Wednesday July 1st

1-07-2015

U.S. stock index futures pointed to a sharply higher open on Wednesday, after a deal between Greece and its international creditors looked possible. Dow Jones futures shot more than 160 points higher after a letter written by the Greek prime minister, first published by the Financial Timesnewspaper, suggested that Greece would finally accept all the demands that were put forward by its creditors over the weekend. Prime Minister Alexis Tsipras accepted lenders' conditions in a two-page letter originally sent to the heads of the European Commission, requesting only minor tweaks to their suggestions on pensions and tax reforms. This came after months of wrangling that culminated on Monday with Greece defaulting on a 1.5 billion-euro repayment to the International Monetary Fund. Aside from Greek developments, investors in the U.S. are fixed on reports on the labor market. The ADP private sector employment report showed creation of 237,000 jobs, topping expectations of 218,000. Treasury yields held higher, with the 10-year yield at 2.43 percent. The 2-year note yield was 0.68 percent. German 10-year bund yields gained to 0.83 percent. The U.S. dollar advanced against major world currencies, with the euro at $1.108. The yen weakened against the dollar at 123.12 yen. Wednesday kicks off two days of important economic data that culminate with the most important report of all: the official non-farm payrolls report for June on Thursday—out early because of the Independence Day holiday. Economists expect a total of 230,000 nonfarm payrolls in the government's report on Thursday. Traders had been eyeing this week's data, especially jobs, to get more clues on the state of the economy and therefore the Fed's potential timing for a rate hike. Other data expected on Wednesday includes construction spending and the ISM manufacturing index, both due at 10 a.m. ET. Vehicle sales data will also be released at 5 p.m. Weekly mortgage applications fell 4.7 percent on the highest rates in 9 months. Major earnings out on Wednesday included Constellation Brands, General Mills and McCormick before market open. Progress Software is due after the bell.Meanwhile in Europe, equities jumped on Wednesday, buoyed by new hopes that a deal could be found between Greece and lenders. Thepan-European Stoxx 600 index was trading nearly 2 percent higher after the FT report. Asian shares outside China drifted higher on the first trading day of the third quarter, as traders digested a raft of economic indicators and news that Greece missed the deadline for a payment to the International Monetary Fund hours after its bailout program expired. Nikkei gains 0.5%. Japan's Nikkei 225 chalked up a second day of modest gainsafter the Bank of Japan's (BOJ) quarterly Tankan survey showed the country's large manufacturers more optimistic than expected, with the index hitting its highest level since March 2014. Oil prices fell more than 1 percent on Wednesday after Greece became the first developed economy to default on a loan with the International Monetary Fund, and as both U.S. and OPEC production hit new records. Front-month Brent crude futures were trading at $63.07 per barrel at 8:20 a.m. EDT (1220 GMT), down 52 cents. U.S. crude futures fell 77 cents, or 1.3 percent, to $58.70 per barrel. Gold hovered above a near-four-week low on Wednesday, due to a stronger dollar and hopes of progress in the Greek debt crisis after reports that the country would accept most conditions from its international creditors. Spot gold was down 0.3 percent at $1,168.50 an ounce. It had touched its lowest since June 5, at $1,166.35, in the previous session. U.S.gold futures for August delivery were down $3.70 an ounce at $1,168.10.