On 30 June, 2015 – US, Asian equities rebound; Europe remains weak

Global markets steadied Tuesday with most stock indices rebounding from Monday’s heavy losses.
United States
Stocks advanced Tuesday in choppy trading as investors hoped for a last-minute deal to keep Greece in the euro. The rebound was partly due to bargain hunting following yesterday’s sell-off, which pulled the Dow Jones industrials down to its lowest closing level in almost five months. Volatility picked up on Tuesday also due to the expiration of quarterly options. The Dow edged up 0.1%, the S&P gained 0.3% and the Nasdaq added 0.6%. The three indices declined in June. The Dow was down 2.2%, the S&P declined 2.1% and the Nasdaq lost 1.6%.
June consumer confidence jumped to a reading of 101.4 from 97.3 in May. Single family home prices rose in April from a year earlier but at a slower pace than forecast.
Biotechnology stocks advanced. Agios Pharmaceuticals and Celldex Therapeutics turned in two of the biotech sector’s best performances. Significant strength was also visible among airline stocks. Brokerage and internet stocks also saw notable strength following the steep losses posted in the previous session. However, steel stocks saw some further downside.
On Tuesday, Greece asked for a new bailout before its current one expires and it misses on a payment to the International Monetary Fund. But Eurozone finance ministers rejected Greece’s last-minute plea for an extension of its bailout beyond tonight’s expiry, leaving Athens without an EU financial safety net for the first time in five years. According to officials who participated in a hurriedly-organized teleconference, the ministers reacted coolly to an unexpected request from Greek Prime Minister Alexis Tsipras for a new €29.1 billion third bailout.
One official said the proposal was only discussed briefly and Greek authorities vowed to submit another set of economic reform proposals in an effort to kick start the new negotiations. Another teleconference among ministers was scheduled for Wednesday morning to discuss the new reform submission. German politicians said chancellor Angela Merkel told party allies she would not begin a new set of consultations with Athens until after Sunday’s Greek referendum on bailout conditions.
Eurozone finance ministers will hold a teleconference Wednesday morning to examine the “state of play” on Greece, according to Jeroen Dijsselbloem, the Dutch finance minister who chairs the Eurogroup. Another focus tomorrow will be the review by the European Central Bank of its emergency liquidity assistance to the Greek banking system.
Gold at the afternoon London fixing dropped US$5.00 to US$1,171.00. Copper futures were down 0.5% to US$2.62. WTI spot crude was up US$1.00 to US$59.33. Dated Brent spot crude was up US$1.50 to US$63.51. The US dollar was up against the euro, pound, Swiss franc and the Canadian dollar. However, it declined against the yen and the Australian dollar. The Dollar Index was up 0.6%. The yield on US Treasury 30 year bond was up 5 basis points to 3.13% while the yield on the 10 year note added 3 basis points to 2.35%.
Europe
Stocks retreated again Tuesday. Today is a fateful day for Greece. It faces a crucial €1.6 billion payment to the International Monetary Fund today, which Greek Finance Minister Yanis Varoufakis has confirmed the country will not make. Failing to pay the IMF will not immediately result in default — the lender would describe that Greece as in arrears. The FTSE was down 1.5%, the CAC declined 1.6%, the DAX dropped 1.2% and the SMI retreated 1.0%. In the month of June, the FTSE sank 6.6%, the CAC lost 4.3%, the DAX retreated 4.1% and the SMI was 4.9% lower. It was the second consecutive monthly decline for the CAC and the third for the DAX.
Last minute efforts to prevent Greece from a potential default or an exit from the Eurozone are underway. The Greek government has submitted a request for a two-year bailout with the European Stability Mechanism (ESM) to fully cover its financing needs, along with debt restructuring. This would imply the country is seeking a third rescue as its second bailout program ends today (June 30). However, the European Financial Stability Facility released a statement mid-afternoon US ET concerning Greece’s financial assistance program. It said that that the program expires tonight at midnight CET. As a result, the last EFSF loan tranche of €1.8 billion will no longer be available for Greece and the €10.9 billion in EFSF notes to cover the potential cost of bank recapitalization or bank resolution in Greece will be cancelled. The EFSF program will expire without any follow-up arrangement and that the positive results of the program are put at risk.
K+S increased after Handelsblatt reported that an offer from Potash Corp of Saskatchewan was too low. Hugo Boss declined on a broker downgrade as did LVMH. ThyssenKrupp and Infineon Technologies finished lower. Total and Technip were down. In London, mining stocks were among the weakest performers as metal prices declined. BHP Billiton, Anglo American, Rio Tinto, Glencore and Randgold Resources retreated. Both Tesco and J. Sainsbury were down.
June flash harmonized index of consumer prices eased to 0.2% on the year from 0.3% in May. Eurozone unemployment rate remained unchanged at 11.1%, the lowest rate recorded in the euro area since March 2012. In Germany, retail sales were up a monthly 0.5% while its unemployment rate was 6.4%. First quarter gross domestic product growth was revised upward to 0.4% on the quarter and 2.9% from the same quarter a year ago.
Asia Pacific
Shares here rebounded from Monday’s losses. Investors seemed to believe that Greece’s debt crisis would only have a relatively small impact across emerging markets, even if Greeks vote against the EU’s bailout proposals in Sunday’s referendum that could decide the country’s fate in the Eurozone.
The Shanghai Composite soared 5.5% after a roller coaster ride. The index fell more than 5% in early trading before rebounding on the back of gains in banking and insurance stocks after the People’s Bank of China injected cash into the banking system using open market operations. The Hang Seng index also reversed early losses to end up 1.1%. The Shanghai Composite lost 7.3% and the Hang Seng was down 4.3% in June. Chinese authorities worked swiftly to draw a line under the stock declines. On Tuesday, officials said they are considering lowering stamp duties on stock purchases, which would encourage buying.
The Nikkei added 0.6% as traders hunted for bargains after sharp losses in the previous session. The index plunged 2.9% in the previous session amid a global sell-off in light of the Greek financial crisis. In June, the Nikkei retreated a relatively benign 1.6%. Fuji Heavy Industries, Suzuki Motor, ANA Holdings, Nippon Paper Industries and Aeon advanced. Sumitomo Mitsui Financial Group gained on a Wall Street Journal report that it is nearing a deal to buy General Electric’s European private equity finance business. Sony retreated after the electronics firm unveiled plans to raise about ¥440 billion by issuing new shares and convertible bonds. Sharp, JFE Holdings and Fujitsu declined.
Australian shares swung between gains and losses before finishing higher after Chinese stocks halted a three-day slide. The S&P/ASX added 0.7% and the All Ordinaries, 0.6%. Both indices lost 5.6% in June. The big four banks advanced while miners were mixed. The Kospi added 0.7% but was 1.9% lower on the month. The Sensex was up 0.5% but down 0.2% on the month.
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*
Final June manufacturing PMIs will be released for China, Japan, India, the Eurozone and member states, the UK and the US. China June CFLP manufacturing PMI will also be posted. In the US, June ADP private employment report, June ISM manufacturing survey and May construction spending will be released.
*Note — all releases are listed in local time.