Flemming J. Nielsen
Danske Bank A/S
Market Movers
Focus will be on Greece after the Greek population yesterday rejected the creditors’ austerity programme in connection with the referendum.
This morning heads of the European Commission, the Eurogroup finance minister and ECB will hold a conference call to discuss the implications of the outcome of the Greek referendum. German chancellor Merkel and French president Hollande are scheduled to meet at 18:30 CET in Paris to agree on a common strategy ahead of the heads of state Eurogroup meeting tomorrow evening. The Eurogroup finance ministers are expected to meet early tomorrow morning to prepare this meeting.
The ECB governing council will hold a conference call this afternoon to discuss a possible increase in the Emergency Liquidity Assistance (ELA). The ECB might also indicate a potential policy response if needed to calm financial markets. The ECB’s response will be key today.
In the data calendar German factory orders, Sentix for the euro area and ISM nonmanufacturing are due for release.
Selected Market News
In Greece the creditors’ austerity programme was rejected in connection with yesterday’s referendum with more than 61% voting ‘No’. This was a substantial larger majority for ‘No’ than suggested by polls ahead of the referendum. Obviously the outcome of the referendum creates substantial uncertainty and increases the likelihood of ‘Grexit’. Without additional cash from the ECB it appears unlikely that Greece will be able to reopen banks tomorrow. On the contrary, press reports suggest that daily withdrawals from ATMs cut be cut further to EUR20.
China on Sunday announced a number of new measures to stabilise the stock market.
Markets Today
The ‘No’ vote has triggered a broad based ‘risk-off’ move across all asset classes but the market response has been relatively modest so far. EUR/USD has declined about one figure to 1.102. Stock markets in Asia are generally lower with Nikkei down more than 2%. Shanghai is slightly up on the back of the measures announced by the Chinese government yesterday.
In the Fixed Income Market Bunds should rally today, the core curves should flatten and we expect the periphery to widen 20-50bp versus core initially on the opening.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD alternates gains with losses near 1.0720 post-US PCE
The bullish tone in the Greenback motivates EUR/USD to maintain its daily range in the low 1.070s in the wake of firmer-than-estimated US inflation data measured by the PCE.
GBP/USD clings to gains just above 1.2500 on US PCE
GBP/USD keeps its uptrend unchanged and navigates the area beyond 1.2500 the figure amidst slight gains in the US Dollar following the release of US inflation tracked by the PCE.
Gold keeps its daily gains near $2,350 following US inflation
Gold prices maintain their constructive bias around $2,350 after US inflation data gauged by the PCE surpassed consensus in March and US yields trade with slight losses following recent peaks.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.