Monday June 29th

29-06-2015

U.S. stock index futures fell sharply on Monday, tracking European and Asian markets downwards, as the Greek crisis entered a new chapter after the instigation of capital controls. Dow futures were down about 180 points, off earlier lows of more than 220 points lower. Greece's main stock exchange was closed on Monday and banks across the country were shut to prevent a run on financial institutions. The central bank has also recommended a 60 euro ($66) limit on withdrawals from cash machines. The closures came after reforms-for-financial aid talks between Greece and its creditors broke down and the European Central Bank capped emergency funding to Greek banks on Sunday. Greek Prime Minister Alexis Tsipras has also called a referendum on July 5, in which Greeks will vote on whether to accept the rescue package previous offered by Athens' international bailout supervisors, which is contingent on austerity measures. "In the absence of a sudden dramatic turn of events towards reconciliation between the Greek government and its creditors, it is difficult to see how it will be able to repay the European Central Bank on July 20, whatever the outcome of the coming weekend's referendum," said Chris Scicluna, head of economic research at Daiwa Capital Markets Europe, in a research note on Monday. The developments in Greece wreaked havoc on global markets, with stock markets in France and Germany falling over 4 percent. Japan's Nikkei closed down 2.9 percent. The Shanghai Composite also closed 3.3 percent lower despite initial attempts at gains following the central bank's rate cut over the weekend. In the U.S., pending home sales data for May are due out late on Monday, but eyes will be fixed on the upcoming nonfarm payrolls employment report. These will come out a day early for Independence Day. "Away from Greece, Thursday's U.S. nonfarm Payrolls data is the only data release of note which may influence market sentiment," said Jassie Singh, credit strategist at Lloyds Bank, in a research note on Monday. The week will be a light one for earnings, with Constellation Brands and General Mills the main companies of interest, reporting on Wednesday. Apollo Education Groupwill post numbers on Monday. Stock markets in China continued to head south amid volatile trade on Monday, with investors shrugging off fresh easing from the People's Bank of China's (PBOC) over the weekend. Elsewhere in the region, equities witnessed a huge selloff after Greecefailed to clinch a deal with its international lenders over the weekend.Nikkei skids 2.9%. Japan's Nikkei 225 index touched a more than one-week trough as the yen gained ground against a weaker dollar. Oil fell more than $1 to below $62 per barrel on Monday, its lowest in three weeks, as Greece shut its banks and imposed capital controls, causing investors to flee from riskier assets and darkening the demand outlook. Brent crude was down 83 cents at $62.43 a barrel by 8:30 a.m. EDT (1230 GMT). It fell to its lowest since May 28. U.S. crude was down 60 cents at $59.03 a barrel, having earlier dropped to its lowest since June 8. The benchmark closed down 7 cents on Friday at $59.63. Gold rose on Monday as fears over the prospect of a Greek debt default battered European shares and weighed on theeuro, but it failed to maintain early sharp gains with investors wary of its longer-term outlook. Gold, which often benefits from uncertainty in the wider financial markets, initially rallied to a near one-week high at $1,186.91, but later gave up some of those gains. Spot gold was up 0.7 percent at $1,182.96 an ounce, while U.S. gold futures for August delivery were up $9.60 an ounce at $1,182.80.