Asia: Japan +0.5% to 20329. Hong Kong closed. China -5.2% to 4054. India +0.9% to 28021.
Europe: London +1.2%. Paris +2%. Frankfurt +1.7%.
Futures: Dow +0.9%. S&P +0.9%. Nasdaq +1%. Crude -1.3% to $58.72. Gold -0.1% to $1171.20.
Ten-year Treasury Yield +6 bps to 2.4%
7:00 MBA Mortgage Applications
7:30 Challenger Job Report
8:15 ADP Jobs Report
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
Key earnings before the open
AYI, AZZ, GBX, GIS, MKC, PAYX, STZ
Key earnings after the close
U.S. stock futures advanced Wednesday after Greek Prime Minister Alexis Tsipras sent a fresh bailout proposal to Greece’s creditors, fueling hopes of a deal being reached. Despite the fact that the proposal was dismissed by European officials Wednesday, markets were cheered by news of the latest offer. The proposals were contained in a letter dated June 30, in which Mr. Tsipras offered to accept a draft proposal disclosed on the commission’s website this weekend with a handful of changes. Greece defaulted on a payment to the International Monetary Fund on Tuesday. Although an extension to Athens’ last bailout is no longer available – it expired at midnight with a missed €1.6B payment to IMF – Tsipras’ new position could serve as the basis of a new bailout in the coming days. Eurozone finance ministers are due to discuss Greece’s new proposal in a conference call at 11:30 a.m. ET.
The S&P 500 finished Q2 with a decline of 0.2%, its worst showing since 2010, while the Dow ended the quarter down 0.9%. The Nasdaq Composite finished the period in the green, but not by much – up 1.7%. Will turmoil in global markets and a Fed rate hike put pressure on stocks in Q3, or will investors be focused on U.S. economic growth and corporate profits?
China’s vast manufacturing sector remained lackluster in June, fueling calls for additional stimulus measures to boost the world’s number two economy. The country’s official manufacturing PMI remained unchanged at 50.2, while HSBC’s final PMI came in at 49.4, below a preliminary reading of 49.6. Investors also digested data from Japan, with the keenly watched Tankan survey showing that capital expenditure rose 9.3% in the three months to June 30 – the highest reading since late 2007. The Nikkei closed up 0.5%, while the Shanghai Composite, which entered a bear market on Monday, ended the day down 5.2%.
China must take urgent steps to reform a “distorted” financial system in its transition to a more balanced economic model, the World Bank warned in its latest review of the country’s economy. The Chinese government retains effective control over almost 95% of bank assets, which allows state-owned enterprises to secure a disproportionate share of available credit at the expense of small and medium-sized companies, especially in the private sector. Karlis Smits, a senior economist at the World Bank and lead author of the report, also warned of the potential dangers from a sharp correction in China’s roller coaster stock market.
Calling on the Chinese-controlled city’s leader to resign, thousands of Hong Kong protesters marched for “full democracy” on Wednesday, just weeks after lawmakers voted down an electoral reform package backed by Communist Party leaders in Beijing. The crowds, closely watched by police, were thinner than a year ago when some half a million people showed up for the annual July 1 march on the anniversary of the city’s return to China in 1997. Hong Kong’s financial markets are closed today for the holiday.
The U.S. and Cuba have reached an agreement to restore diplomatic relations and reopen embassies in each other’s capitals, the biggest step yet toward ending a half century of enmity between the two countries. The historic deal will be proclaimed in a White House statement today, and follows the two countries’ landmark announcement to normalize relations last December. A U.S. economic embargo against Cuba will still remain in place, and only Congress can lift it.
By a 2-1 vote, a federal appeals court has upheld a 2013 decision finding Apple (AAPL) liable for conspiring with publishers to fix e-book prices. Apple is now set to pay $450M to e-book consumers and lawyers through a settlement originally announced last year. Publishers involved: Hachette (LGDDF), HarperCollins (NWSA), Penguin Group (PSO), Simon & Schuster (CBS) and Macmillan.
AT&T’s proposed $48.5B acquisition of DirecTV is expected to get U.S. regulatory approval as soon as next week, sources told Reuters. The Department of Justice, which assesses whether deals violate antitrust law, has completed its review of the merger and is waiting on the FCC to wrap up its own. The move would create the country’s largest pay-TV company, giving DirecTV (DTV) a broadband product and AT&T (T) new avenues of growth beyond wireless service.
Gas negotiations between Russia and Ukraine have fallen apart again, after the two failed to agree on a pricing plan at talks in Vienna. The European Commission, which mediates the negotiations between Gazprom (OGZPY) and Naftogaz, issued a statement Tuesday evening saying the two sides were “still far apart” on a deal. Ukraine has now stopped receiving gas from Russia, but transit supplies to Europe are continuing at the usual rate.
General Electric (GE) expects to accelerate the pace of GE Capital asset sales in the third quarter as the U.S. conglomerate retreats from the banking industry. Since the landmark announcement on April 10, GE Capital has announced asset sales totaling $23B in ending net investment, and anticipates $100B in sales in 2015. As a result, the company will apply to escape its SIFI designation next year, although the path to do so is still not entirely clear.
Nike Chairman Phil Knight has told the board he’s recommending that CEO Mark Parker succeed him as chairman when he steps down in 2016. The move is part of a few governance actions the company’s taking. Travis Knight (Phil’s son) was named to Nike’s (NKE) board, and Phil is transferring his share ownership, representing about 15% of Nike’s common stock, to a limited liability company called Swoosh.
A South Korean court has rejected an appeal from activist fund Elliott Associates to block the merger of two Samsung group companies – Cheil Industries and Samsung C&T – saying that the proposed deal did not represent an illegal transfer of value to investors. The deal would allow the heirs of patriarch Lee Kun-hee, who remains hospitalized since a May 2014 heart attack, to consolidate stakes in affiliates like smartphone maker Samsung Electronics (SSNLF) and keep control of the Samsung group. Elliott, which has a 7.1% stake in Samsung C&T, argued the merger should be ruled invalid because it undervalued the company.
Sprint is ending a policy of slowing video speeds for unlimited data customers, a practice known as throttling, after an outcry over the practice undermined the carrier’s attempt to promote a new phone plan and raised concerns due to new net neutrality rules. “We heard you loud and clear,” announced Chief Executive Marcelo Claure. Meanwhile, a U.S. judge signed off on a $50M settlement between the Consumer Financial Protection Bureau and Sprint (S) over claims the mobile carrier added unauthorized charges to customer phone bills.
Toyota’s first first female managing officer has resigned following her arrest last month on suspicion of illegally importing the painkiller oxycodone into Japan. In April, Julie Hamp was appointed the company’s chief communications officer as part of a drive to diversify Toyota’s (TM) male-dominated, mostly Japanese executive line-up. The automaker accepted the resignation offer after “considering the concerns and inconvenience recent events have caused our stakeholders.”