Expectation of a last gasp deal in Greece is helping push global equities higher on Thursday with US stocks set to make a higher open ahead of personal income and spending data.
US markets sold off on Wednesday contending with Greece’s lenders rejecting its latest proposal, rising concern that the Fed may lift off from zero-bound interest rates in September and end-of-quarter fund repositioning. The Dow Transports underperformed major US indices with railway stocks coming in for heavy selling.
The end of the quarter repositioning is being exacerbated by the growing risk of a Fed rate-hike in September. Equity funds are looking to move away from interest-rate sensitive sectors such as utilities but may not be willing to move into more growth orientated stocks which see the most volatility in market pullbacks.
In Brussels, Greek PM Tsipras has been given a rather arbitrary deadline for coming up with a workable proposal today. Reports suggest some bailout money could be unlocked in order to pay the IMF on June 30 without a Greek parliament vote, if a deal does get agreed. So a rejection of any deal at home is of no consequence, at least until a payment is due to the ECB later in July. In all likelihood, creditors will leave it until the weekend or early next week to squeeze as much out of Greece as possible before risking the country defaulting on its debts.
Expectations are for core PCE inflation to remain at 1.2% in May, well below the Fed’s target rate of 2%. Personal spending could jump from 0% in April, to 0.7%, offering some signs of a recovering in consumer spending that has been lacking so far this year.
Nike (NYSE:NKE), Barnes & Noble Inc (NYSE:BKS) and Micron Technology Inc (NASDAQ:MU) are expected to report earnings on Wednesday.
Futures suggest the:
S&P 500 will open 7 points higher at 2,115 with the
Dow Jones expected to open 85 points higher at 18,051 and the
Nasdaq 100 18 points higher at 4,542.
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