Futures rise after Greek election

By Ryan Vlastelica Source: Reuters

NEW YORK | Sun Jun 17

(Reuters) – U.S. stock index futures rose on Sunday with Greek parties that support a bailout for the country set to win a slim parliamentary majority, bringing some relief to a world braced for fresh financial turmoil.

Investors have feared that if the winner had been the radical left SYRIZA party, which rejects the terms of the bailout, it could result in Greece leaving the euro zone, the result of which was uncertain. With 80 percent of the votes counted, the pro-bailout New Democracy Party led with 30.1 percent while SYRIZA had 26.6 percent.

“The gain is understandable given the massive fallout that could have happened had the New Democracy Party lost,” said Michael Yoshikami, chief executive officer at Destination Wealth Management in Walnut Creek, California. “If they’re able to construct a majority, as it appears, that will be a huge relief for the market.”

S&P 500 futures rose 7.2 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 85 points and Nasdaq 100 futures rose 20.25 points.

With the gain in futures, Wall Street looked to extend its recent rally. The S&P rose 1.3 percent last week, the second straight week of gains for the benchmark index. The Dow rose 1.7 percent in the week while the Nasdaq was up 0.5 percent.

Wall Street has largely traded on developments from Europe in recent sessions, with the Greek elections and questions about a bailout plan in Spain sparking sharp volatility.

“We’ll have all kinds of other headlines for Europe over the summer that we’ll be trading on, so we’re nowhere near the end of volatility,” Yoshikami said.

Sectors tied to the pace of economic growth are likely to see the biggest reaction to the election results. Financials .GSPF, energy .GSPE and materials .GSPM have all traded largely in sync with the developments from Europe.

(Editing by Chizu Nomiyama)

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