US stock futures boosted by Greek bailout deal
New York (July 13) Wall Street was set for an upbeat start to the week, with U.S. stock futures pushing higher Monday morning after eurzone leaders reached an agreement for a third bailout program for Greece.
Futures for the Dow Jones Industrial Average YMU5, +0.66% climbed 119 points, or 0.7%, to 17,788, while those for the S&P 500 index ESU5, +0.66% picked up 14 points, or 0.7%, to 2,083. Futures for the Nasdaq 100 index NQU5, +0.77% added 37.25 points, or 0.8%, to 4,445.50.
The advances came on the back of a rally in European equity markets, spurred by news that a Greek exit from the eurozone has been avoided for now. After a marathon meeting through Sunday night, eurozone leaders agreed Monday on a package of reform measures in principle for the debt-laden country, paving the way for formal negotiations on financial aid through the eurozone’s bailout fund, the European Stability Mechanism, or the ESM. Read: ‘End of eurozone democracy’, ‘bitter pill to swallow’ — analysts assess the Greek deal
Eurozone leaders reach a deal on Greece
Eurozone leaders said they would give Greece another three-year bailout, provided the government of Prime Minister Alexis Tsipras manages to implement a round of punishing austerity measures.
The deal will now have to be approved by national parliaments, including the Greek parliament, before the formal ESM negotiations can begin. The formal decision is expected by the end of the week.
“Even if a deal can eventually be reached to keep Greece in the euro area, the ramifications of this weekend’s incredible bloodletting will have long-term consequences,” said analysts at Oxford Economics in a research note Monday.
“The damage done to relations between France and Germany may prove irredeemable, while the German suggestion that Greece be granted a short-term euro area surely shatters the principle that membership of the euro area is irrevocable.”
Greece’s stock market GD, +2.03% remained closed for trade, but the Global X FTSE Greece 20 ETF GREK, +9.21% jumped 9% in U.S. premarket trade.
U.S. stocks also rallied on Friday on hopes a deal on Greece would be reached over the weekend. For the week, however, the main benchmarks ended roughly where the started after a volatile trading week, marked by wild swings in Chinese stock markets and a trading halt on the New York Stock Exchange.
Oil blues: On a more downbeat note, oil prices CLQ5, -0.87% slumped more than 2% on Monday as uncertainty over the Iranian nuclear deal continued. Negotiations between Iran and six world powers have reached a make-or-break point, European officials said according to The Wall Street Journal, raising concerns that there will be no final agreement.
The VelocityShares 3x Long Crude ETN UWTI, -0.89% slid 6.3% ahead of the bell, while drilling contractor Noble Corp. NE, -4.16% shaved off 0.5% for the largest premarket decline among S&P 500 SPX, +1.23% components.
Movers & shakers: Among other premarket movers, shares of Ascena Retail Group Inc. ASNA, +0.80% dropped 2.8% after the retailer late Friday cut its full-year earnings outlook, citing weaker-than-expected sales at its stores.
Shares in Halliburton HAL, +0.05% and Baker Hughes Inc. BHI, -0.73% could be active after they agreed to extend the Justice Department’s antitrust review period of their $35 billion merger until at least Nov. 25.
Other markets: Chinese stocks led Asian markets higher, although many firms were still halted for trade on the back of recent weeks’ sharp selloff.
Gold and silver prices moved lower, while other metals gained. The dollar DXY, +0.46% advanced against most other major currencies and strengthened particularly against the euro EURUSD, -0.7620% which slipped to $1.1069, down from $1.1156 late Friday in New York.
“While European officials are patting each other on the back traders are now ‘selling the fact’ and the euro is on the slide. The market still needs more detail on the deal, and many investors are still questioning Greece’s longer- to medium-term future as part of the eurozone,” said Alex Edwards, head of the corporate desk at UKForex, in a note.
Source: MarketWatch
