Europe
European markets saw a modest rebound on Thursday on optimism that Greece and its creditors will eventually meet in the middle over disagreements that have so far prevented a deal. Unfortunately, confusion still reigns since both Athens and its lenders tabled separate and competing proposals for finance ministers to review.
Creditors are still holding firm on the need to remove early retirement incentives in Greece and raise the VAT on certain industries as well as the Greek islands, but have pushed out the timeframe in which the changes would need to be made.
While Greece did submit its own proposal, it will only be the creditor’s proposal that is considered in Thursday’s meeting, leaving little chance of agreement.
The FTSE 100 was flat after having come in the vicinity of two-week highs with most sectors trading narrowly in the red.
ARM Holdings (LONDON:ARM) benefitted from a move higher in Apple shares (NASDAQ:AAPL), one of its main customers, after comments from respected investor Carl Icahn that the stock represents the same opportunity as Netflix (NASDAQ:NFLX) a few years ago before it more than doubled in value.
Shares in Sage Group (LONDON:SGE) helped the FTSE’s tech sector outperform, partly recovering the heft drop seen yesterday.
Admiral Group Plc (LONDON:ADML) lost over 2% after a broker downgrade.
US
US markets opened higher on Thursday as personal spending picked up more than expected in May, boosting chances the US consumer may help lift the US economy into faster growth in the second half of the year after a lacklustre start.
US personal spending was up 0.9% when a gain of 0.7% was expected, which compares with a revised 0.1% gain in April. The pickup in spending and upward revision to previous data would imply second quarter US GDP will be revised higher, giving the Fed more room for a rate hike.
FX
The US Dollar was mostly lower on Thursday despite a broadly positive set of economic data with the commodity currencies reversing some of yesterday’s losses and the Swiss franc the biggest loser.
The Swiss franc fell on Thursday after the SNB’s Jordan said the currency was still “significantly overvalued.” USD/CHF jumped above 0.94 and to a two-week high.
With little in the way of major economic data and the ongoing uncertainty over a resolution for Greece before next week’s deadline, activity in currency markets was subdued.
Commodities
Despite the bigger than expected drawdown in US crude inventories, the WTI contract again failed to close above $61 per barrel, the ceiling that’s been in place since the beginning of May. There will need to be a number of weeks of drawdowns to convince investors oil prices deserve to trade closer to $70 per barrel. For now, the biggest influence on oil prices is likely to be the US dollar.
Gold closed off its lows on Wednesday but was slipping back again on Thursday, likely looking for a challenge of the June 5 low just above $1160 per oz.
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