LONDON (Alliance News) - UK shares are called to open higher Wednesday, even as the Greek crisis worsened, with the country missing its payment to the International Monetary Fund Tuesday and with the eurogroup of creditors expected to meet Wednesday at 1030 BST.
IG says futures indicate the FTSE 100 to open 31 points higher at 6,551.0. The index closed down 1.5% at 6,520.98 points Tuesday. The blue-chip index lost 6.2% during the month of June. Despite its post-election rally, it lost 3.7% in the second quarter and 0.3% in first six months of 2015.
Greece did not make its EUR1.6 billion loan payment to the International Monetary Fund on Tuesday, as the Eurogroup earlier rejected any bailout extension in spite of the European Central Bank's decision to hold a meeting to review the emergency funding assistance.
In a release, IMF Director of Communications Gerry Rice confirmed the non-receipt of the debt payment and said Greece is now in arrears, which means that only once the country clears the debt can it receive further financing from the lender.
"I can also confirm that the IMF received a request today from the Greek authorities for an extension of Greece's repayment obligation that fell due today, which will go to the IMF's Executive Board in due course," Rice added.
During last minute efforts, the Greek government submitted a request for a two-year bailout with the European Stability Mechanism to fully cover its financing needs, along with debt restructuring, the state-backed ANA-MPA news agency reported citing a statement from the office of the Prime Minister Alexis Tsipras.
"Some have suggested that the moves by the Greek government suggest that they could lose this weekend?s referendum, which rather misses the point that there won?t be any winners from this vote," says Michael Hewson, chief market analyst at CMC Markets UK.
"Irrespective of the outcome of the vote, if it happens, due to monumental incompetence on all sides, the Greece people will have to vote for a choice of debt enslavement over decades, or a sudden sharp spiral into default, neither of which is particularly appealing," Hewson writes.
The ECB is set to hold a Governing Council meeting on Wednesday to review the emergency funding assistance to Greek banks. The lender had refused to raise the cap of its emergency liquidity assistance on Sunday, as the Eurogroup rejected any bailout extension a day earlier.
Greece has to pay EUR3.46 billion to the ECB on July 20 for the bonds the lender holds. If the central bank decides to cut off its crucial lifeline, Greek banks could be in for harder times.
Meanwhile, rating agency Standard & Poor's downgraded Greece's rating to CCC- from CCC and said there was a 50% chance the country would leave the euro. Fitch downgraded Greek banks to 'Restricted Default' and also lowered the country ceiling to 'CCC' from 'B-'.
In Asia on Wednesday, the Japanese Nikkei 225 trades up 0.4%. The manufacturing sector in Japan continued barely to expand in June, the latest Nikkei Manufacturing PMI showed on Wednesday, with a score of 50.1. That was up from last month's preliminary reading of 49.9, although it was down significantly from 50.9 in May. The index also remained just barely above the boom-or-bust level of 50 that separates expansion from contraction.
In China, the Hang Seng is up 1.1% and the Shanghai Composite is down 0.6%.
Wall Street ended higher Tuesday. The DJIA closed up 0.1%, the S&P 500 ended up 0.3% and the Nasdaq Composite closed up 0.6%.
In the corporate calendar Wednesday, Serco Group, Tullow Oil and Anite issue trading statements while Greene King and Better Capital PCC release full-year results. Topps Tiles provides a third-quarter interim management statement.
In the economic calendar, Markit manufacturing Purchasing Managers' indices for Italy, France, Germany and the eurozone are due at 0845 BST, 0850 BST, 0855 BST and 0900 BST, respectively. UK Markit manufacturing PMI is set for 0930 BST, while the UK financial stability report is due at 1030 BST. In the US, ADP employment change is due at 1315 BST, while ISM manufacturing PMI is at 1500 BST and EIA crude oil stocks at 1530 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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