Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
The European indices started the session in consolidation. In the last 24 hours, the Greek situation has undergone some developments and setbacks, ending the day almost at the same point where it started. According to some Greek sources, during the morning, the Athens executive sent a new letter to the European institutions, accepting some of the conditions imposed by the Eurogroup. Moreover, it circulated a rumor that pointed that possibly the Sunday referendum could be canceled. In the afternoon, in a statement to the Nation, Alexis Tsipras said that the referendum will take place but will not be a test to see if the country stay in the Eurozone, and appealed the people to vote against austerity, arguing that it would strengthen the bargaining power of Greece within the Eurozone. Simultaneously, Greece remains open for further negotiations if the Eurogroup’s response to his proposals is positive. These advances and setbacks caused some irritation in some European chancelleries, and many Eurozone leaders expressed, vehemently, that will not take place any kind of negotiations until the referendum. Now the focus will be on the Sunday referendum outcome and its potential consequences. If Greece and its partners get, once again, to the negotiating table, the process will be more arduous than hitherto. If the negotiation of a mere extension of a support program languished for five months, prepare a root agreement could take quite complicated contours unless there is a significant change in the attitude of both parties.
US markets closed higher, reflecting the positive performance of the European markets before a confused and contradictory scenario. The US private sector created 237,000 jobs in June, recovering from weak reading in April (165,000), which corresponds to the minimum of the last 14 months, and May (192,000). June’s observation surpasses estimates of 218,000. Although there is a high correlation between the ADP report and the official employment report, economists generally use the first to perfect their estimates for the second. The ISM index, which at this stage is the second most relevant indicator (preceded only by the employment report), signaled an improvement in US manufacturing in June to reach 53.5 compared to the 52.8 seen in May and the 53.0 estimated by analysts. Among the various ISM components there is the employment (which increased from 51.7 to 55.5) and the price, which remained unchanged. An industry to grow without causing inflationary pressure is the best scenario for the stock markets. The construction investment reached 0.80% in May, the highest level since October 2008. Today, investors’ attention will deviate from the Greek situation to the employment report. US markets being closed tomorrow (on Saturday celebrated the Independence Day), the publication of this indicator was brought forward to today. The latest data point to a labor market in a very dynamic expansion phase, marked by a growing job creation, by a decrease in the unemployment rate in recent months and accompanied by a sustained rise in wages.