On 01 July, 2015 – Markets continue to be dictated by developments in Greece

Most stock indices gained on the day on hopes that a settlement might be reached between the Troika and Greece. However, those hopes faded as the day wore on, eroding the initial advance.
United States
Stocks advanced as investors hoped Greece will find a way to remain in the Eurozone. Although Greece’s government appeared to be softening its stance toward its creditors, European officials ruled out any deal before a Greek referendum scheduled for July 5. The Dow Jones industrials gained 0.8%, the S&P added 0.7% and the Nasdaq was 0.5% higher on the day.
New economic data revealed that private payrolls increased by a respectable 237,000 jobs in June, according to Automatic Data Processing and Moody’s Analytics. The ISM’s manufacturing purchasing managers’ index rose to 53.5 in June from 52.8 in May. May construction spending climbed to its highest level in just over 6-1/2 years. Spending jumped 0.8% on the month after jumping 2.1% in April.
Chubb Corporation gained after the company agreed to be acquired by Ace for about US$28 billion. Airline stocks tumbled after the Associated Press reported the US Department of Justice is investigating whether some carriers have colluded to keep ticket prices high.
Gold at the afternoon London fixing was down US$3.00 to US$1,168.00. Copper futures were up 0.6% to US$2.63. WTI spot crude was down US$2.52 to US$56.95. Dated Brent spot crude was down US$1.53 to US$62.06. The US dollar was up against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The dollar index was up 0.9%. Yields on both the US Treasury 30 year bond and the 10 year note were up 7 basis points to 3.20% and 2.42% respectively.
Europe
Stocks advanced Wednesday but pared their gains in late trading. Early gains were fueled by investor optimism for a solution to the Greek debt crisis. However, the market pared its gains in late trade after Prime Minister Tsipras confirmed that the government will hold a July 5 referendum and asked Greeks to vote ‘no.’ German Chancellor Angela Merkel reiterated her position that any new talks will have to wait until after the Greek referendum on Sunday. The FTSE gained 1.3%, the SMI advanced 1.5% and the CAC and DAX added 1.9% and 2.2% respectively.
Deutsche Bank and Commerzbank advanced as did automakers Volkswagen, Daimler, BMW, Renault and Peugeot. Merck and Bayer were up. Airbus, which has announced new orders, climbed. Banks including Crédit Agricole, BNP Paribas, Société Générale, Royal Bank of Scotland, Barclays, Lloyds Banking Group and Standard Chartered rallied. Tullow Oil declined after it increased its 2015 working interest production guidance for West Africa. Airline shares were boosted as oil prices declined on the back of record new production levels and after a government-appointed commission said Britain should build a third runway at Heathrow. EasyJet and British Airways’ owner International Consolidated Airlines Group advanced.
The final manufacturing PMIs for the Eurozone and member states indicate that the sector expanded in June. The overall Eurozone PMI reading climbed to 52.5 from 52.2 in May. In the UK, the British manufacturing sector expanded at the slowest pace in more than two years in June as production and new orders logged slower growth.
After markets in Europe closed, the European Central Bank kept Greek banks’ access to emergency loans frozen at just under €89 billion. The ECB’s governing council did not take a decision whether to impose tougher haircuts on Greek government bonds and government-backed bank debt which the country’s biggest lenders are using as collateral for their Emergency Liquidity Assistance, or ELA, from the Bank of Greece. Tougher haircuts are considered an option for monetary policy makers after Greece exited from its bailout program and failed to repay €1.5 billion to the International Monetary Fund on Tuesday.
Asia Pacific
Asian stocks rose broadly for the second day even though Chinese stocks tumbled after a late-session selloff on concerns about hefty valuations for small-cap growth stocks in an environment of slowing economic growth. Although the Greek debt crisis ratcheted up uncertainty in the financial markets, investors seem to believe that the European Union and the European Central Bank have the tools in place to contain any potential contagion from a default.
The Shanghai Composite plunged once again, this time by 5.2% after rallying 5.5% the day before after data showed fresh evidence of sluggish growth. The Hong Kong market was closed for the Special Administrative Region Establishment Day. China’s official PMI for June showed that the pace of expansion in the country’s manufacturing sector held steady at a reading of 50.2, slightly below estimates. However, the services PMI for June ticked up to 53.8 from 53.2 in the previous month. Separately, the final of the HSBC China Manufacturing PMI was 49.4 in June, down from last month’s preliminary 49.6 but up from 49.2 in May.
The Nikkei was 0.5% higher after the Tankan survey showed improving confidence among big manufacturers. Investors also took the news of Greece’s non-payment on an IMF loan in their stride, keeping the yen under pressure from the dollar. Nippon Electric Glass, Obayashi and J Front Retailing climbed while Mitsui Mining & Smelting, Asahi Group Holdings, Hitachi Construction Machinery, Sumitomo Heavy Industries, Komatsu and Japan Tobacco retreated. Sony edged up after losing over 8% Tuesday on equity dilution worries. Suzuki Motor tumbled after naming the eldest son of chief executive Osamu Suzuki as its new president.
Both the S&P/ASX and All Ordinaries jumped 1.0% with sentiment aided by takeover talks and soothing comments from the Reserve Bank of Australia. Speaking in London, Reserve Bank Governor Glenn Stevens said that Australia’s exposure to the Greek crisis was “miniscule” and there’s unlikely to be material issues unless there is a major ruction in global markets. The Kospi rallied 1.1%, reflecting ebbing worries about the Greek debacle on the broader global economy. The Sensex added 0.9%.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Thursday — Australia posts May merchandise trade balance. The Eurozone reports May producer prices. The UK releases June construction PMI. The European Central Bank publishes the minutes of its governing council meeting of June 3. In the US, June employment situation and May factory orders along with weekly jobless claims, money supply and Fed balance sheet will be reported.
Friday — June composite PMIs will be released for China, Japan, the Eurozone, Germany and France while services PMIs are posted for India and the UK. Eurozone May retail sales will also be reported. It is a holiday in the US and all markets are closed.
*Note — all releases are listed in local time.