Markets brace as Greece debt crisis unfolds - 29.6.2015

US stock index futures are falling today after ending the week lower as Greece rejected international creditors’ proposal for bailout extension. The S&P 500 ended 0.4% lower for the week as it closed flat on Friday. The Dow Jones Industrial Average recorded 0.3% gain on Friday as Nike’s 4.3% jump on better-than-expected earnings report lifted the blue chip index, but still lost 0.4% on the week. The dollar jumped today after edging higher against major currencies on Friday as the ICE US Dollar Index advanced 0.18%, gaining 1.4% on the week. The final reading of University of Michigan consumer confidence index for June was revised upward to the highest level in five months. The trading volume on US exchanges was 6.17 billion shares, 1.3% higher than monthly average. This week investors will be looking forward to June nonfarm payroll report on Thursday to gauge the timing of first interest rate hike as the Federal Reserve announced its policy remains dependent on US economic performance data. Today at 15:00 CET May pending home sales will be released in US. The tentative outlook is negative.

European stock futures are falling today after stocks ended higher on Friday on hopes that an agreement between international lenders and Greece can be reached on Saturday. The Stoxx Europe 600 ended 0.1% higher, advancing 2.9% over the week. Euro fell today 1.5% after trading 0.27% lower against the dollar on Friday, recording 1.75% weekly drop. The Greek government on Friday rejected the bailout extension proposal. Prime Minister Alexis Tsipras made a surprise decision on Saturday to call a referendum on bailout proposal. The European negotiators reacted negatively to the announcement of the referendum after they rejected Athens’ request on Saturday to extend the bailout by a few more weeks. The failure to reach an agreement on bailout extension effectively means Greece is going to default on 1.6 billion euros repayment to IMF on June 30 as it had indicated it did not have sufficient funds to make the payment. On Sunday Greek parliament authorized Prime Minister Alexis Tsipras’ proposed July 5 referendum. The same day the European Central Bank decided not to provide more emergency funds to Greek banks suffering deposit losses and froze the ceiling on Emergency Liquidity Assistance at just below 89 billion euros. Today Greece imposed capital controls, limiting daily cash withdrawals to 60 euros and banning payments and transfers abroad. Banks will be closed until July 6. Today at 10:00 CET May economic confidence index for euro-zone will be released. The tentative outlook is negative. At 13:00 CET preliminary German consumer price index for June will be released. The tentative outlook is negative. Tomorrow at 01:00 CET May retail sales will be released in Germany. The tentative outlook is negative. At 08:55 CET June unemployment rate will be released in Germany. The tentative outlook is neutral.

Nikkei fell 2.9% today on concerns over Greek default and possible exit from euro-zone as yen strengthened on the back of higher safe haven demand.

China’s central bank cut interest rates and reserve requirements on Saturday, aiming to boost economic growth and calm stock market fluctuations.

Oil prices are falling today after WTI Crude lost 0.1% on Friday while Brent Crude gained 0.1%.

Gold prices are rising today after closing little changed on Friday as investors expected negotiations over the Greek bailout extension to continue over the weekend.