European stocks rallied and the U.S. futures markets looked ready to shoot up this morning on news that Greek Prime Minister Alexis Tsipras appeared to be conceding to austerity conditions to get desperately needed funds for his country. (See a copy of the letter here.) Greece failed to repay about $1.8 billion to the IMF, due June 30. Also helping European markets: A strong manufacturing report from Markit, which says the index rose to 52.5, the highest level since April 2014. In the U.S., look for the PMI Manufacturing Index at 9:45 ET, ISM Manufacturing Index and Construction Spending, both at 10:00 ET. Also out: the ADP private sector report on hiring at 8:15 ET.
Greece appears to say it will accede to austerity measures — with some conditions. The Financial Times obtained a copy of the letter sent to the European Stability Mechanism, which provides the bailouts, as well as to Jeroen Dijsselbloem, the Dutch finance minister who is chairing the eurozone committee. Greece is asking for €29.1bn to repay loans through 2017. The FT notes that in his letter, Tsipras is asking for money simply to service existing debt. That means that Greece will have to buckle down and accept extreme austerity to generate revenues to keep its government running. Financial Times (paywall)
There’s one big sticking point in the request: Reprofile vs restructure. The Financial Times explains that Tsipras has asked the European Financial Stability Fund to “reprofile” — extend — the duration of the loans, something the ESFS has always been open to. But he also asks for restructuring — perhaps debt forgiveness or a writedown. That’s a non-starter. Financial Times (paywall)
Shanghai Composite ends 5.2% lower despite herculean efforts to support market. The decline wiped out the previous day’s rally and put the index back in bear territory. Since Sunday, the Chinese government has been taking extraordinary measures to support stocks, including a rate cut and a drop in reserve requirements plus a draft plan to allow pension funds to invest up to 30% of assets in stocks. State institutions have reportedly been buying stocks. The day opened quietly with little change in prices and then turned sharply lower. Hong Kong’s markets were closed for an official holiday.
China futures denies short-sellers have been manipulating the market. The China Financial Futures Exchange denied on its official microblog account “foreign institutions” were massively shorting mainland A-shares using index futures. “The exchange named Goldman Sachs Group Inc. and China Southern Asset Management, a Shenzhen-headquartered company with an asset-management subsidiary in Hong Kong, adding the latter didn’t have a registered account with the exchange.” Wall Street Journal
Death toll in Indonesian plane crash reaches 141, up from 74 as reported late Tuesday night. The air force transport plane that crashed in a residential area in Medan city had more passengers than earlier reported. The death toll included the victims from the area where it crashed. The Wall Street Journal (paywall)
U.S., Cuba mend diplomatic ties. The two countries will reopen embassies in each other’s countries after more than five decades. That won’t happen though before mid-July. Opponents including a U.S. lawmaker are not happy with the renewed ties with Cuba. Bloomberg
New runway at Heathrow. The Airports Commission picked the London airport as the best location for a new runaway. A third landing strip at Heathrow northwest of two existing ones “presents the strongest case and offers the greatest strategic and economic benefits,” the commission said. Bloomberg
Photo by DIE LINKE via Flickr.