U.S. Stock Futures Lower on Greece Concerns

U.S. stock futures are lower as lingering concerns about Greece trump U.S. market news and a lack of a 'Merger Monday'. In Greece, Greek Prime Minister Alexis Tsipras announced his plans to reverse several bailout measures including an increase in the minimum wage, restoring the income tax-free threshold and halting infrastructure privatization.

Dow futures are off 85 points, while S&P 500 futures are down 10 points.

Strategist as Nomura noted this morning:

"Markets across Europe were down in the morning with concerns on developments in Greece overhanging markets. Equities were broadly lower, with the FTSE 100 and Eurostoxx 50 indices currently down 0.70% and 1.70%, respectively. In FX there was a similar picture with sterling and euro both down against the G10 basket of currencies. Against the dollar the former is at 1.5220 and the latter at 1.1312. In rates German 10yr Bund yields fell by around 4bp, with the decline larger in 10yr Gilts at around 5bp.

In Greece, shares on the Athens Stock Exchange and the price of 10yr Greek bonds were down around 5% this morning: This comes after Greek Prime Minister Alexis Tsipras announced his plans to reverse several bailout measures including an increase in the minimum wage, restoring the income tax-free threshold and halting infrastructure privatisation. In his first significant address to parliament, starting a three-day debate, he outlined that the government will stick to its election pledges and will not ask for a bailout extension. He remained confident that Greece could reach an agreement by the end of this month on a bridging loan that would last until June. German newspaper FAS cited central bank sources as saying that the €60bn ELA funding signed off by ECB will not be sufficient for Greece if deposit flight continues. See Nemo for more on the Greek situation.

On Friday rating agencies S&P and Moody’s expressed their concerns about the Greek situation, with the former cutting the economy’s rating by one notch to ‘B-‘ from ‘B,’ assigning CreditWatch negative. Moody’s put Greece’s ‘Caa1’ rating on ‘review for a downgrade,’ adding pressure on Greece to organise some form of agreement with the relevant authorities."

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