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

UK 100 Index called to open -15pts at 6845, with June downtrend and completion of end-May bearish double-top pattern taking overnight futures as far as the 6800 May lows we had anticipated. Bulls eyeing potential for reversal of 250pt losses and recovery to June falling highs 6930. Bears hoping for mere dead-cat bounce and further downside (April lows 6670?). Watch levels: Bullish 6855, Bearish 6800.

The negative opening call follows yesterday’s rejection by Athens of the latest funds-for-reforms deal offered by Eurogroup creditors and subsequent missed €300mn IMF payment that as due today. The Greek government has exploited a loophole in IMF policy that allows for all of June’s payments to be bundled together and paid at the end of the month.

The move is seen by some as an expression of confidence on the part of the Greeks that a deal will be reached in June to unlock much needed bailout funds, with such a move previously rejected on the grounds that it would indicate Greece had no money left.

US bourses closed lower in reaction to the above as the Dow and S&P signed off at 4-week lows following a choppy week that saw extreme fixed income and currency volatility amid continued speculation on a Fed rate hike (Lagarde weighing in dovishly yesterday…). Is a US interest rate rise quietly pricing itself in to the markets under a shroud of Eurozone-related volatility?

The Fed’s Tarrullo said the US economy appears to have lost some momentum with recovery not as strong as it was in Q2 2014 – but promising macro data this week leaves the door open to a 2015 kick-off. All eyes on Non-Farm Payrolls at lunchtime today then.

Asian equities mixed around breakeven, showing continued cautious trading after negative volatile EU/US sessions, ahead of today’s key (when is it not key?) US Jobs report and after Greece confirmed deferral of today’s IMF debt payment until month-end, joining the likes of Zambia who were last to do so in the 1970s.

Greek PM Tsipras’ negotiations with creditors continue but it sounds like he has made party-furying requests for changes to terms to avoid default which go against his hard-line election-winning rhetoric and could, if things worsen, mean the beginning of the end for Syriza in power? Confidence vote? More elections? All talk/speculation of progress is market-moving at the moment – beware.

The recovery by China equities continues after the recent blip, with more records broken (Shanghai >5000, highest since 2008). Australia’s ASX hindered by further contraction in the construction sector and as commodities remain under pressure from a stronger USD and questionable demand for natural resources (China, Eurozone). The Index looks headed for its biggest weekly loss in 2 years.

Japan’s Nikkei just in the red after stops triggered at yesterday’s lows took it to the downside, but still being helped by a weak JPY and sideways range since end-May. Hong Kong’s Hang Seng is the underperformer despite gains for China.

In Focus today we have the UK BoE May inflation forecast at 0930, followed at 1330 by the all-eclipsing US Non-Farms report looking for a mediocre improvement on last month. The US unemployment rate is expected to remain at 5.4% while average hourly earnings looking to be up 0.1% on the month. See the live macro calendar for a full rundown with consensus.

Gold headed for third week of declines, trading near 1-month lows ahead of a US Jobs report which may provide clues about the timing of the Fed’s first rate rise in years. A bounce by the USD yesterday saw the downtrend from Mid-May resume after an 8-day pause with the yellow metal testing recent support at 1180 and almost as far as 1-May lows of $1170. Cue volatility this afternoon. Strong Jobs report, USD rally and Gold sell-off towards March lows $1140? Or recovery on worsening of Greek uncertainty?

Crude prices tanked somewhat on Thursday in anticipation of continued global oversupply and a rise in European bond yields that would see a reduction in the amount of speculative cash in the oil markets. OPEC is expected today to continue with its output target of 30mn barrels a day, in defiance of fellow members who would rather see production curbed to support the crude prices on which their economies depend heavily. US light testing support around $57 while Brent made a small bounce off $62.

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