Stock Futures Rise Despite Cyprus Fears
NEW YORK ( TheStreet) -- Stock futures were rising Friday, poised to bounce back from the biggest selloff in equities in almost a month, even as Cyprus' fate was hanging in the balance.
Cyprus is fighting to avoid financial collapse after Russia, which has billions of dollars of deposits in Cypriot banks, brushed off the island-country's pleas for financial aid.
After two days of talks with Russian Finance Minister Anton Siluanov, Cypriot Finance Minister Michael Sarriss left Moscow without a deal to help fund €5.8 billion it needs to raise in order to unlock €10 billion in European and and International Monetary Fund aid and garner the €17 billion it needs to recapitalize its banks.
The urgency for finding a new plan to fill the funding gap after the country rejected an outright tax on bank depositors as part of a European bailout deal is mounting as the European Central Bank threatens to withdraw ongoing emergency bridge funding for its banks before Tuesday if the near-bankrupt country cannot come to a bailout agreement with the European Union and IMF soon.
Cyprus' government pleaded with lawmakers Friday to "take the big decisions" to avert financial chaos.
"The next few hours will determine the future of the country," Christos Stylianides, a government spokesman, said in televised statement before lawmakers began debating alternative proposals to avoid financial ruin.
The "troika" of lenders to Cyprus consisting of the International Monetary Fund, the European Central Bank and the European Commission met with President Nicos Anastasiades Friday morning and would vet the measures if Parliament passed them.
"The market thinks that a solution will be found....it doesn't believe it is going to implode," said Kenny Polcari, director of New York Stock Exchange Floor Operations at O'Neil Securities, Inc.
Polcari thinks that end-of-quarter "window dressing" by mutual fund and portfolio managers was also contributing to the firmer markets.
Futures for the S&P 500 were up 3.5 points, or 3.45 points above fair value, at 1,542.5, with the index looking to avoid tipping into its second weekly decline this year.
Futures for the Nasdaq were up 6.25 points, or 8.75 points above fair value, at 2,776. Futures for the Dow Jones Industrial Average were rising 31 points, or 33.51 points above fair value, at 14,378.
"The two questions for investors are: 1) is there a bank run in Cyprus regardless of any deal, when banks reopen? and 2) will events in Cyprus make future Euro crises more difficult or costly to resolve. The answers appear to be 1) don't know and 2) yes," Paul Donovan, managing director of global economics at UBS in London, said in a note.
Cyprus banks are expected to remain closed until at least Monday to avoid bank runs as a bailout deal remains uncertain.