S&P 500 Futures Rise as Euro Falls on Greece; China Shares Gain

Frankfurt (Jun 30)  Standard & Poor’s 500 Index futures rose, indicating the gauge will rebound from its biggest slump in a year. European stocks fell with the euro as Greece looked set to lose bailout funding, while Chinese shares rallied.

Standard & Poor’s 500 Index futures rose 0.5 percent by 7:10 a.m. in New York. The Stoxx Europe 600 Index slipped 0.5 percent and the euro declined 0.5 percent to $1.1176. Italian bonds rebounded, with the 10-year yield falling two basis points to 2.38 percent. The Shanghai Composite Index jumped 5.5 percent reversing a decline of as much as 5.1 percent earlier in the day. Nickel dropped to a six-year low.

About $1.5 trillion was erased from the value of global equities Monday, the most in two years, after Greek Prime Minister Alexis Tsipras short-circuited bailout talks by calling a referendum on creditor demands. The focus Tuesday shifts to whether Greece will miss a $1.7 billion payment to the International Monetary Fund with Europe’s funding program due to expire at midnight.

“Who would have thought that Greece would even get to this stage,” said Ben Kumar, who helps oversee about $14 billion at Seven Investment Management in London. “Today should have been about putting the finishing touches on photos of Tsipras and creditors signing a deal. Instead we have to wait out this week with more uncertainty.”

Paring Losses

Stocks and the euro pared losses after EKathimerini said in a Twitter post that the Greek government is reconsidering a proposal from European Commission President Jean-Claude Juncker. The newspaper reported last night Tsipras rejected an offer by Juncker to accept the creditors’ proposal, campaign for a “Yes” vote in the referendum and resume talks to reach an accord. Both postings cited people familiar.

The Global X FTSE Greece 20 ETF added 3.3 percent in early New York trading after slumping 19 percent on Monday. American depositary receipts of National Bank of Greece SA added 2.7 percen following a 24 percent plunge. The yield on 10-year bonds increased 31 basis points to 15.39 percent today.

All but one of the Stoxx 600’s 19 industry groups fell, with commodity producers posting the biggest declines. The volume of shares changing hands was 52 percent greater than the 30-day average.

The Stoxx 600 has dropped 3.3 percent this quarter, the most since June 2012. With an 8.1 percent decline, Germany’s DAX Index is the worst performer among developed markets. Greece’s ASE Index rose 2.8 percent in the period, before its exchange got shut.

Biggest Losers

After reaching a record in April, a rebound in the euro, bond rout and deadlock talks between Greece and its creditors dragged stocks lower. The Stoxx 600 has trimmed its annual advance to 12 percent.

The DAX and France’s CAC 40 Index were among the biggest decliners in western Europe on Tuesday, falling more than 0.8 percent.

LVMH Moet Hennessy Louis Vuitton SE dropped 2.6 percent after Bank of America Corp. lowered its rating on the stock to the equivalent of a sell. K+S AG rose 2.4 percent after Societe Generale SA said the probability is high that Potash Corporation of Saskatchewan Inc. will succeed in taking over the German company.

While Greek turbulence played out in European bond markets, moves reflected investor optimism that contagion would be contained by euro-area and European Central Bank firewalls.

Euro-area sovereign securities handed investors a 5.7 percent loss this quarter through June 29, according to Bank of America Merrill Lynch’s Euro Government Index, the worst quarterly performance in data going back to 1985.

Kiwi Slides

The euro’s decline erased a 0.6 percent advance from Monday. It’s up 4.1 percent against the dollar this quarter, the most since March 2011. The pound, which is little changed today, is the best performer among major currencies this quarter, with a 6.1 percent rally versus the dollar.

New Zealand’s dollar fell for a third day as deteriorating business confidence added to speculation the central bank will cut interest rates next month. It slid 1 percent to 67.84 U.S. cents, reaching the lowest since June 2010.

S&P 500 E-mini futures expiring in September rose after the index fell for a fourth day. It’s lost 0.5 percent in the past three months, heading for its first quarterly decline since 2012. It has slipped 2.4 percent this month, erasing its gains for the year on Monday.

Willis Group Holdings Plc added 1.2 percent in German trading. The world’s third-largest insurance broker and risk adviser Towers Watson & Co. agreed to an all-stock merger.

Juno Jumps

Celgene Corp. fell 1.7 percent in New York after the biopharmaceutical company said it will pay Juno Therapeutics Inc. about $1 billion as part of a 10-year partnership to study cures for cancer and autoimmune diseases. Juno soared 38 percent in German trading.

The MSCI Emerging Markets Index added 0.9 percent, paring a 3.6 percent monthly drop. The gauge has gained 1.3 percent this year compared with a 1.5 percent advance in the MSCI World Index of developed markets.

The Shanghai Composite Index’s 10-day volatility climbed to the highest level since December 2008. Chinese authorities stepped up efforts to support the market, allowing pension funds to buy stocks as a brokerage association called on investors and fund managers to stabilize the market.

Even after falling more than 20 percent from its June 12 peak, the index is 13 percent higher for the quarter, a fifth straight gain. The Hang Seng China Enterprises Index of mainland shares listed in Hong Kong gained 2.5 percent today, poised for a third quarterly advance.

Metals Fall

Base metals declined, with nickel falling as much as 8.8 percent on the London Metal Exchange. China’s Shanghai Futures Exchange started to ease delivery constraints for the metal, added to speculation that supplies will be enough to meet demand from the world’s biggest user.

Oil held below $60 a barrel in New York as U.S. and European diplomats in Vienna said a path to a nuclear accord with Iran is within reach even if Tuesday’s deadline for an agreement is set to be missed. Iran, the fifth-largest producer of the Organization of Petroleum Exporting Countries, has estimated it can double exports within six months if international sanctions are lifted.

Source: Bloomberg