Europe
Optimism that Eurogroup meetings this week will finally bring about a deal for Greece coupled with another increase in emergency lending for Greek banks from the ECB helped drive a strong rally in European stocks on Monday. Gains were tempered after various Eurozone officials voiced dissatisfaction at the new proposals for economic reform issued by Greece.
Adding to the farcical nature of the latest set of “crunch” talks, Greece apparently submitted the wrong documents on Sunday and produced an entirely different set of proposals at the summit on Monday. Creditors were left without enough time to review them with the net result being that the meetings ended after a couple of hours and were scheduled to be resumed Thursday.
No deal is expected to materialise today in Brussels but the next summit arranged for Thursday could offer more promise. Language from creditors appears a little more placatory in recent days so if Greek PM Tsipras can give a bit more ground on the budget surplus, pensions and wages, hope for a deal is kept alive.
UK stocks were helped higher on Monday by takeover talk and the apparent progress over a Greek debt deal. The FTSE 100 bounced back from one month lows led by Severn Trent and Sky which were both seeing strong gains thanks to takeover speculation while Carnival (LONDON:CCL) was a top performer after a broker upgrade. Progress in the UK’s top index was dented by weak performing resource shares ahead of a key Chinese manufacturing data early Tuesday.
US
US stocks opened higher on Monday thanks to a spill-over of optimism from European markets that a Greek deal will get done at summits taking place this week.
Underlying the positivity in US markets is the Federal Reserve’s apparent assurance that it is in no rush to hike rates at its latest policy meeting last Wednesday.
Government bond yields were up again on Monday but for the time being, the recovery in bond prices since the June 10 low supports US equities.
Apple shares (NASDAQ:AAPL) opened higher on Monday after the iPhone-maker U-turned on its policy to charge artists during the 90-day trial period of its new streaming service, seemingly caving in to criticism from singer Taylor Swift. Swift’s battle with market leader Spotify is clearly something Apple’s PR department wish to avoid replicating, just as the company’s rival music streaming service gets going.
FX
The US dollar was mixed on Monday with the euro trading higher thanks to optimism that a deal will get done in Greece while the New Zealand dollar was weak after some disappointing consumer sentiment data from Westpac.
Sterling traded down on profit taking after it touched a 2015 high on Thursday, GBP/USD declined to just above 1.58 while EUR/GBP bounced off a three-week low to just beneath 0.72.
Commodities
Gold came in for heavy selling on Monday, erasing most of Thursday’s post-FOMC gains. Traders moved out of safe-havens to take advantage of the rally in equities buoyed by a new proposal from Greece.
Crude oil chopped around on Monday, erasing early gains as traders sold into a bounce from Friday’s sell off but took quick profits. Iranian lawmakers look set to back a deal on a nuclear agreement, possibly paving the way for higher production, adding to the global supply-glut which could weigh on prices, despite falling US production.
CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.