On 23 June, 2015 – European markets rallied on the strong eurozone private sector report

Stocks continued to rally on expectations that Greece will reach a deal with its creditors. Positive economic data also helped investor morale.
United States
Stocks were little changed as investors wait for a deal between Greece and its creditors. The Dow Jones industrials, S&P and Nasdaq all added just 0.1%.
At a meeting Monday, leaders of the 19 nations that use the euro said the offer by the government of Greek Prime Minister Alexis Tsipras might form a basis of a deal. European finance ministers are scheduled to meet on Wednesday, followed by a summit of the region’s political leaders. However, Mr Tsipras still has to sell the proposal to his own political party back in Greece. His Syriza party was voted into office on a pledge to repeal the harsh budget cuts and tax increases that previous governments had imposed since 2010.
Darden Restaurants advanced after the restaurant holding company announced stronger than expected quarterly results and also said it planned on spinning off its significant real estate assets into a separate company. Its sales rose as more customers ordered wine and appetizers. AT&T gained after two analyst upgrades. Green Dot jumped after authorizing a stock buyback plan and reaching a new five year deal with Wal-Mart Stores. Semiconductors reversed Monday’s gains as Nvidia and Qorvo retreated. Miner Freeport-McMoRan rallied as copper prices rose the most in seven weeks on optimism that stabilizing economies will buoy demand. Cisco Systems, Microsoft and Intel declined to weigh on the technology group. Western Digital retreated to its lowest since October on a broker downgrade. BlackBerry declined after it posted a wider than anticipated quarterly loss and handsets shipments were at the lowest since 2007 even as the new keyboard-equipped Classic phone went on sale.
May new homes sales increased more than forecast to the highest level in seven years. That added to data Monday showing sales of previously owned homes climbed to their highest level in six years, boosted by more first-time buyers. Orders for business equipment gained in May for just the second time this year. Orders for all durable goods declined 1.8%, reflecting a drop in the volatile aircraft category.
Gold at the afternoon London fixing was down US$7.50 to US$1,178.00. Copper futures were up 1.7% to US$2.62. WTI spot crude was up 77 US cents to US$61.15. Dated Brent spot crude was up US$1.34 to US$64.68. The US dollar was up against the euro, yen, pound, Swiss franc and the Australian dollar. It was virtually unchanged against the Canadian dollar. The Dollar Index was up 1.5%. The yield on US Treasury 30 year bond was up 3 basis points to 3.20% while the yield on the 10 year note added 4 basis points to 2.41%.
Europe
Stocks continued to rally and extended Monday’s advances. The gains continued to be fueled by investor optimism that a Greek debt deal will be reached this week. Investors were also encouraged by the strong Eurozone private sector report. The FTSE inched up 0.1%, the CAC advanced 1.2%, the DAX gained 0.7% and the SMI added 1.3%.
Fresh reform proposals submitted by Greece Monday are being studied by the country’s creditors with the goal of possibly reaching an agreement in the Eurogroup meeting on Wednesday. Grexit worries refuse to die down as voices of dissent are heard in Athens even from within the ruling party because of the increased concessions being offered. In an 11th-hour effort to avert an exit from the euro, Greece submitted revised proposals for economic reform early Monday, ahead of a crucial extra meeting of Eurozone finance ministers in Brussels. The proposals were received positively by creditors who said work will begin immediately with the aim of reaching a deal later this week. This suggested that an end to a five-month long deadlock over releasing bailout aid to the Greece may be near.
Automakers including BMW, Daimler and Volkswagen finished higher as did Peugeot and Renault. Deutsche Bank, Commerzbank, BNP Paribas, Crédit Agricole and Société Générale also rallied. Deutsche Post and Deutsche Telekom gained on the day. Ladbrokes surged after it confirmed it is in discussions with Gala Coral Group Limited regarding a possible merger. Petrofac leaped after issuing an update on its order intake and backlog. Sports Direct gained on a broker upgrade. However, Bunzl retreated after the company announced that it expects Group revenue for the six months ending 30 June 2015 to have increased by 6%. Associated British Foods declined on a broker downgrade. Swiss crop chemicals firm Syngenta’s chairman reaffirmed that Monsanto’s recent approach was not in the best interests of Syngenta, its shareholders and its stakeholders.
Eurozone private sector growth hit a four-year high in June, reflecting broad-based upturn in services and manufacturing sectors according to the flash PMIs for June. The flash composite output index rose unexpectedly to a 49-month high of 54.1 in June from 53.6 in May. It was expected to ease slightly to 53.5. Germany’s flash composite output index rose to 54 in June from a 5-month low of 52.6 in May. In France, the composite output index rose to 53.4 in June from 52 in May, signaling the strongest pace of expansion for 46 months.
Asia Pacific
Stocks closed mostly higher Tuesday after signs of a potential breakthrough in debt talks between Greece and its international creditors helped lift the Nasdaq Composite index to a new record high during the Monday global market day. Eurozone leaders have called a new debt proposal by Greece “a welcome step in the right direction” raising hopes that a final agreement on a Greek bailout deal to unlock frozen aid and avert a looming default would be taken at a routine EU summit starting Thursday.
The Shanghai Composite reversed early steep losses to end sharply higher as trading resumed after an extended weekend. The benchmark Shanghai Composite index fell more than 2% early in the day before reversing direction to end the session up 2.2%. Today’s wild swings came on the back of last week’s sharp correction attributed to concerns over valuations, tightening of margin requirements and new offerings draining liquidity from the secondary market. The Hang Seng added 0.9%. China’s flash June manufacturing PMI edged up to a still contractionary 49.4 from May’s final of 49.2.
The Nikkei was up 1.9%, hitting a fresh 15-year high, tracking the gains in the US and European markets. Banks including Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial and Mizuho Financial rallied. Softbank advanced — the telecom and internet giant, together with India’s Bharti Enterprises and Taiwan’s Foxconn, will invest about US$20 billion to develop wind and solar energy capacity in India. Sony gained after unveiling its new “Ultimate Player Edition” PS4 with a massive 1 terabyte of storage. Toshiba reversed early losses to end higher on a Nikkei report its accounting problems extended to units beyond its infrastructure group. Takata declined after a US congressional report said the company had overlooked internal signs of defective air bags for years. Sharp dropped after the company sought its second major bailout from banks. Japan’s flash manufacturing PMI slipped to 49.9 from 50.9 in May.
The S&P/ASX and All Ordinaries added 1.3% and 1.2% respectively. The big four banks as did miners. The Kospi advanced 1.3% with Greek deal hopes and easing concerns over the outbreak of Middle East Respiratory Syndrome underpinning investor sentiment. The Sensex gained for the eighth consecutive trading session, the longest winning streak in nearly five months as good monsoon rains and signs of a potential breakthrough in debt talks between Greece and its international creditors helped keep investors in a good mood. The Sensex added 0.3% on the day.
Global Stock Market Recap

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Looking forward*
France reports final estimate of first quarter gross domestic product. Germany’s Ifo survey for June will be released. In the US, the final estimate of gross domestic product and corporate profits will be reported.
Anne D PickerChief EconomistEconoday