Futures Flat on Debt Ceiling Fears
U.S. equity futures were flat in early trading Thursday
following a letter from Treasury Secretary Geithner to leaders
stating that the debt ceiling would be breached on December 31
unless the Fiscal Cliff were to be avoided and the ceiling
raised. Geithner has stated that the Treasury will defer and
delay some payments to create approximately $200 billion worth of
additional room under the ceiling, but exactly how much time this
buys is unknown.
In other news around the markets:
- The Spanish bailout fund, the FROB, has released a report
stating that bailed out Bankia Group, and its parent company
BFA, has a negative equity of about $14 billion. Shares fell
more than 12.5 percent at the European open on the news.
- Newly appointed Japanese Prime Minister Shinzo Abe has
announced some of his cabinet members economic advisor Hamada
spoke overnight, stating that the BoJ should consider buying
more longer-dated JGB's and other longer-dated assets and would
even consider buying foreign bonds to boost inflation through
- Barclays (NYSE:
) analysts say that their favorite trade in 2013 is long gold
and short yen, with the yen devaluation being front-loaded into
the first quarter as the bulk of the adjustment already may
have occurred in the latter part of 2012. However, they expect
gold to rally in the face of increased central bank liquidity
and rising inflation fears.
- S&P 500 futures were flat at 1,413.50.
- The EUR/USD was higher at 1.3265.
- Spanish 10-year government bond yields rose to 5.289
- Italian 10-year government bond yields rose to 4.528
- Gold fell 0.25 percent to $1,656.80 per ounce.
Asian shares were mostly higher overnight once again lead by
Japanese stocks as investors piled into inflation-hedged assets
in hopes that the BoJ can effectively kick start the domestic
economy. The Japanese Nikkei Index rose 0.91 percent and the Hang
Seng Index gained 0.35 percent while the Shanghai Composite Index
fell 0.6 percent. In addition, the Korean kospi rose 0.26 percent
and Australian shares gained 0.28 percent.
European shares were mostly higher save for Spanish shares
following the news about its troubled banking sector. The Spanish
Ibex Index lost 0.46 percent, in contrast to Italian shares which
gained 0.49 percent. Meanwhile, the German DAX rose 0.24 percent
and the French CAC rose 0.5 percent while U.K. shares gained 0.22
Commodities were mostly weaker in overnight trade of Fiscal
Cliff and Debt Ceiling fears. WTI Crude futures rose 0.12 percent
to $91.09 per barrel and Brent Crude futures fell 0.22 percent to
$110.83 per barrel. Copper futures were effectively flat
overnight with prices steady at $359.70 per pound in New York.
Gold was lower and silver futures fell 0.25 percent to $29.96 per
Currency markets showed broad dollar weakness overnight as the
euro gained and the greenback sold off against nearly every major
partner save for the yen. The EUR/USD was much higher at 1.3265
and the dollar gained against the yen to 85.74, briefly touching
its highest two years Wednesday. Overall, the Dollar Index fell
0.25 percent on weakness against the euro, the pound, the
Canadian dollar, and the Swiss franc. A notable mover was the
EUR/JPY cross, climbing 0.47 percent to its highest this
Stocks moving in the pre-market included:
- Discover Financial (NYSE:
) shares rose 1.7 percent pre-market after Sterne Agee
reiterated its buy rating on the company.
- Ford (NYSE:
) shares fell 0.63 percent pre-market as it is being sued for
false mileage claims.
- Microsoft (NASDAQ:
) shares rose 0.67 percent following a Reddit post from Mark
Cuban highlighting how much better the Nokia (NYSE:
) Windows-powered phones are compared to Apple's (NASDAQ:
- Time Warner Cable (NYSE:
) shares rose 0.42 percent pre-market as the company bid for
) Optimum West unit, which would give it access to four new
markets in Montana, Wyoming, Colorado, and Utah.
No notable companies are expected to report earnings
On the economics calendar Thursday, jobless claims and new
home sales highlight the calendar. Overnight, French GDP and
Italian debt auctions will headline the data stream out of
Good luck and good trading.
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