Greek Exchange Opens Sharply Down

Greek financial markets reopened today after a five-week suspension as talks continue with creditors on austerity measures and reforms required for a third bailout. The Athens Stock Exchange General Index opened 22.3% down, the index falling to 619.55 as of this writing. Greek traders are able to buy stocks, bonds, derivatives and warrants under certain conditions, according to the Finance Ministry. International investors won’t face any restrictions, as long as they were active in the markets before they were closed in June. Currently, Prime Minister Alexis Tsipras is negotiating conditions that will be attached to an 86 billion-euro lifeline to see the country through the next three years. An agreement is needed before a payment comes due on bonds held by the European Central Bank on Aug. 20. The imposition of capital controls has restricted the functioning of Greece’s economy, with the country set to be the only euro-area nation to shrink this year. The economy may contract by as much as 4 percent this year, according to a July 29 report from the Greek parliamentary budget office.

Over 330 US companies have reported their half yearly earnings so far and the trend is more or less similar to what has been observed in the past where 74% of them have beaten earning per share estimates but only 50% have beaten revenue forecasts. The trend is more balanced in Europe with about 63% and 65% of those that have reported so far beating earnings per share and revenue consensus, respectively.

HSBC Holdings Plc shares rose over 1% after the global bank reported an 18 percent climb in second-quarter profit in Q2 .Pretax profit for the three months ended June 30 rose to $6.57 billion from $5.56 billion a year earlier. The company disclosed $1.1 billion of settlements and provisions for legal matters for the period, and also agreed to sell its Brazilian unit to Banco Bradesco SA for $5.2 billion. The bank has been seeking ways to shore up earnings, battered by rising misconduct costs. In June, the bank unveiled a three-year plan to lower headcount by some 50,000, including through the sale of business units, to cut annual costs by up to $5 billion. Since taking over in 2011, the CEO has announced more than 87,000 job cuts and exited about 78 businesses. While net interest income fell in the second quarter and fee income was little changed, HSBC’s revenue was buoyed by net trading income doubling to $2 billion. It said it booked a $1 billion gain from the sale of Industrial Bank shares. The bank reported an “end point” common equity Tier 1 capital ratio, a measure of financial strength, of 11.6 percent, up from 11.1 percent in December.

Looking at this week’s highlights of data reporting, today PMI’s for the Euro area are due. Lots of data points are also due in the US with the deflator and core PCE, personal income and spending, final manufacturing PMI reading, construction spending, ISM manufacturing and vehicle sales data. Tomorrow we expect Euro area PPI and Wednesday in the US we also get the final PMI figures for the US. Thursday we expect German factory orders, UK industrial and manufacturing production and finally the BoE decision, and in the US we’ll get more employment data. On Friday we get the Bank of Japan decision and we’ll end the week in Europe with German trade data and industrial production and US payrolls. Any unexpected data points could result in larger than usual market movements due to the relatively thin trading volumes as the summer slowdown reduces trading activity.