NEW YORK (MarketWatch) — U.S. stock-market futures eased gains on Monday as investor cheer over a bank-bailout plan for Spain was tempered by concern over the longer-term implications.
“The initial enthusiasm for the news that Spain’s banks will get the bailout that was well telegraphed on Friday has been tempered by the reality that Spain’s sovereign debt is about to rise,” Peter Boockvar, equity strategist at Miller Tabak, emailed.
“Nothing is free of course, especially in the short term when you can’t print your own currency,” he added.
The Spanish government over the weekend said it would ask the European Union for financial assistance for its banks of up to €100 billion ($125 billion).
Worries about Spain and its banks, suffering the aftermath of a housing crisis and resulting bad loans, have weighed on markets for weeks. But Spain stocks pared much of their rise as analysts questioned how far the bank bailout would go to solve its crisis.
“Investors have let out a collective sigh of relief that the immediate pressure is off the Spanish banking system,” said Fawad Razaqzada, market strategist at GFT Markets, in emailed comments. But he said plenty of obstacles remain for Europe, such as Greece’s elections, which could mean short-lived gains.
`Unsustainable debt burdens’
“Ultimately, any relief is likely to prove temporary, as the structural problems at the heart of the euro zone continue to fester away unaddressed,” said Razaqzada.
“Growth rates in the majority of member countries remain feeble, and this will continue to be the case as peripheral countries have to deal with their unsustainable debt burdens.”
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