Europe
There was stifling heat in the City of London on Wednesday but stock markets weren’t losing their cool over the crises in Greece.
Greek prime minister Tsipras offered enough hope to spring a relief rally by suggesting Greece would meet most of the demands of its creditors in the most recent proposal. However, Greek banks remained closed while the European Central bank deliberated providing more emergency funding
The final reading for European manufacturing PMIs showed improvement in month with the Eurozone figure at 52.5, matching the preliminary estimate. France was a highlight, moving into expansion while Italy and Spain slipped back a bit but remain firm while Germany saw modest improvement.
The second quarter as a whole was a big improvement for manufacturing in the Eurozone and its no coincidence that the euro has strengthened as well. Unfortunately for Europe’s export-orientated blue chip stocks the euro’s strength has forced a correction from the huge rally in Q1.
Bank of England Governor Mark Carney said the UK’s stability outlook had worsened because of Greece but prefaced it saying the risk of financial contagion was limited.
UK Banks were some of the top performers with RBS (LONDON:RBS), Barclays (LONDON:BARC) and Lloyds (LONDON:LLOY) all making strong gains in the FTSE 100, the notable laggard was HSBC (LONDON:HSBA)impacted by comments from BOE Governor Carney on market access to banks with overseas headquarters.
US
US markets opened higher on Wednesday as fears over Greece’s debt crisis temporarily abated but in a repeat of early trading on Tuesday, gave back some early gains when strong economic data raised the chance of an early rate hike.
Private companies added 237K jobs in June, above the 218K expected and up from 201K in May. ISM manufacturing beat expectations with a reading of 53.5, higher than the 53.2 expected and 52.8 in May.
Shares of insurance company Chubb Corporation (NYSE:CB) moved higher on the news of a takeover by Swiss rival ACE for $28.3bn.
McCormick & Company Incorporated (NYSE:MKC) shares were higher after the spice-maker beat quarterly earnings estimates.
FX
Better than expected ADP employment and ISM manufacturing data helped push the Dollar up against most major currencies on Wednesday.
The euro got an early lift on rumours Greece may give in to creditor demands but gains quickly turned to bigger losses when creditors reaffirmed that they will wait for the result of Sunday’s Greek referendum before any deal can be agreed.
Disappointing manufacturing data from the UK as well as a worsened UK stability outlook kept the British pound on the backfoot. After its strong run at the start of June, GBP/USD is retracing back towards 1.56.
Commodities
Gold seems like it’s just waiting for a strong non-farm payrolls number to send it crashing beneath recent support at $1,170, though turmoil in Greece could see safe-haven demand cushion the blow.
Crude oil was weak leading into the IEA inventories data after a surprise build in inventories according to API data on Tuesday. Expectations were for a slower drawdown than seen the prior month but IEA data confirmed the API with a build of 2.39m barrels, sending crude even lower.
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