Futures Lower on Debt Ceiling Fears
U.S. equity futures traded slightly lower and European shares
ticked down in early trade as investors feared the next upcoming
cliff, that of the Debt Ceiling. Republicans look set to use the
upcoming debate over increasing the debt ceiling to pass spending
cuts and to even launch broad-based entitlement reform. Recall that
the recent Fiscal Cliff deal focused mainly on the tax side of the
equation but did not address spending cuts.
In other news around the markets:
Former Italian Prime Minister Silvio Berlusconi struck a deal with
political rivals to not run for Prime Minister in the upcoming
elections in exchange for being nominated economy minister should
the large Northern League Party win. Big banks were handed a gift
by international regulators, as regulators agreed to postpone the
imposition of the Basel III rules another year. The move allows
banks one more year to reach liquidity ratios and also included
some previously not included assets in the so-called Liquidity
Coverage Ratio (LCR), making it easier for banks to reach LCR
levels. Analysts at J.P. Morgan (NYSE:
) see a return to massive healthcare M&A in 2013. The bank sees
deals not only increasing in quantity but in size as well. S&P
500 futures fell 1.5 points to 1,460.10. The EUR/USD was lower at
1.3038. Spanish 10-year government bond yields rose to 5.09
percent. Italian 10-year government bond yields rose to 4.297
percent. Gold rose 0.31 percent to $1,654.00 per ounce.
Asian shares were mixed overnight with a slight downward bias as
fears over the U.S. fiscal situation and the European economy
weighed on markets. The Japanese Nikkei Index fell 0.83 percent and
the Shanghai Composite Index rose 0.37 percent while the Hang Seng
Index fell 0.01 percent in Hong Kong. Also, the Korean Kospi
slipped 0.03 percent while Australian shares fell 0.14 percent on
concerns that the RBA may not cut rates further.
European shares were mostly lower, but only marginally so,
overnight on fears that the ECB will not do enough later this week
to stimulate growth and pull the continent out of its debt crisis.
The Spanish Ibex Index rose 0.06 percent while the Italian MIB
Index fell 0.09 percent and Greek shares fell 0.05 percent.
Meanwhile, the German DAX slid 0.53 percent and the French CAC fell
0.67 percent while U.K. shares were lower by 0.3 percent.
Commodities were mixed overnight as well with oil prices showing
weakness and metals remaining mixed. WTI Crude futures fell 0.35
percent to $92.76 per barrel and Brent Crude futures fell 0.25
percent to $11.03 per barrel. Copper futures fell 0.85 percent to
$366.20 per pound on Chinese weakness and on fears that the RBA
will not cut rates to weaken its currency in an effort to boost
exports. Gold was higher and silver futures rose 0.8 percent to
$30.18 per ounce.
Currency markets were in clear risk-off mode overnight as yen
strength and euro weakness dominated markets. The EUR/USD was 31
pips lower at 1.3038 and the dollar fell against the yen to 87.88,
a drop of 0.31 percent. Overall, the Dollar Index rose 0.11 percent
on strength against the euro, the Swiss franc, and the pound,
despite weakness against the yen and the Canadian dollar. It is
important to note that the AUD/USD rallied back above 1.05 in early
trade despite the Aussie falling against the yen. The biggest loser
was the EUR/JPY, which fell 0.56 percent to 114.57.
Stocks moving in the pre-market included:
Bank of America (NYSE:
) shares rose 1.32 percent pre-market on the news that the Basel
regulators are to delay harsh restrictions. KeyCorp (NYSE:
) shares fell 4.25 percent pre-market following a downgrade at
Zacks Research over the weekend but on no truly significant
) shares rose 0.73 percent pre-market as the company is expected to
sell off non-core assets to shrink its balance sheet and become
more flexible. Microsoft (NASDAQ:
) shares rose 0.45 percent pre-market as the company announced that
it had entered its largest ever contract with the Department of
Defense to provide software and enterprise services to over 75
percent of DoD employees.
No notable companies are expected to report earnings Monday.
Earnings season officially kicks off Tuesday, January 8 with Alcoa
) set to report earnings.
On the economics calendar Monday, the Treasury is set to auction
3- and 6-month bills as well as STRIPS. Overnight, focus will be on
eurozone retail sales and the eurozone unemployment rate as well as
German factory orders data.
Good luck and good trading.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice.
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