes slipping a fourth day after Mario Draghi forecast faster euro-area inflation and continued market volatility. Australia’s dollar slid with Asian shares and oil.
Yields on 10-year Japanese government bonds climbed 2 basis points to 0.48 percent by 12:48 p.m. in Tokyo, the highest level since November, while Australian yields topped 3 percent for the first time in three weeks. The Aussie declined 0.8 percent after data showed the nation’s exports fell in April. A measure of Chinese shares in Hong Kong erased gains of 2 percent to drop for a third day, as U.S. index futures decreased 0.2 percent. U.S. oil held below $60 a barrel before Friday’s OPEC meeting.
This year’s gains in global bonds evaporated as the European Central Bank chief inflamed a selloff in German bunds, saying price growth in the region would pick up further. Greece’s premier claimed to be near agreement with creditors, adding there was no need to worry about an International Monetary Fund payment due Friday. The U.S. reports jobless claims Thursday, before payrolls data at the end of the week.
Stocks
Asian stock indexes rose after a rebound in U.S. shares as investors speculated Greece will reach a deal with its creditors. Japan’s benchmark gauge climbed as the yen declined against the dollar.
The MSCI Asia Pacific Index traded little changed at 150.23 as of 9:10 a.m. in Tokyo. The Standard & Poor’s 500 Index advanced 0.2 percent on Wednesday as Greek Prime Minister Alexis Tsipras pursued late-night talks with European officials in Brussels. Greece will near an agreement in the “next days,” Prime Minister Alexis Tsipras said, adding there was no need to worry about the first of four repayments due to the International Monetary Fund Friday.
“It would be quite a surprise if they didn’t reach an agreement on Greece,” Keith Poore, who helps manage $131 billion as head of investment strategy at AMP Capital Investors Ltd. in Wellington, said by phone. “There’s scope for equities to rise further. Investors need to watch the volatility in bonds. Equity valuations don’t look stretched, with Hong Kong-listed Chinese shares still trading at pretty low levels. Valuations in Japan are higher but earnings are growing.”
Yields on 10-year Australian and New Zealand bonds climbed after Mario Draghi inflamed global bond losses, helping send 10-year German bund yields up another 17 basis points on Wednesday as the European Central Bank chief warned about ongoing volatility in the market and forecast faster inflation.
Regional Gauges
The Topix index added 0.2 percent. South Korea’s Kospi index advanced 0.2 percent. Australia’s S&P/ASX 200 Index rose 0.2 percent. New Zealand’s NZX 50 Index climbed 0.1 percent. Markets in China and Hong Kong have yet to open.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong traded at 9.9 times estimated earnings on Wednesday, compared with 19.6 times for the Shanghai Composite Index. Japan’s Topix traded at 16.1 times expected profit.
The Shanghai Composite Index closed Wednesday little changed after changing direction 15 times, with 100-day volatility surging to the highest in more than five years. The equity benchmark has advanced more than 140 percent over the past 12 months.
E-mini futures on the S&P 500 Index slipped 0.1 percent. The underlying equity measure gained on Wednesday as banks and insurers rose with Treasury yields and investors speculated Greece will reach a deal with its creditors. [Ref]
FTSE Outlook
Todays pivot is 6944 so initial resistance there and looking at the moving averages we could get a move down to start the day to support at 6918 before a rise on hopes of a deal, though it still appears a bit of a deadlock. If the bulls can break through the 6944 area then the next main area of resistance is 6986 then the top of the 10 day Bianca at 7009. The 10 day Raff channel top is 7025 where we also have the daily T3 coral line so decent resistance there. We could well rise today on hopes of a deal. If the bears have other ideas then a decline to 6918 initially, then support below that is 6902 for the bottom of the 20 day channel then the 10 day at 6885. There is also the bottom of that 30minute channel lower down at 6870ish. In the absence of a deal I think shorting the rallies is a good move (as proven yesterday) though the choppy week continues!
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