Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European indices started the session trading with very sharp losses. During the weekend, the Greek situation has precipitated. On Saturday, Greece abruptly left the table of the Eurogroup negotiations, ending a process that extended from February without major breakthroughs. Subsequently, the Tsipras Prime Minister called a referendum for the Greek people to express themselves in relation to the plan proposed by the European partners. The Syriza already said to be opposed to this plan. Simultaneously, the Greek executive asked the European institutions an extension of the support program that formally expires on Tuesday, without offering some sort of compensation. The European institutions rejected that request. On Saturday and Sunday there has been a run on deposits by many Greeks. Given this behavior, the Greek Government stated that banks today would not open and would be imposed controls on withdrawals (maximum € 60 daily) and movement of capital, also deciding the closing of the Athens stock exchange presumably to the referendum in Sunday. However, the ECB maintained but did not increase the liquidity hotline that makes available to Greek banks in 89 000 M. €, stating that will coordinate with the Bank of Greece a strategy to maintain financial stability in the country and its banking system. So far, the Central Bank of Greece has injected liquidity in the banking institutions of the country to meet withdrawals of Greek savers. Tomorrow at 23h00 (GMT) the deadline for Greece to repay the 1600 M. € to the IMF. Non-payment is not technically a default. Only if Greece fails to repay the ECB in the near term (July 20) is that the default or default would materialize. On June 30 ends the support program of the European Commission / ECB / IMF which in February had been extended in order to provide time to the Greek authorities drew up a plan of action. In this context, the national stock exchange is expected to show quite vulnerable to the first shock of this whole situation. In bond markets, the national debt yields are expected to rise in line with the Italian and Spanish and it is expected a decline in German interest rates. Several European Investors should reduce their exposure to equity markets taking refuge in German bunds.
American indices closed almost unchanged, with the exception of Nasdaq that has been conditioned by specific news from some companies. The uncertainty about Greece and the possibility of the occurrence of events (positive or negative) during the weekend led investors to keep an expectant attitude on Wall Street. According to several surveys, a large majority of American institutional investors have a neutral view of the stock market, ie is neither negative nor positive, which explains the larger share than the average of their portfolios that is applied in the form of liquidity. The Nasdaq was penalized by results and disappointing revenues from Micron. Micron, which manufactures semiconductors and chips, not only published revenues and profits lower than expected but also proved something pessimistic about the coming quarters, leading to a drop of 18.15% of the company’s shares, which affected many of its competitors. In turn, the Dow Jones benefited from good results from Nike (supported by strong sales of products where the company has higher margins) that had an impact on multinational stocks which appreciated 4.30%. Today, attention will be directed to the events in Greece. Later in the week, the employment report and its consequences for the monetary policy of the Fed will take center stage.
Asian markets ended lower, due to the nervousness generated by the deterioration of the Greek crisis. In Shanghai, the stock exchange was declining 2.25%, after last week have lost 6.50% and 20,50% since the peak in June. The Central Bank of China decided to reduce, for the 4th time since November, policy rates at 0.25% to 4.85%. The deposits of reference rates were also reduced by 2.25% to 2%. These measures represent a further step to stimulate lending to the economy but at the same time is a risk that liquidity is channeled to a stock market that took extreme contours. In this regard it should be noted that Morgan Stanley issued on Friday in a study that argues that, despite the recent drop, the Chinese equities are not attractive. The account of this study is the contrast between business results and the economy as a whole given the stock prices, the high number of leveraged private investors and multiple extremes that many fundamental stocks reached.