Greece Worries Wane, U.S. Stock-Index Futures Rise

30 Jun 2015 | Author: | No comments yet »

Greece Worries Wane, U.S. Stock-Index Futures Rise.

A day after the Dow plunged 350 points in the worst selloff of the year, U.S. stock-index futures signaled calm was on the horizon for Wall Street at the opening bell. Futures for the Dow Jones Industrial Average YMU5, +0.49% rose 62 points, or 0.4%, to 17,582.00, while those for the S&P 500 index ESU5, +0.63% were higher by 10 points, or 0.5%, at 2,060. The deadline comes after weeks of failed negotiations between the nation and its international creditors – and a refusal from Prime Minister Alexis Tsipras to accept a new bailout deal that would have Greece cut pensions and raise taxes.

An early Tuesday morning report from Athens’ daily newspaper Ekathimerini suggested the Greek government could consider a last-ditch acceptance of a previous proposal from European Commission President Jean-Claude Juncker , one that Tsipras called “absurd.” But Greece’s Finance Minister Yanis Varoufakis told a group of reporters that, “no,” the nation will not meet its IMF payment deadline. Greece on Tuesday is slated to miss its 1.54 billion euro ($1.71 billion) payment to the International Monetary Fund, and the country’s bailout program also expires the same day. Though a default for Greece on its obligations could seem like dire circumstances, for the most part, market participants in the U.S. said that outcome is essentially priced-in to the market. “In the big scheme of things, in relation to the global economy and investment landscape, [Greece doesn’t matter]…Most people agree on this point including us,” Dan Greenhaus, chief strategist at BTIG wrote in a note to clients Monday night. “Many have told us like Cyprus, QE’s end or the debt ceiling, this will be a terrific buying opportunity.” Added to that, David Madden, market commentator at IG, said while the uptick in the futures market initially appreared a short-covering after Monday’s big drop and amid the wide-scale selloff in Europe, sentiment has shifted, and a positive day on Wall Street seems to be setting up. “After Tsipras has stated he would consider accepting the terms put forward by Juncker, and the U.S. index futures have continued to rally on the back of that, the Greek debt saga has a history of ending with a compromise being reached, and dealers are quietly confident Greece will make good on its payment,” Madden said. Questions remain about the future of the country as it heads toward a referendum Sunday that is being framed as a vote on whether Greece should stay in the eurozone. “Financial markets are likely to settle down a little on Tuesday following widespread panic-driven selling at the start of the week,” said Craig Erlam, senior market analyst at Oanda, in an note. “I don’t think markets were particularly ready for those developments…as we’re just so used to an 11th-hour deal that I think people just assumed that would happen again,” he said.

He continued that equity markets could stand to rally if the Greek PM supports the European Commission’s so-called bailout terms before Tuesday’s deadline. Blackstone Group BX, -2.07% said it would sell its U.S. security services business AlliedBarton to French investment firm Wendel for about $1.67 billion.

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