European stock market, economy and companies update (July 06, 2015)

***Notes/Observations***
- Safe-haven flows in demand following Greek "No' vote on creditor bailout conditions
- Greece referendum on creditor bailout conditions registered a resounding "No" giving the Syriza govt a victory. Greece Fin Min Varoufakis announced his resignation from position to pave the way for better negotiations
- Shanghai Composite manages to close higher to end a 4-day losing streak aided by measures to combat recent slide in price action


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
**Equities**
Indices [Stoxx50 -1.4%, FTSE 100 -0.6% at 6,549, DAX -1.1% at 10,937, CAC-40 -1.3% at 4,744, IBEX-35 -1.8% at 10,586, FTSE MIB -2.7% at 21,917, SMI -0.3% at 8,883, Athens Stock Exchange closed, S&P 500 Futures -0.7% at 2,053]

- Market Focal Points/Key Themes: European equity markets open lower; Initial reaction to Greek referendum result less dire than what was seen last week, when the referendum plan was initially announced; Peripheral banks underperform; Copper trades sharply lower as Chinese equities pare gains and European stocks move lower; Rolls Royce warns on outlook ; Possible upcoming ECB decision on ELA for Greek banks

By Sector
- Industrials [Rolls Royce RR.UK -8% (profit warning), Fomento FCC.ES -2% (capital raise speculation)]
- Stoxx50 sectors [Financials -1.8%, Utilities -1.6%, Energy -1.6%, Telecom -1.5%, Basic Materials 1.5%, Consumer Cyclical -1.5%, Technology -1.4%, Industrials -1.2%, Consumer Non-Cyclical -1.2%]

**Speakers**
- Greece Fin Min Varoufakis announced his resignation from position. He stated he was made aware of a certain preference by some Eurogroup participants, and assorted partners, for his absence from its meetings. To continue to support PM Tsipras and the new Finance Minister. Greek chief negotiator Tsakalotos said to be favored to be new Fin Min
- ECB's Noyer (France) reiterated view that Greece debt to ECB could not be restructured as it would be considered monetary financing of a member State
- France Fin Min Sapin stated that Greek referendum vote would not solve the country's problems but must be respected; No vote carried risks of Grexit but nothing was automatic. Up to Greece to make proposals. Basis of negotiations was on the table; The weight of Greek debt can be a part of the process and not taboo
- S&P sovereign analyst Kraemer: Risk of Grexit has increased. Contagion risks is fairly manageable
- Germany SPD Lawmaker Carsten Scheider: Varoufakis resignation will not make talks easier
- Greece Fin Min Official stated that it would pay coupon on 2018 note Monday (approx. €14M)

**Currencies***
- Risk aversion was heightened as the trading week began but significant safe haven flows did not materialize much in trading on Monday following the Greek referendum on creditor bailout conditions.
- Euro currency was initially weighed down by the resounding "No" vote in Greek referendum but losses were tempered after Greece Fin Min Varoufakis announced his resignation from his position. Dealers noted that Varoufakis absence would aid a move towards a compromise between Greece and Europe. Overall the bias for Euro remained lower as uncertainty likely to flare up in the wake of the 'no' vote over the weekend. The EUR/USD tested the 1.0970 level during the Asian session bu made an attempt to regain a foothold above 1.11 area during the European morning.
- The CHF currency was mixed against the major pairs. There was a modest relief for Swiss policy makers following CPI data given their concerns about the overvalued currency. USD/CHF at 0.9430 area just ahead of the NY morning.

**Fixed Income:
- Bund futures trade at 152.52 up 74 ticks on the day trading well off the highs at 153.35 in the early session as the Greeks voted overwhelmingly NO in the Greek referendum on Sunday. Volumes are robust with over 230K contracts traded so far. Having come off 80 ticks from the highs analysts are targeting initial support at 151.96 which would represent the gap fill followed by 151.58. A break below this would target 151.13 a reversal of the trend. Initial resistance lies at 153.35 today's highs followed by 153.79. Beyond this 154.51 provides resistance after which targets 155.34 representing June 1st highs.
- The Euribor strip continues to flatten, and are approaching levels seen in early June, as the Greek no vote continues to push long end Euribors bid, with red and blue months up 1.5-3 ticks in the early going. Jun16-17 Calender trades now at 12.5bp after being as high as 22bp on June 26th.
Mondays's liquidity report** **showed Friday's excess liquidity dropped to €391.8B a rise of €1.85B from €389.95B prior due to a corresponding decrease in AFs. €594M was borrowed in the overnight loan facility a fall from the €722M prior.
- UK Gilt futures trade at 116.36 up 33 ticks as it contract reclaims the 116 handle. The yield of 1.96% touched after the open represented the lowest level since mid June. Despite the move the Gilt continues to trade in a wide range with resistance cited by analysts to remain a 116.45, with a firm break above signalling a break out with 117.26 and 117.91 (May 29th Highs) as next resistance levels. To the downside 116.03 represent the gap fill, with 115.18 cited as the next area of support, with a break of this resuming the downtrend with a target of 114.45 next.

**Political/In the Papers:
- (GR) With 100% of Greek referendum votes counted, NOs received 61.3% to 38.7% YES - press
- (GR) ECB reportedly to maintain current ELA cap for Greek banks when talks resume Monday - financial press
-(GR) Greece bank association says Greek banks have "sufficient liquidity until the planned reopening of the banks on Tuesday"
- (ES) According to latest polls, Spain's anti-austerity Podemos is in a virtual tie with the mainstream parties with 6 months to go to parliamentary elections
- (CN) China Stock Regulator (CSRC): China Securities Finance to increase capital from CNY24B to CNY100B to help keep markets stable - financial press

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (EU) EU-Japan Free Trade negotiations in Brussels
- (IS) Israel Central Bank Jun Minutes of Rate Meeting
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-2.0B in 6-month Bills
- 06:00 (IE) Ireland May Industrial Production M/M: No est v 1.3% prior; Y/Y: No est v 9.4% prior
- 06:45 (LX) Luxembourg Fin Min Gramegna
- 06:45 (US) Daily Libor Fixing
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:30 (CL) Chile May Economic Activity Index (Monthly GDP) M/M: 0.1%e v 0.0% -prior; Y/Y: 1.5%e v 1.7% prior
- 08:00 (IN) India announces details of upcoming bond auction
- 08:50 (FR) France Debt Agency (AFT) to sell combined €5.6-6.8B in 3-month, 6-month and 12-month Bills
- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 09:45 (EU) ECB announces Covered-Bond Purchases
- 09:45 (US) Jun Final Markit Services PMI: 54.9e v 54.8 prelim; Composite PMI: No est v 54.6 prelim
- 10:00 (US) Jun ISM Non-Manufacturing Composite: 56.4e v 55.7 prior
- 10:00 (US) Jun Labor Market Conditions Index Change: 2.0e v 1.3 prior
- 10:00 (CA) Canada Jun Ivey Purchasing Managers Index (Seasonally Adj): 55.50e v 62.3 prior; PMI Unadj: No est v 65.2 prior
- 10:30 (BR) Brazil Jun Vehicle Production: No est v 210.1K prior; Vehicle Sales: No est v 212.7K prior; Vehicle Exports: No est v 40.8K prior
- 10:30 (CA) Bank of Canada (BOC) Q2 Senior Loan Officer Survey: No est v 6.7 prior; Business Outlook Future Sales: 12.0e v 4 prior
- 11:30 (US) Treasuries to sell 3-Month and 6-Month Bills
- 16:00 (US) Crop Condition Report
- 18:00 (NZ) NZIER Think Tank Q2 Business Opinion Survey: No est v 23 prior
- 20:30 (TW) Taiwan Jun CPI Y/Y: -0.7%e v -0.7% prior; WPI Y/Y: -9.2%e v -9.5% prior
- 21:00 (PH) Philippines Jun CPI M/M: +0.3%e v -0.1% prior; Y/Y: 1.5%e v 1.6% prior; CPI Core Y/Y: 2.2%e v 2.2% prior
- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills
- 23:45 (JP) Japan to sell CPI Linked 10-Year Bonds
- (UR) Ukraine Jun CPI M/M: 0.5%e v 2.2% prior; Y/Y: 57.5%e v 58.4% prior


**Economic data***
- (JP) Japan May Preliminary Leading Index CI: 106.2 v 106.2e; Coincident Index: 109.2 v 109.1e
- (DE) Germany May Factory Orders (beat) M/M: -0.2% v -0.4%e; Y/Y: 4.7% v 3.8%e
- (ES) Spain May Industrial Output NSA Y/Y: 1.7% v 2.5% prior; Industrial Output SA (beat) Y/Y: 3.4% v 2.8%e
- (CH) Swiss Jun CPI (beat) M/M:+_0.1% v -0.1%e; Y/Y: -1.0% v -1.2%e
- (CH) Swiss Jun CPI EU Harmonized M/M: +0.2% v -0.1%e; Y/Y: -0.6% v -1.0%e
- (TW) Taiwan Jun Foreign Reserves: $421.4B v $419.0B prior
- (EU) Euro Zone July Sentix Investor Confidence (beat): 18.5 v 15.0e

Fixed Income Issuance:
- None seen

Contributed by Trade The News