There's got to be a morning after because China didn't crash last night. Iran has a chance to find the sunshine but Greece may exit stage right.
The morning after, crude oil prices got whack and the market is trying to pick up the pieces. The perfect combination of the "no" vote in Greece, the turmoil in the Chinese stock market and hopes about a potential deal with Iran on its nuclear program had traders running for the exit.
Many are still trying to decide what the major factor was and I have to say it's all of it. It was the mood shift to uncertainty that took away optimism that the global economy was healthy enough to benefit from the abundance of crude thereby raising consumption and tightening supply. That optimism has been washed away in as sea of uncertainty and rising deflationary concerns that has now engulfed the markets mood.
The crisis in Greece has already hurt demand expectations and the concerns about China and their stock-market bubble concerns are not making traders feel any better. China's CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.8% and the Shanghai Composite Index shed 1.3%. The good news was that it wasn't a crash like some had feared. Chinese's stocks are down more than 30% from the highs and the government is trying everything from buying shares, outlawing short selling and suspending IPO's and forcing brokerage firms to buy stock. The market does not think it is going to work.
The Iran nuclear talk deadline is approaching, again. Yesterday's optimism that we were on the verge of a deal is now turning into pessimism. Its seems Iran is taking exception to full access to weapons inspectors to certain military sites and they want to have access to ballistic missiles that are capable of delivering a nuclear payload. Of course, I assume that would be for peaceful civilian uses.
We need to look out for the summit in Brussels as the Greek Prime Minister will have to make a proposal to European Union leaders to stay in the Euro-zone. Also, we're waiting to see if the Iranian talks finally lead to a deal, if the deadlin is extended or if we see a breakdown. Oil will be headline driven!