Futures Slip on Spanish Fears
U.S. equity futures slipped in early Friday trade as fears of
the finances of Spanish banks resurfaced. The Spanish government
has placed a freeze on evictions of homes due to increasing
suicide rates as people lose their homes, which will be costly to
the banks in the end.
In other news around the markets:
- The Economist has published a scathing article of the
French economy in this weekend's edition, with cover headline
calling France the ticking time bomb at the heart of
- Israeli officials and Hamas leaders failed to reach a cease
fire overnight and Israel's missile defense system shot down
all 66 missiles fired from Gaza.
- Japanese opposition candidate for Prime Minister Abe
reiterated his stance on the Bank of Japan overnight, stating
that the BoJ should adopt a 3 percent inflation target
(currently 1 percent) and commit to unlimited QE to weaken the
- CCLA Chief Investment Officer James Bevan, in an interview
with Bloomberg television, called Europe the ultimate value
trap and warned investors from trying to call a bottom on the
- S&P 500 futures fell 3.5 points to 1,347.80.
- The EUR/USD was lower at 1.2735.
- Spanish 10-year government bond yields fell to 5.863
- Italian 10-year government bond yields fell to 4.876
- Gold slipped 0.23 percent to $1,709.80 per ounce.
Asian shares were mixed overnight, once again led by Japanese
stocks on hopes of increased stimulus from the Bank of Japan. The
Japanese Nikkei Index jumped 2.2 percent and the Shanghai
Composite Index fell 0.77 percent while the Hang Seng Index rose
0.24 percent. Also, the Korean Kospi fell 0.53 percent and
Australian shares slipped 0.29 percent as the IMF warned on the
slowing export boom.
European shares were lower in early trading on Spanish fears.
Spain's Ibex Index fell 0.58 percent and the Italian MIB Index
fell 0.88 percent on bank fears there as well. Meanwhile, the
German DAX fell 0.55 percent and the French CAC fell 0.33 percent
while U.K. shares dropped 0.63 percent.
Commodities were weaker overnight as European fears weighed on
risk appetite. WTI Crude futures fell 0.25 percent to $85.24 per
barrel and Brent Crude futures slipped 0.06 percent to $107.94
per barrel. Copper futures dropped 0.49 percent to $345.65 per
pound, gold was lower, and silver futures slipped 1.16 percent to
$32.30 per ounce.
Currency markets were in clear risk-off mode as the dollar
rallied against most partners save for the yen. The EUR/USD was
lower at 1.2735 and the dollar fell against the yen to 81.11.
Overall, the Dollar Index rose 0.19 percent to 81.23 as a report
from analysts at Citi (NYSE:
) highlighted that the dollar has been rallying as the Fed has
yet to act under its QE3 program. The dollar saw relative
strength overnight against the euro, the Swiss franc, and the
Swedish krone. The Australian dollar fell slightly against the
greenback but rose 0.24 percent against the euro.
Stocks moving in the pre-market included:
- Nike (NYSE:
) shares jumped 1.09 percent pre-market as the company
announced a 2-for-1 stock split and increased its dividend by
- Hewlett-Packard (NYSE:
) shares fell 0.61 percent pre-market ahead of its earnings
report next week.
- Gamestop (NYSE:
) shares fell 1.11 percent in pre-market trade after the
company reported earnings that beat forecasts but was cautious
on the key holiday season.
- Target (NYSE:
) shares fell 0.24 percent pre-market after the company
reported earnings that beat forecasts.
Notable companies expected to report earnings Friday
- Foot Locker (NYSE:
) is expected to report third quarter EPS of $0.54 vs. $0.43 a
- J.M. Smucker Co. (NYSE:
) is expected to report second quarter EPS of $1.44 vs. $1.36 a
On the economics calendar Friday, the Treasury International
Capital (TIC) flows report is due out and will shed light on
foreign holdings of U.S. government debt. Also, industrial
production and e-commerce retail sales are due out. Lastly,
Dennis Lockhart of the Atlanta Fed is set to speak after the
Good luck and good trading.
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