Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
After the opening, the European markets traded with contained losses. Greece will be the center stage of today’s session after yesterday news have emerged of some progress in the negotiations which apparently may have broken the impasse that had been ongoing for several months. According to the Greek authorities, their negotiators and representatives of the Brussels Group (IMF, ECB, European Commission and European Stability Fund) are to draw an outline of an agreement that could avoid a financial default by Greece. Apparently, the Athens authorities would be willing to conduct a reform of the pension system without introducing any reduction in pension payments. Additionally, it would be a solution to be reached regarding the Greek debt held by IMF, ECB and EU. The same source states that there are still different views between lenders. However, the attitude of many European leaders are less enthusiastic than the Greek authorities. The Vice-President of the European Commission, Valdis Dombrovskis said still to be made many efforts before agreement is reached. The position of the German Finance Minister is also similar. Investors will measure every word will be said regarding this issue and should significantly react to their interpretation. In this context, the southern European markets will have a greater sensitivity to rumors and news on this topic. For its part, Central Europe stock markets will be more positively influenced, by the Greek situation than conditioned negatively by the appreciation of the Euro. Theoretically, if the prospect of improving investors regarding the Greek situation should enhance the Euro it is therefore reduced the perceived risk of the eurozone. Interestingly, the last two weeks, the correlation between German equities and the euro was negative, something that had not occurred since 2013.
The US stock market closed up, recovering a significant part of the losses of the day before. The possibility of an agreement in Europe between Greece and its creditors was the main catalyst for yesterday’s rise. After Tuesday’s falls, US investors needed a reason to increase their market exposure. Buyer interest did not cover all sectors in a similar way, focusing more on technological titles, like Apple, biotech companies and the semiconductor. The news from Greece has caused the loss of momentum of the dollar, which has penalized American multinational’s Stocks. The yields of government bonds ended without major fluctuations despite a bid bonds to 5 years have attracted fewer buyers than usual. In recent sessions we have seen a pattern that did not occur for several years on Wall Street and is a warning sign. The major US indices, the S & P, the Nasdaq and the Dow Jones negotiates close to its maximum annual (corresponding to the historical maximum), thus keeping intact the upward trend started in 2009. However, some minor indices such as the Russell 2000 (which includes the small caps) and the Dow Jones Transportation (which brings together the leading transport companies and airlines) are located in distant levels of maximum and present signs of weakness. Whereas the Russell and the Dow Jones Transportation led the Wall Street rally since 2009, these signs inspire some caution.
Asian shares closed without a defined trend. While the Japanese and Korean markets ended up, Shanghai and Hong Kong stock markets closed with sharp losses. The Nikkei benefited from the good performance of Wall Street and the devaluation of the yen, which allowed that the Japanese index reached the maximum of the last 15 years. In China, investors decided for profit taking. In recent months, the Chinese securities recorded an impressive growth with the increasing demand for stocks not only by foreign investors but also tens of millions of individual investors, and listed technology stocks in Shenzen duplicated their value since early 2015 .