All roads lead to Greece this week as Tuesday’s debt deadline is set to govern market direction and volatility. Prime Minister Tsipras gained approval from Parliament over the weekend to hold a referendum on the proposed bailout terms. Set to occur on July 5, the move has received widespread condemnation with the Financial Times posting the headline, “Tsipras takes Greece to the edge of the precipice.”
On the economic front, important Non-Farm Payrolls, Factory Orders, Consumer Confidence, Construction Spending and Auto Sales data will be released.
Greek banks will be closed on Monday with Prime Minister Tsipras confirming that capital controls would be imposed to stave off a possible collapse. Limited to €60 withdrawals, locals would be unable to transfer funds overseas unless commercially approved.
Dow futures are pointing to heavy losses on Monday. Pending Home Sales for May will be announced at 10 am with the market factoring in a rise of 4.0% for the period.
- Paychex (PAYX ) is set to release earnings before market open with a projected Earnings Per Share of 44 cents. PAYX has a dividend yield of 3.17%.
Tuesday will be an important date in the European calendar with a Greek debt payment due to the IMF. Failure to fulfill these obligations could lead to a default and ultimately an exit from the euro.
Economically, Consumer Confidence data will be announced at 10 am on Tuesday with an expectation of 97.5. This is considerably higher than May’s result of 95.4. Other economic releases that could influence market movements include Chicago PMI and the Case Shiller City Index.
- ConAgra Foods (CAG ) is set to release earnings before market on Tuesday with an estimated EPS of 59 cents per share. Analysts have downplayed revenue expectations for the quarter. CAG has a dividend yield of 2.27%.
- Unifirst Corporation (UNF ) is expected to announce earnings of $1.39 per share before market open on Tuesday. UNF has a dividend yield of 0.13%.
Construction Spending, ISM Index and ADP Employment Change will be notable economic announcements on Wednesday. Forecasting a softening in spending for the month of May, the Automatic Data Processing employment data is expected to rise to 216,000. Economists take note of this figure as it can provide insight into jobs leading up to Non-Farm Payrolls.
- Acuity Brands (AYI ), which has a dividend yield of 0.29%, will announce its quarterly earnings before market open on Wednesday with analysts expecting earnings of $1.34 per share.
- General Mills (GIS ), which recently announced the loss of 700 jobs, will release its earnings before market open. The processed and packaged foods company is expected to miss estimates and post a lackluster quarter. The market has factored in an EPS of $0.71. GIS has a dividend yield of 3.09%.
Thursday is jobs day with Non-Farm Payrolls, Average Hourly Earnings, the Unemployment Rate and Unemployment Claims set to be released in the morning. The Bureau of Labor’s NFP report is expected to come in at 231,000, below last month’s 280,000. Economists are factoring in an unemployment rate of 5.4% and Claims of 270,000.
No important dividend stock earnings on Thursday.
Quiet session on the economic front on Friday with all eyes on Greece’s proposed referendum. Tuesday and Thursday’s events will determine end-of-week market sentiment.
No important dividend stocks earnings on Friday.
The Bottom Line
Greek Prime Minister Tsipras’ move to hold a referendum could prove costly with the market beginning to price in a euro exit. Germany’s Chancellor Merkel and U.S. President Obama discussed the situation in length over the weekend, agreeing that a “Grexit” would be hazardous to the global economy and growth forecasts.