What many had feared it would come down to has happened in Greece, no more ELA funding from the ECB and the introduction of capital controls. The collapse of talks between Greece and its lenders on Sunday means Greece will almost certainly miss its payment to the IMF on Tuesday.
Greek PM Alexis Tsipras has called for a referendum on July 5, leaving the decision to the Greek people as to whether they wish to stay a part of the euro. The choice is to keep the euro and have the associated enforced austerity measures, or reject austerity and probably drop out of the euro.
Stocks in China, Japan, Australia, the UK and Europe have all traded substantially lower with US stocks also expected to open lower on the risk that financial fallout in Greece will lead to contagion across other markets.
China cut interest rates in response to the 7% drop in the Shanghai Composite on Friday. The attempted confidence-boosting measure has done little to soothe investors who are experiencing what is now a bear market in China with a 22% decline from the highs. The worry for investors in Europe and the US is that the collapse of the government stimulus-induced rally in China will be repeated in domestic markets.
Until 2nd quarter earnings season begins in two weeks’ time, US stock will remain at the mercy of international developments, especially Greece, as well as speculation over the timing of the Fed’s first rate hike.
The only economic data release of significance is pending some sales which is expected to show a 1.2% increase month-over-month.
Futures suggest the:
S&P 500 will open 18 points lower at 2,083 with the
Dow Jones expected to open 154 points lower at 17,792 and the
Nasdaq 100 43 point lower at 4,441.
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