Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 Index called to open +10pts at 6835, with yesterday's relief-rally continuing to test higher following an overnight test of 6800 support. The index is holding on to strong gains with the rebound continuing and end-May downtrend now broken. Completion of a complex H&S bottom reversal still on the cards with mid-Jun highs 6870 as a potential target, confirmed by a Daily RSI having only improved to neutral. Watch levels: Bullish 6835, Bearish 6780.

A muted opening call comes following two meetings on Monday that either involved Greece and her creditors talking about Greece, or EU ministers talking about Greece, with European and US markets reacting well to a new set of proposals (once the right ones were actually submitted) aimed at unlocking bailout funds ahead of the June 30 deadline for a bundle of IMF loan repayments.

Still no Greek deal though, but plenty of optimism that we are edging closer. This comes from experience, with years of similar happenings resulting in deals at the last minute. As always, more meetings needed (dangerous for Greek banks, given deposit outflows) to evaluate Athenian proposals which means more market-swinging deal-on, deal-off headlines and comments. Talk of a deal Weds evening, with approval Thurs morning. There is still work to do by both sides. Markets are long on optimism, but short on  time - buckle-up.

US markets closed in the green (NASDAQ hitting another new record) as capital flowed out of safe havens and fixed income and into equities on a risk-on Monday. Note the Dollar Basket looks to have bottomed out at June 18 lows and is now in recovery (gold suffering as a consequence with risk-on mentality adding to the burden) while the EUR/USD tests 1-month rising support.

Asian equities higher, extending the global relief rally amid hopes that Greece is closer to providing acceptable 'cash-for-reform' proposals which would allow creditors to unlock the financial aid it needs to avoid a month-end default. Should we expect an extension of the current bailout? Could some debt relief be on the agenda once the current hurdle is cleared?

Japan's Nikkei trading fresh 15yr highs thanks to a weaker JPY and despite the preliminary PMI Manufacturing reading falling sharply into contraction in June. Australia's ASX enjoying the global rally and shrugging off slowing house price growth in Q1 and the Leading Index going negative while Consumer confidence held its ground.

China shares paring losses from the steepest slump in 7yrs as they re-open after a holiday. They join the global relief rally, but only marginally, helped by improvement/stabilisation in HSBC PMI Manufacturing even if it remains in contraction (4th month in a row). Government stimulus finally delivering.

In focus today we have June PMI data from France, Germany and the Eurozone while this afternoon sees US durable goods orders, FHFA house price index, manufacturing PMI and new home sales which might get both Fed hawks and doves singing tomorrow, although there’s arguably only one driver this week. If you’re bored with Greece, then peruse the live macro-calendar for a full rundown of alternatives.

Crude prices still suffering from global supply glut worries with poor Chinese & Japanese PMI prints (China improved but still cause for concern) continuing to drag on sentiment while a prospective pullback in US oil stocks put a strong support line under WTI ($60, in a potential descending triangle pattern nonetheless) while Brent suffering from lower lows and lower highs, currently around $63. Traders are eyeing supply levels with Iran likely to flood the market with (30 million tonnes of) its own oil following a likely agreement with 6 world powers on its nuclear programme.  

Gold is the notable sufferer of the Greek-led equity rally, dropping back sharply from $1204 June-highs to revisit $1185 as the safehaven metal is dumped by investors in favour of risk. Could the pause overnight be the flag of a bearish flagpole, with downside to shallow falling 3-month lows at $1160?

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UK Company Headlines: (Source: Reuters/DJ Newswires/Bloomberg)

• Petrofac order backlog $20.5 billion at end of May
• Interserve named preferred bidder to build defence rehab centre
• Bunzl acquires four new businesses in U.S, Colombia, Canada and France
• Chemring first-half revenue falls 23 pct
• Britain cuts Lloyds Banking Group stake to below 17 pct
• Tullow oil drills dry well in the Norwegian Sea – partner
• Petrofac expects FY profit to be weighted towards H2
• Telecom Plus full – year pretax profit rises 21.3 pct
• Acacia Mining sees small benefit if Tanzanian shilling remains weak
• Crawshaw comparable sales up 2.3 pct in 8 wks since April 23