Dax 30; Ftse 100; SP 500 - Market View

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Investor fears does not relate to the relevance of Greece itself but with the impact of a hypothetical failure could have on financial markets. This scenario would be a negative factor in the global environment, characterized by the slowdown of the Chinese economy and the contraction of many emerging economies. Thus, the dependence of the US economy from domestic factors would increase.

 

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Now, creditors expect Greece to present a new plan so that the technicians from both sides can discuss it until Saturday lunch time, when it will be held the Eurogroup meeting. Chancellor Angela Merkel was adamant in saying that an agreement should be reached by Sunday before the opening of financial markets on Monday.

 

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The Greek Government stated that banks today would not open and would be imposed controls on withdrawals (maximum € 60 daily) and movement of capital, also deciding the closing of the Athens stock exchange presumably to the referendum in Sunday.

 

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US markets closed with very wide losses. The reaction of US investors was significant. Until yesterday, and as at similar times in the past, the US stock markets have always considered the Greek situation a European issue with limited potential to affect the US economy. However, given the high uncertainty that is spreading throughout the Eurozone, US investors fear that the modest European economic recovery is compromised, adversely influencing this quarter the attempted acceleration of the US economy. In a risk aversion context, the publication of economic data has been relegated to a lower plane. Technically, yesterday’s session is an important warning. Since late March, the S & P had fluctuated between 2067 and 2135, not showing any clear trend in the short term. Yesterday, the S & P broke the lower part of this range and may signal the beginning of a descending phase. This signal can be thwarted if the S & P back to close within that range.

 

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Angela Merkel said that should not be discussed new proposals while the Greek people do not express themselves through the referendum.

 

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Another particular moment of increased volatility in the financial markets:
On Sunday 5th July 2015 Greece will be requested to vote in a referendum about the approval or refusal of the austerity measures requested by the EU. This can significantly impact the markets when they open on Sunday July 5th and Monday July 6th.

 

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If there are no unexpected developments for Greece and considering the Wall Street holiday, today’s session should be less volatile than the last one.

 

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The voting yesterday generates great uncertainty. All this uncertainty may generate some nervousness in financial markets, because uncertainty is the worst enemy of investors. The next key date will be July 20, when Greece will have to repay 3500 M. € to the ECB. If this reimbursement is not hypothetically performed, most likely it will be decreed a failure of Greece.

 

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According to the Greek authorities, the Greek banks will not reopen today and will remain closed for a few days. In addition to the limitations on cash withdrawals and control the movement of capital, liquidity of these institutions is alarmingly decreasing in recent days.

 

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Asian markets closed with sharp losses, justified by the uncertainty in the eurozone and the weakness of Chinese stock markets. In Shanghai, at 7:20 AM, the local stock market lost 6%, with many private investors being forced to sell, as they could not provide financial guarantee to maintain their investment positions in the stock exchange. Chinese officials already mentioned there is “a sense of panic” in the market, which explains the irrationality of sales spiral.