Stock Futures Slide as Eurozone Uncertainties Persist
NEW YORK (TheStreet) -- U.S. stock futures were falling Monday as a victory by the Greek pro-bailout party failed to quell longer-term uncertainties about the eurozone.
Futures for the Dow Jones Industrial Average were lower by 71 points, or 54.2 points below fair value, at 12,639. Futures for the S&P 500 were down 7.5 points, or 6.3 points below fair value, at 1330, and futures for the Nasdaq 100 were falling 8.5 points, or 10 points below fair value, at 2556.
Official projections show that Greece's pro-bailout New Democracy party was set to win 29.7% of votes and 129 seats in the 300-member parliament, trumping the 26.9% of votes and 71 seats obtained by the leftist Syriza party. The New Democracy Party now faces the challenge of forming a viable coalition government.
"A temporary relief rally in the euro and risk assets does not mean that uncertainty has been eliminated," said HSBC analysts. "Antonis Samaras, the [pro-bailout] New Democracy leader, has said that he, too, wants to renegotiate some of the terms of the bail-out which means that a temporary halt to Troika funding cannot be ruled out. More immediately, New Democracy needs to form a coalition involving [center-left] Pasok, which has suggested forming a national unity government including [anti-bailout party]Syriza."There are rumors that Pasok, the party that came in third place, won't form a coalition with New Democracy unless Syriza is involved, implying that there could be no government in Greece for a while. "The uncertainty now begins," said Paul Donovan, a global economist with UBS, in reference to the composition of the new government and how the renegotiation of Greece's bailout terms will progress. Meanwhile, other ongoing worries about the eurozone returned to the forefront, with the Spanish 10-year bond yield earlier rising above 7% Monday, saddled by reports that bad bank loans in the country have reached an 18-year high. The FTSE in London was ahead by 0.48% and the DAX in Germany was rising 0.89%. Hong Kong's Hang Seng index closed higher by 1.01% and Japan's Nikkei Average settled up 1.77%. July crude oil futures were up 5 cents at $84.08 a barrel. August gold futures were down $2.90 to $1,625.20 an ounce. The benchmark 10-year Treasury was down 1/32, raising the yield to 1.585%, while the dollar was flat, according to the dollar index. The U.S. economic calendar Monday includes the National Association of Home Builders Housing Market Index for June, which is slated to be released at 10 a.m. EDT. Economists surveyed by Briefing.com expect the reading to slip to 28 from 29. In corporate news, Microsoft (MSFT) has a media event scheduled for Monday at which the software giant could unveil a tablet computer developed in conjunction with Barnes & Noble (BKS). According to TechCrunch, Microsoft has a tablet/e-reader on tap and it will be entertainment-driven. Microsoft and Barnes & Noble announced a strategic partnership in late April with Microsoft investing $300 million in the venture. PetSmart (PETM) announced Monday it is raising its quarterly dividend to 16.5 cents a share from 14 cents, an increase of 18%. The company also said Monday that it will repurchase $525 million of stock. The program will begin on July 30. Chevron (CVX) sold an equity stake in its Wheatstone project in Australia and agreed to supply additional liquefied natural gas to Tokyo Electric Power . Chevron's $29 billion Wheatstone gas-export project is expected to begin exporting gas in 2016.
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