Good morning, I hope you had a good weekend. Greece rumbles on with a make or break week this week. Greece enters what could be a defining week after last-ditch negotiations between representatives of the Greek government and its creditors collapsed on Sunday. The European Commission said the talks in Brussels had broken up after just 45 minutes with the divide between what creditors asked of Greece and what its government was prepared to do unbridged. The focus now shifts to a June 18 meeting in Luxembourg of euro-area finance ministers, known collectively as the Eurogroup, that may become a make-or-break session deciding Greece’s ability to avert default and its continued membership in the 19-nation euro area. “While some progress was made, the talks did not succeed as there remains a significant gap,” the commission said in a text message. “On this basis, further discussion will now have to take place in the Eurogroup.”
US & Asia Overnight from Bloomberg
Asian stocks dropped for the first time in four days after the latest round of negotiations between Greece and its creditors fell apart.
The MSCI Asia Pacific Index declined 0.4 percent to 147.63 as of 9:01 a.m. in Tokyo. Talks in Brussels collapsed after just 45 minutes on Sunday. The latest failed attempt to find a formula to unlock as much as 7.2 billion euros ($8.1 billion) in aid for the anti-austerity government of Prime Minister Alexis Tsipras means Greece has two weeks until its euro-area bailout expires with no future financing arrangement in place. The burden of finding a resolution now shifts to a meeting of euro-area finance ministers set for June 18.
“Grexit fears have ratcheted higher,” said Stewart Richardson, chief investment officer at RMG Wealth Management in London. “Unless one side backs down then it would appear as if Greece has no choice but to default and probably leave the Euro. Losses would be huge, albeit shouldered mostly by taxpayers, and nobody really knows what the short-term or long-term implications will be.”
Japan’s Topix index slipped 0.8 percent and South Korea’s Kospi index retreated 0.6 percent. Australia’s S&P/ASX 200 Index declined 0.1 percent and New Zealand’s NZX 50 Index lost 0.3 percent.
E-mini futures on the Standard & Poor’s 500 Index fell 0.4 percent. The underlying equity gauge sank 0.7 percent on Friday as the Greek crisis overshadowed data showing the U.S. economy continues to gain speed.
Wholesale prices in the U.S. rose in May, giving the figure gains in two of the past three months that may eventually filter through to consumers, helping reassure Federal Reserve policy makers that inflation is progressing toward their target. [Ref]
FTSE Outlook
We have had a bit of a gap down to start the week, dropping 40 or so already from Fridays close. The 30min chart has a fairly decent declining channel with support at 6713ish so I think we will get some support here if we drop to that area. Todays pivot is 6794 so we have resistance there which would also tally with the 200ema on the 30min, so a decent area to short from. The 30min chart has pretty bearish moving averages to start with, the the 10min is trying to rise back above S1 at 6748 as I write this. On the daily, there is resistance from the 10 day Bianca at 6846 – we also have the 20 day Raff here, with the 25ema at 6880 above that. Daily chart is still pretty bearish. If we break below the 6713 area then the bottom of the Bianca channels are more than likely to be hit, certainly the 20 day at at 6690. 10 day is 6672. Still feels like shorting the rallies is the best play at the moment, and we only have a 1.3 dividend this week so nothing to get too excited about!
S&P500
As with the FTSE has left a gap at 2093 from Friday that it might want to close today with some initial bull. We have the pivot at 2098 above that as resistance with 2102, 2110, 2113 and 2116 above that. Support wise, 2084, 2079, 2070, 2068 are the main areas to watch. A rise to 2093 and then shorting from that area looks good.