Asia: Japan -2.1% to 20112. Hong Kong -3.2% to 25236. China +2.4% to 3776. India +0.4% to 28209.
Europe: London -0.5%. Paris -1.2%. Frankfurt -1.3%.
Futures: Dow -0.7%. S&P -0.6%. Nasdaq -0.8%. Crude -4.3% to $54.49. Gold flat at $1164.
Ten-year Treasury Yield -8 bps to 2.3%
8:30 US Consumer Spending
9:45 PMI Services Index
10:00 Labor market conditions
10:00 ISM Non-Manufacturing Index
Key earnings after the close
U.S. stock futures fell on Monday after Greeks resoundingly rejected creditors’ conditions for further financial aid, pushing their country closer to bankruptcy and a potential exit from the eurozone. Traders across the globe were greeted with a sea of red overnight after 61% of Greeks voted ‘No’ in a referendum asking them to accept an international creditor proposal that would have included more austerity reforms. A couple of emergency meetings are now in the works, including an ECB gathering to discuss emergency liquidity assistance and a meeting between Angela Merkel and Francois Hollande that will review the eurozone’s response to the vote. Meanwhile, Finance Minister Yanis Varoufakis has indicated that he is stepping down from his post due to heavy pressure from Greece’s European partners.
Shanghai bucked the weak overnight trend, gaining over 2.4% due to a salvo of fresh support measures. Over the weekend, China’s biggest brokerage firms unveiled a government-endorsed plan to buy at least 120B yuan ($19.3B) of shares, while Beijing suspended IPOs until further notice. About $2.7T in market value has evaporated since the Chinese stock market peaked on June 12. That is six times Greece’s entire foreign debt, or 11 years of Greek economic output.
Key elements of a nuclear accord between Iran and six world powers fell further into place on Sunday, but U.S. Secretary of State John Kerry warned there were more sticking points that may scuttle the deal. “We are not yet where we need to be on several of the most difficult issues,” said Kerry, stating he would walk away from negotiations if the problems were not resolved by Tuesday. Should sanctions be lifted, Iran would double its oil exports to 2.3M barrels a day, multiplying the tensions in the world’s sensitive oil markets.
The Philippines has confirmed a second case of the deadly MERS virus, in a man who showed symptoms after traveling last month to the Middle East. While isolated cases around Asia have cropped up in the past, South Korea has experienced the largest outbreak outside Saudi Arabia. Nearly 180 Koreans have been infected and 27 have died from the virus since mid-May.
After weeks of frenzied health insurer merger talks, Aetna (AET) has agreed to buy Humana (HUM) for about $37B, or about $230 per share. The deal will see Humana shareholders receive $125 in cash and 0.8375 Aetna shares for each share held, representing a premium of 23% from July 2nd’s close. Following the merger, Aetna shareholders will own about 74% of the combined company.
Ant Financial, the financial services affiliate of Alibaba (BABA), has closed a private placement of shares that values it at more than $50B, Globes reports. The so-called Series A round of financing was led by the National Social Security Fund of China, one of the country’s biggest state funds. While a timetable has not yet been revealed for the company’s public listing, Jack Ma has suggested that any IPO would most likely take place in China’s capital markets.
Shares of Chipotle are losing their spice, a weekend article in Barron’s declared, stating that unless growth revives at the company, the stock could see a 15%-20% plunge. Since peaking at $727.17 in early January, Chipotle (CMG) shares have fallen about 16% and closed Thursday at $609.56. Rising food and healthcare costs are crimping the burrito chain, and April’s disappointing results as well as the the removal of pork from one-third of its restaurants are expected to hammer the stock.
As it prepares for its July 17 split from eBay (EBAY), PayPal (PYPL) is on the hunt for international acquisitions to drive growth and fend off predators, chief executive Dan Schulman told the FT. “The balance sheet affords us the opportunity to look opportunistically where it makes sense to acquire,” said Schulman. “I think there is a tremendous opportunity to look across the world.” Last week PayPal announced it would spend nearly $1B to purchase Xoom, a digital money transfer provider, and more acquisitions now seem to be on the horizon.
Fiat Chrysler CEO Sergio Marchionne expects the company’s Ferrari unit to be valued “at least” at €10B ($11B) in an initial public offering scheduled for 2015. Last year, the automaker announced plans to sell 10% of Ferrari and distribute its remaining 80% stake to Fiat Chrysler (FCAU) investors, while Piero Ferrari (the son of founder Enzo Ferrari) plans to keep his 10% holding.
Evan Blass, responsible for leaking pictures of many soon-to-be-launched phones for years, has posted an image render of a BlackBerry (BBRY) Android phone codenamed Venice. Much like Samsung’s Galaxy S6 Edge, the Venice has a display with curved edges, while UI and app icons point to the use of Google’s (GOOG, GOOGL) version of Android. The phone is also said to have a slide-out keyboard.
Illustrating his vision for a turnaround at recall-slammed Honda (HMC), Takahiro Hachigo, the automaker’s new chief executive, said he doesn’t have plans to provide financial aid to Takata (TKTDY), and has set aside enough money this year to cover the cost of recalling over 2M cars. Honda continues to suffer due to Takata’s costly global recall, which has dented the automaker’s public image as well as its earnings.
Philip Morris plans to sell over $1B worth of shares in its Indonesian operation, PT HM Sampoerna, in what would be one of the year’s biggest share sales in Southeast Asia. The sale would allow Philip Morris (PM) to comply with a pending stock-exchange rule requiring all Indonesia-listed companies to have a minimum free float of 7.5%.
Investors pulled another $3B in assets from the Pimco Total Return Fund (PTTRX) in June, compared with $2.7B the previous month, in another sign the fund is still bleeding since the departure of Bill Gross last fall. On top of cash withdrawals of $5.6B in April and $7.3B in March, total assets in the fund have now plunged to $102.8B from a peak of $293B in April 2013.
Toshiba shares are poised to feel more pressure after an ongoing investigation into past accounting practices found more irregularities than previously expected. A source familiar with the matter said Toshiba (TOSYY) may need to write down past earnings by over ¥100B ($818M), more than double earlier estimates. Since the company disclosed the internal investigation in early April, shares have fallen 22% and many analysts have suspended their ratings.