On 10 June, 2015 – European markets break six-day losing streak on hopes for a Greek deal

While Asian stocks were mixed, shares in Europe and the US rebounded after the two negative days that began the week.
United States
US shares rallied on signs of progress in negotiations over Greece’s debts, snapping a weeklong slump. Both the Dow Jones industrials and Nasdaq were up 1.3% while the S&P gained 1.2%. The rally was partly due to bargain hunting, with traders picking up stocks at somewhat reduced levels following recent weakness. Prices on US government bonds continued to slide.
It has been reported that Germany’s Chancellor, Angela Merkel, may be willing to release more money from Greece’s bailout fund if the Greek government commits to at least one move to tighten its budget. Some analysts are thinking that investors are starting to shift their attention from Greece’s troubles to better news on the US economy.
Johnson Controls jumped after the company announced that it was considering a sale of its automotive business. Netflix gained after shareholders approved a proposal to increase the number of shares the company can issue, spurring hopes for a possible stock split. HCC Insurance moved sharply higher after the company announced an agreement to be acquired by Tokio Marine in a US$7.5 billion all cash deal. Sigma Designs posted a strong gain after reporting first quarter results that came in above analyst estimates. Mattress Firm came under pressure after the mattress retailer reported weaker than expected first quarter results. Alliance One helped to lead the tobacco sector higher, jumping to its best closing level in 10 months.
Gold at the afternoon London fixing was up US$11.10 to US$1,188.50. Copper futures were up 1.1% to US$2.74. WTI spot crude was up US$1.08 to US$61.22. Dated Brent spot crude was up 73 US cents to US$65.61. The US dollar was down against the euro, yen, pound and the Canadian and Australian dollars. It was virtually unchanged against the Swiss franc. The Dollar Index was down 0.8%. The yields on both the US Treasury 30 year bond and on the 10 year note were up 6 basis points to 3.33% and 2.49% respectively.
Europe
European markets rallied sharply Wednesday, putting an end to a six session losing streak. Greece remained in focus ahead of a meeting between Greek Prime Minister Alexis Tsipras with German Chancellor Angela Merkel and French President François Hollande. Investors are optimistic that a deal will soon be reached to resolve the Greek debt problem. The FTSE was up 1.1%, the CAC gained 1.7% and the SMI was 1.4% higher. The DAX, which dropped into correction territory on Tuesday, rebounded 2.4%.
The European Central Bank has reportedly increased the cap on the emergency liquidity assistance that Greek banks can draw on by €2.3 billion. Recent volatility in the European bond market eased slightly, but the sell-off continued. The yield on the German 10-year bond climbed back above 1% for the first time since September.
HeidelbergCement advanced after it announced full year results. Daimler, BMW and Volkswagen finished higher on the day. Both RWE and E.ON gained. In Paris, Total and Technip were up. Kering and LVMH rallied. Retailer J Sainsbury climbed after issuing its first quarter sales update. Tesco and Morrison Supermarkets also advanced. Standard Chartered surged after its CEO vowed to eliminate waste and excess at the company. Mining stocks including Fresnillo, Anglo American, BHP Billiton and Glencore gained thanks to an increase in precious metal prices. Weir Group declined after the engineering solutions provider said its divisional order input over the first five months of 2015 was 34% lower than last year.
April industrial production in France and Italy declined a monthly 0.9% and 0.3% respectively. However, UK output was up 0.4% thanks to increased production in oil and gas extraction. However, manufacturing retreated 0.4% due to weakness in pharmaceutical products.
Asia Pacific
Asian stocks ended mixed near three month lows Wednesday as higher US bond yields, uncertainty about the timing of a Fed rate increase and the apparent lack of progress in talks between Greece and its creditors kept investors on edge.
Chinese and Hong Kong shares drifted lower after index provider MSCI said it would hold off including China-listed shares in its Emerging Markets Index until a few important remaining issues related to market accessibility are resolved. The Shanghai Composite edged 0.1%. Shares of China National Nuclear Power, a subsidiary of one of the country’s two state-owned nuclear reactor builders, soared on its debut on the Shanghai Stock Exchange, helping ease investor disappointment over MSCI’s decision to some extent. The Hang Seng dropped 1.1% to a two month low after a woman was rushed to a Hong Kong hospital Wednesday on suspicion she had contracted the potentially deadly MERS virus.
The Nikkei retreated for a fourth consecutive session, this time by 0.2%. The yen strengthened after Bank of Japan Governor Haruhiko Kuroda said a further decline in the currency is “unlikely” on a real effective exchange rate basis because it is already very weak. The yen rose more than 1% against the dollar and the euro, leaving investors in a tizzy. Investors ignored positive data that showed Japan’s core machinery orders unexpectedly jumped 3.8% in April from the previous month, in a sign that companies may be boosting capital expenditure.
Both the S&P/ASX and All Ordinaries added 0.1% despite a downbeat speech from Reserve Bank of Australia governor Glenn Stevens leaving open the possibility of another rate cut to sustain growth. Miners were mixed while banks advanced. The Kospi dropped 0.6%. Concerns over the fallout of the Middle East Respiratory Syndrome (MERS) weighed on tourism-related stocks. However, the Sensex rallied 1.4%, snapping its six day losing streak, as MSCI’s decision not to include China-listed shares in one of its key benchmark indexes eased worries over short-term capital flight.
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*
Australia releases its May labour force survey. In the US, May retail sales and import/export prices along with April business inventories will be released. Weekly money supply, Fed balance sheet and jobless claims will be reported.
*Note — all releases are listed in local time.