FTSE 100 preview: New Greek deadline underpins sentiment

on Jul 8, 2015

The FTSE 100 is expected to edge higher today, as European leaders gave debt-stricken Greece a final deadline to come up with new proposals and avoid crashing out of the euro.

UK stocks ended firmly lower yesterday, with heavyweight mining shares bearing the brunt of risk averse investor behaviour and sell-off in metal prices. The Footsie closed 1.58 percent down at 6,432.21, reaching a level not seen since January 16. This morning, the benchmark index will open nine points higher at 6,547, according to trading platform IG.
The Eurozone had expected Greece to submit fresh plans yesterday after its voters rejected a deal in a referendum, but no new proposals were tabled. Athens was given five more days to reach a deal with its creditors after European leaders of all 28 EU members called an emergency summit on Sunday to decide the country’s fate.
While the Greek saga remains in focus, investors will also eye today’s UK summer budget update. Chancellor George Osborne is expected to unveil £12 billion in welfare cuts and changes to taxation in a budget statement to the House of Commons that is scheduled to start at 11:00 BST.
Elsewhere, US stocks rallied yesterday after a choppy trading session, as a rebound in US oil prices helped offset concerns about Greece. The Dow Jones Industrial Average ended 0.53 percent higher at 17,776.9, the S&P 500 gained 0.61 percent to 2,081.34, while the Nasdaq finished the session 0.11 percent better off at 4,997.46.
Asian shares tumbled to a one and a half year low this morning, with trading sentiment battered by the plunge in Chinese markets and the Greek developments. By 06:58 BST, Tokyo’s Nikkei 225 had fallen 2.63 percent to 19,840.09. Meanwhile, the MSCI’s broadest index of Asia-Pacific shares outside Japan was 2.79 percent lower at 548.70.

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