Good morning. Its hard to keep up with the Greek situation – one minute they are on the cusp of a deal then its all off. Latest is that there is going to be an Emergency summit after taks fail yet again. However the market bounced exceptionally well from the 6630 area I mentioned yesterday as support, adding 100 on the FTSE and the Dax nearly 500 off its lows. So maybe there is some good news that Joe Public isn’t aware of yet, or received that Greece might just leave the Eurozone and everyone can move on (till Spain, Portugal and Italy start though!).
Greece
Greece lurched closer to an exit from the euro as a meeting of finance officials to reach a deal over aid dissolved in acrimony, forcing leaders to call for an emergency summit for Monday.
As the European Central Bank prepared for its own emergency session on Friday, thousands of Greeks piled outside parliament in Athens asking for the nation to be saved from default. Prime Minister Alexis Tsipras government blamed a conspiracy to blackmail Greece for the rancorous breakdown in talks. Greece and its creditors — the ECB, the IMF, and the European Commission — seem further apart than ever after four hours of closed-door talks. Without a settlement, the ties still binding Greece to the currency bloc may begin to unravel with funding keeping Greek banks afloat under scrutiny. “The extreme economic uncertainty coupled with fears of currency change have driven withdrawals to unprecedented levels, wiping in four days the cushion of about 3 billion euros of the Greek banking system,” said Nicholas Economides, professor of economics at New York University’s Stern School of Business.
US & Asia Overnight from Bloomberg
Asian stocks rose for a second day, following gains in U.S. shares, as investors awaited a Bank of Japan policy decision. Energy shares led the advance.
The MSCI Asia Pacific Index climbed 0.3 percent to 146.91 as of 9:01 a.m. in Tokyo, paring this week’s slide to 0.8 percent. The Standard & Poor’s 500 Index jumped 1 percent on Thursday in New York and the Nasdaq Composite Index closed at a record high after the Federal Reserve signaled it will continue to support the economy even as growth picks up.
Japan’s Topix index added 0.9 percent. The BOJ ends a two-day policy meeting on Friday. More economists now see the BOJ expanding stimulus later, according to a Bloomberg survey June 8-15, after Governor Haruhiko Kuroda said the yen’s exchange rate adjusted for inflation and trade with other nations has returned to levels before the collapse of Lehman Brothers Holdings in 2008.
“What the market is looking for is: will the yen continue to weaken and will the comments support a weaker currency?” Steve Goldman, a fund manager at Kapstream Capital, told Bloomberg TV in Sydney. The Japanese economy “needs much more stimulus. We’re not there yet in Japan.”
E-mini futures on the S&P 500 lost 0.1 percent. Fed policy makers said Thursday that the world’s largest economy has picked up after its first-quarter slump, and that they expect inflation to accelerate gradually in the medium term. Yellen told reporters she still wants to see more “decisive” evidence of a lasting turnaround.
Reports in the U.S. showed the cost of living excluding food rose less than forecast in May and fewer Americans than estimated filed for unemployment benefits last week.
Greece Standoff
Euro-area finance ministers failed to reach a deal on Greece after meetings in Luxembourg, European Commission Vice President Valdis Dombrovskis said. Euro-area leaders will hold an emergency summit Monday.
South Korea’s Kospi index added 0.6 percent and Australia’s S&P/ASX 200 Index rose 0.2 percent. New Zealand’s NZX 50 Index advanced 0.4 percent.
The Shanghai Composite lost 7.4 percent this week through Thursday, on course for its biggest weekly drop since February 2009, amid speculation the gauge’s year-long rally has driven valuations too high. Short-interest in the largest exchange-traded fund tracking Chinese stocks jumped to a record 16 percent of outstanding shares Wednesday.
Hang Seng Index futures climbed 0.5 percent in most recent trading, and contracts on the Hang Seng China Enterprises Index, a gauge of Chinese equities listed in the city, advanced 0.7 percent. Futures traded in Singapore on the FTSE China A50 Index rose 0.4 percent. [Ref]
FTSE Outlook
Things are pretty uncertain at the moment with regards to Greece though we had an excellent bounce off the bottom of the 10 day Bianca yesterday at 6624 (low was 6624.1). Be interesting to see if that bullishness continues today on the hope of a deal and reaches the top of the channels – 6756 for the 20 day and 6768 for the 10 day. Todays pivot is 6692 and I think any dip will find support there. The bulls will be keen to defend yesterdays rise and as such a push towards the 6750 area is likely I think. We have the top of the 20 day Raff at 6740 as well for a bit of resistance to add to this area. 10 day Raff is at 6782.
Support wise, below the pivot we have the bottom of a rising 30min channel at 6683 with 6667 below that. If things get really bearish then the bottom of the Bianca channels are 6617 and 6591, though I would be surprised if the bulls gave up that easily after yesterday. All eyes on the ECB emergency session today. Plus its Friday so probably going to be weird anyway, especially as we have options expiry – so expect some volatility at 10:10am.