Greek brinkmanship will be a familiar theme in the U.S. markets next week after the embattled country failed to convince its creditors over the weekend for an extension on its rescue package.
Finance Minister Yanis Varoufakis made the request, during a meeting in Brussels with his eurozone counterparts, which was immediately rejected. See the story.
The move follows an announcement that the Greek government will seek a referendum to allow voters a say in whether the country should accept tax hikes and spending cuts in exchange for a new bailout deal. Parliament later approved the proposal. See the story.
The latest developments raise the probability of Greece defaulting on its $1.7-billion payment to the International Monetary Fund due on Tuesday and prompted renewed speculation of Greece losing its membership in the eurozone.
Even as Greece is poised to move a step closer to its debt endgame, U.S. investors will be hard pressed to find motivation to actively trade stocks on a dearth of fresh incentives as summer doldrums set in with the abbreviated holiday-shortened week.
“It will be boring. There will be no change and it will be a continuation of the same,” said Brian Belski, chief investment strategist at BMO Capital Markets.
“Just flip a coin. No one knows what’s going to happen [with Greece]. It’s a fool’s game,” said Belski.
Tuesday is also the deadline for Iran to reach a deal over its nuclear program with the West which could lead to the country exporting oil again. News of an agreement is likely to weigh on energy stocks on expectations of oil prices going back down to $50 a barrel. August crude CLQ5, -1.59% fell 7 cents to settle at $59.63 a barrel on the New York Mercantile Exchange Friday.
The S&P 500 SPX, -0.04% fell 0.4% last week to close at 2,101.61 after two weeks of gains and the Dow Jones Industrial Average DJIA, +0.31% slid 0.4% to 17,947.02 while the Nasdaq Composite Index COMP, -0.62% declined 0.7% to 5,080.51.
It will be a thin week for corporate earnings with only a few stragglers reporting results before the new earnings season picks up again in a couple of weeks.
“For the second quarter, the energy sector is expected to be the largest contributor to the projected year-over-year declines in both earnings and revenues, as the price of crude oil is well below year-ago levels,” said John Butters, senior earnings analyst at FactSet.