U.S. stocks following markets in Europe and Asia, opening modestly higher this morning after Greece essentially capitulated to all the demands of the European Union. While some headlines suggested a deal to resolve the debt had been reached, it was actually only an agreement on a plan to be presented to the Greek legislature for a vote on Wednesday.
The latest plan did not come to any conclusion on restructuring the debt load, but focused on avoiding a collapse of the banking system. The chance of a “Grexit” has now dropped to 50 percent as it seems Greece has given in to all the EU demands in order to get the banks enough money to reopen. Greece also agreed to handing over 50 billion in Greek assets, which could include infrastructure like the airport, airplanes and land. Social media made it clear that most believe the plan is so harsh that the phrase #ThisIsACoup was trending.
Ascena Retail Group stock is plunging after the company lowered its earnings guidance for the quarter and the fiscal year on Friday after the market closed. Ascena said that it expects to take a charge in the range of $275 million to $325 million related to the Lane Bryant chain. Earnings for the full year have dropped to the range of 57 cents to 60 cents from the previous range of 70 cents to 75 cents. The company has had to take aggressive markdowns at Justice and was disappointed with sales at Dress Barn. The stock is down over 11 percent to trade at about $14.25.
Wal-Mart Stores Inc. has upped the promotion ante with Amazon by revealing an even bigger sale than Prime Day and throwing a shade over Amazon’s Prime membership. Wal-Mart will cut prices, not for one day, but for 90 days. Wal-Mart also made a point of saying its sale was for everyone and didn’t think customers should have to pay for discounts. Amazon’s Prime Day is set for Wednesday, but is only available for those with a Prime membership, which costs $99 a year. Both Amazon and Wal-Mart stocks were up in early trading.
Ralph Lauren stock was upgraded by Stephens to Overweight from Equal Weight, but maintained the $155 price target. The rating change was mostly based on valuation and still voiced concerns that the company’s operating performance in fiscal 2016 would be hurt by foreign exchange, weaker tourist sales and higher investment spending. Ralph Lauren stock is up 3 percent to $133.36.
European stock markets surged on news that European Union leaders had reached an agreement aimed at ensuring Greece secures its third bailout, and remains a member of the euro zone.
The CAC 40 in Paris led the upswing, climbing 1.5 percent to 4978.81, followed by the DAX in Frankfurt, 1.1 percent to 11,439.21, and the FTSE 100 in London, 0.8 percent to 6,727.94. The FTSE MIB in Milan rose 0.7 percent to 23,102.47.
The euro traded at $1.11 while the pound fetched $1.55 and the Swiss franc equaled $1.06 at 9:30 a.m. CET.
Retail and luxury stocks were also buoyant, with only a few losing ground. They included Geox, 1.3 percent to 3.40 euros; Italia Independent, 1.3 percent to 31.15 euros; and Luxottica Group, 0.2 percent to 61.75 euros.
Among the stocks that gained the most ground were Jimmy Choo, 3.3 percent to 1.68 pounds; Salvatore Ferragamo, 3 percent to 26.13 euros; Britain’s Bonmarche Holdings, 2.7 percent to 2.90 pounds; and LVMH Moet Hennessy Louis Vuitton, 1.7 percent to 161.40 euros.
In Asia, China’s Shanghai Composite ended the day higher by 2.4 percent. China also reported that its exports had risen by 2.8% year over year.
Looking ahead this week in the U.S., retail sales data will be delivered on Tuesday with the market expecting an increase of 0.3 percent versus the prior report of 1.2 percent. Briefing.com forecasts a drop of 0.2 percent. Tuesday also brings earnings reports from many major companies including JPMorgan Chase and Johnson & Johnson.