U.S. Indexes Futures Rise as Central Bankers Step Up Actions

Arthi Gupta
15 Jun, 2012
New York City

U.S. indexes futures traded higher after central banks took preemptive steps to thwart liquidity crunch. The Bank of Japan left its key rate unchanged, the Swiss National Bank said it will act to arrest sudden surges in the franc and the Bank of England offered additional liquidity.

[R]8:10 AM New York – U.S. indexes futures traded higher after central banks took preemptive steps to thwart liquidity crunch. The Bank of Japan left its key rate unchanged, the Swiss National Bank said it will act to arrest sudden surges in the franc and the Bank of England offered additional liquidity.[/R]

U.S. index futures and global indexes rallied ahead of the Greek election Sunday as investors prepare for all possible outcomes and traders focused away from the Greek election to the possible regulatory response and the impact on the economies of the region.

G20 leaders meet in Mexico City beginning Monday for a 2-day summit and traders look ahead to the FOMC meeting next week.

Investors are increasingly taking optimistic view that regulators and bankers are at least prepared to calm markets and Greek exist from the euro zone is months away even if Greece elects a party that chooses to leave.

The investor sentiment was buoyant on the hopes that the central banks are prepared to inject significant liquidity in the event Greek outcome leads to market chaos.

Bank of England offered additional liquidity to banks with collateral and increase lending to the banking system. Swiss National Bank also offered to take steps in the Swiss franc advances and said it is prepared to act if the currency rises above the target price.

Yields on the Italian and Spanish bonds backed off from near record highs but traders were jittery after ratings agency downgraded five Dutch banking groups.

Asian markets advanced tracking the U.S. and European market gains in overnight trading.

The Bank of Japan decided to hold the key uncollateralized overnight call rate at around 0% to 0.1%. The size of the asset purchase fund and credit facility was also left unchanged at 40 trillion yen and 30 trillion yen, respectively.

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