7th Jul 2015 11:17
LONDON (Alliance News) - Stocks are struggling to get their heads above water midday Tuesday ahead of another emergency Eurogroup meeting on Greece, while US indices are looking to rebound from Monday's losses with futures indicating a higher open on Wall Street.
The FTSE 100 trades down 0.2% at 6,521.20, the FTSE 250 is down 0.2% at 17,403.50, and the AIM All-Share is down 0.2% at 757.32.
In mainland Europe, the CAC 40 in Paris is down 0.6% and the DAX 30 in Frankfurt is down 0.4%.
On Wall Street, futures indicate a higher open. The Dow Jones Industrial Average and the S&P 500 are both called 0.3% higher, and the Nasdaq 100 is pointed up 0.2%. On Monday, the DJIA and Nasdaq Composite both declined 0.3%, while the S&P 500 fell 0.4%, caused partially by the 'no' vote in Greece and by a decline in oil prices.
On Monday, Brent oil fell to its lowest level since mid-April at USD56.35 a barrel, but has since risen to trade at USD57.30 a barrel midday Tuesday. US benchmark West Texas Intermediate also fell to its lowest level since mid April at USD52.39 a barrel, but currently trades at USD52.93 a barrel.
"Pressure still remains to the downside for oil prices. Oil demand from China could decline further if the current stock market rout spreads to the rest of the economy, while a Greek exit could affect demand for oil from Europe. The US seems determined to reach a nuclear deal with Iran which will open up supplies there while US production has started edge up in the last week, helped by a rise in the number of oil rigs," says CMC Markets analyst Jasper Lawler.
Investors' attention will be firmly fixed on the Eurogroup meeting of finance ministers on Greece's situation at 1200 BST after the weekend referendum in Greece on bailout conditions resulted in a resounding victory for the 'no' campaign. Later in the evening, starting at 1700 BST, EU leaders hold a special summit in Brussels.
Ahead of the meeting, European Commission President Jean-Claude Juncker told the European Parliament Tuesday that he would like to see financially embattled Greece stay in the eurozone.
"Nobody should even think about throwing the Greeks out," Juncker said. Talks with Greece must be renewed, he said, although admitting there was little chance of a solution being found at the summit.
Societe Generale analysts Michel Martinez and Yvan Mamalet say they now see a 65% chance of a Grexit following the referendum result and avoiding it will be difficult.
"A full formal exit is unlikely to happen in the next few days or weeks. Both sides will try to resume negotiations in the coming days. We expect euro area policymakers to make a statement that places the ball in the court of Athens (ie opening the door to a deal but with strict conditionality attached). If this process fails, we expect both sides to coordinate their actions to manage the exit," the analysts say.
On Monday, the European Central Bank maintained its emergency liquidity assistance for Greek banks at the June 26 level of EUR89 billion, with haircuts on collateral for ELA adjusted. The decision by the Governing Council of the ECB comes after discussing a proposal from the Bank of Greece. ELA can only be provided against sufficient collateral.
The SocGen analysts believe that as long as discussions are ongoing between the Greek administration and the euro area they consider it unlikely that the ECB would fully cut the ELA and Greek banks' access to ECB liquidity facilities.
On the corporate front, Rolls-Royce Holdings, down 4.5%, continues as the biggest faller in the FTSE 100 after its profit warning on Monday. The aerospace and engineering group has since been downgraded by both JP Morgan and Investec.
Smiths Group trades down 3.1% after it said it has appointed Andrew Reynolds Smiths as its new chief executive, with plans for him to take the helm on September 25.
Fellow FTSE 100 engineering company Weir Group trades down 2.1% after it said it struck a USD47 million deal to acquire Delta Industrial Valves. The price will comprise a USD37 million initial consideration, with USD21 million to be paid in cash and USD16 million to be paid in Weir shares. Up to another USD10 million will be paid over the next 18 months based on Delta meeting profit growth targets.
Marks & Spencer Group reported year-on-year growth in sales in the first quarter of its financial year, and while general merchandise like-for-likes declined on the preceding quarter, it said that it is on track to improve its gross margin in that area of the business and that all guidance for the full year remains unchanged.
The clothing and food retailer said that total group sales were up 1.3% in the 13 weeks to June 27 from a year before, as food sales grew 3.2% and general merchandise revenue rose 0.2%. On a like-for-like basis, food sales grew 0.3% but general merchandise declined 0.4%. However, Cantor Fitzgerald reiterated its Sell rating on the company, saying it feels it will be a challenge to keep the positive momentum in sales in both general merchandise and food going. M&S trades down 1.4%.
Online fashion retailer ASOS reported growth in sales in the four months to June 30 in both its UK and international businesses and said that sales for the full year should be at the higher end of its guided growth range.
The company said that retail sales in the four months grew 20% on the same period the year before, with UK sales rising 27% and international revenue up 16%, all at actual currency rates. It said that the rise in international sales benefited from price investments which it is making to try to turn that part of the business around. However, ASOS trades down 2.0% midday Tuesday.
Jaywing is up 12% after it announced the appointment of a new chief financial officer and a chief operating officer, while saying its pretax loss widened in its 2015 financial year, as a rise in operating costs offset an improvement in both revenue and margins.
The brand and digital agency has spent the year focusing on integrating the Epiphany Solutions business that it acquired in 2014 and said the first quarter of Jaywing's current financial year has been in-line with its expectations.
Omega Diagnostics Group trades down 18% as it said there is a stability issue with the storage of its Visitect CD4 product, which is a disposable, rapid test designed to test whether people with human immunodeficiency virus (HIV) or acquired immune deficiency syndrome (AIDS) can be moved onto antiretroviral treatment.
Still ahead in the economic calendar, the US trade balance is due at 1330 BST and the Redbook index is at 1355 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Marks & SpencerJaywingODX.LWeir GroupSmiths GroupASOSRolls-Royce