Wednesday August 19th

19-08-2015

U.S. stock futures indicated a lower open on Monday on heightened fears of a possible Greek exit from the euro zone after the country's voters rejected austerity measures demanded in return for much-needed cash. Japan's blue-chip Nikkei closed down just over 2 percent, while European shares opened broadly lower as investors reacted to Sunday's overwhelming 'No' vote by Greek voters. That set the tone for trade in U.S. stock futures, with Dow Jones industrial average futures down more than 100 points in morning trade. Monday's trading session will be the first since last Thursday, as markets were closed Friday for the Independence Day holiday. "After the comprehensive victory for the 'No' camp in yesterday's Greek referendum, eventual 'Grexit' now looks more likely than not," analysts at Daiwa Capital Economics said in a note. "The response of policymakers over the next 48 hours will be key." "Unless a deal can be reached swiftly the Greek banks and the Greek government will simply run out of funds making the introduction of a parallel currency soon inevitable," they added. Greece, which last week defaulted on a major loan to the International Monetary Fund and has imposed capital controls to limit an exit of cash, is in uncharted territory following Sunday's referendum. The country's outspoken Finance Minister Yanis Varoufakis resigned on Monday, removing an obstacle to talks with Greece's creditors. The European Central Bank meanwhile holds a conference call later in the day to decide how long to keep Greek banks afloat, while euro zone leaders are to hold an emergency summit on Greece on Tuesday. "The key is not so much when talks resume (but) if the ECB increases loans," said Peter Cardillo, chief market economist at Rockwell Global Capital. The Institute for Supply Management's June service sector survey is due out at 10:00 a.m. ET and may take investors' focus briefly away from Greece to the U.S. economic outlook. After last Thursday's softer-than-expected U.S. non-farm payrolls report, expectations for a September interest rate rise from the Federal Reserve have been scaled back. Elsewhere, U.S. Treasury yields were broadly lower as jitters over Greece sent investors fleeing into safe-haven bonds. The yield on the benchmark 10-year note was down 8.6 basis points at 2.30 percent. The dollar edged higher against the euro at 1.1013 and down 0.1 percent at 122.74 yen. Ahead of the unofficial start of earnings season this Wednesday, A Schulman posts results after the close. Investors in Asia sought safer havens for their investments on Monday after Greece voted 'No' to harsh bailout conditions in a crucial referendum held on Sunday. Amid the sea of red, China was the lone bright star after a raft of support measures unleashed over the weekend calmed jittery sentiment which sparked a 30 percent correction over the past two weeks. Nikkei skids 2.1%. Japan's Nikkei 225 finished at a one-week low, as a stronger local currency took a toll on export-oriented plays. Oil prices fell more than 3 percent on Monday after Greece rejected debt bailout terms and China rolled out emergency measures to support its stock markets, adding to concerns about demand at a time of global oversupply. Benchmark Brentcrude oil fell $1.61, or 2.7 percent, to $58.71 a barrel by 8:45 a.m. EDT (1245 GMT). U.S. light crude traded $2.57 lower at $54.36, down about 4.5 percent and off a session low of $53.91. The falls left both crude benchmarks at their lowest since mid-April. Gold fell on Monday as a robust dollar outweighed the impact of lower equity markets and some retail demand after Greek voters rejected the terms of a bailout package, potentially setting Athens on a path out of the euro. Spot gold was down 0.2 percent at $1,163.50 an ounce, while U.S. gold futures were up 40 cents at $1,163.90 an ounce.