Futures Flat Following Wall Street Sell Off
U.S. equity futures were flat in pre-market trading Tuesday
following Monday's late day sell off. Stocks teetered around flat
for most of the day Monday but sold off into the close on fears
that a Fiscal Cliff deal is still a long ways away. Also, the
weak reading of the ISM Manufacturing Index Monday spooked
investors and hurt risk appetite.
In other news around the markets:
- The Reserve Bank of Australia (
) cut its benchmark interest rate to 3.00 percent from 3.25
percent, as expected. The Bank cited increasing downside risks
to the global economy and expected increases in domestic
unemployment as key reasons for the cut.
- German Finance Minister Wolfgang Schaeuble spoke overnight
on the Banking Union and said that it would be difficult for
the German Parliament to pass a bill allowing the ECB complete
oversight over all banks. Rather, he believes that the ECB
should choose select banks to oversee.
- European Finance Ministers aim to finalize the remaining
details on the new Greek aid package by next week and are
optimistic that the Greek debt buyback will work.
- S&P 500 futures were flat at 1,407.1.
- The EUR/USD was higher at 1.3074.
- Spanish 10-year government bond yields fell to 5.233
percent, the lowest since March.
- Italian 10-year government bond yields fell to 4.416
percent, the lowest level since lat 2010.
- Gold fell 0.79 percent to $1,707.50 per ounce.
Asian shares were mixed overnight with Chinese shares rallying
and other markets seeing declines, a clear reversal of Monday's
price action in Asia. The Japanese Nikkei Index fell 0.27 percent
while the Shanghai Composite Index rose 0.78 percent and the Hang
Seng Index rallied 0.15 percent in Hong Kong. Also, the Korean
Kospi fell 0.25 percent and Australian shares fell 0.62 percent
following the RBA rate cut.
European shares were mostly higher in early trade Tuesday as
continued optimism over the Greek debt buyback boosted stocks for
the second consecutive day. The Spanish Ibex Index rose 0.6
percent and the Italian MIB Index rose 1.03 percent as optimism
also rose as bond yields fell to new lows in both countries.
Meanwhile, the German DAX rose 0.2 percent and the French CAC 40
rose 0.743 percent while U.K. shares rose 0.23 percent.
Commodities were mostly lower in pre-market trade as Fiscal
Cliff and global growth fears off-set optimism over the Greek
buyback deal and monetary stimulus in Australia. WTI Crude
futures were flat at $89.10 per barrel and Brent Crude futures
fell 0.3 percent to $110.59 per barrel. Copper futures rose 0.25
percent to $366.10 per pound following the RBA rate cut and in
spite of fears that Chinese growth will not be able to absorb the
amount of new inventory coming online in the next few years. Gold
was lower and silver futures fell 1.17 percent to $33.37 per
Currency markets were fairly quiet overnight except for the
Aussie dollar which reacted to the RBA rate cut. The EUR/USD was
slightly higher at 1.3074, up from the close of 1.3053, and the
dollar fell against the yen to 81.97. Overall, the Dollar Index
fell 0.18 percent to 79.74 on weakness against the euro, the yen,
and the Swedish krone. In addition, the Aussie dollar rallied
following the RBA rate cut with the AUD/USD rising 0.45 percent
and the EUR/AUD falling 0.29 percent to 1.2489.
Stocks moving in the pre-market included:
- U.S. Steel (NYSE:
) shares rose 0.51 percent in the pre-market as hopes of
increased steel demand in China buoyed the stock.
- Oracle (NASDAQ:
) shares fell 0.68 percent as the company announced that it
would be combining three quarters of dividends into one
dividend to be paid this month to avoid the dividend tax hikes
in the new year.
- Carnival Corporation (NYSE:
) shares fell 0.47 percent pre-market as the company announced
that it is to go ex-dividend tomorrow, December 5.
Notable companies expected to report earnings Tuesday
- Autozone (NYSE:
) is expected to report first quarter EPS of $5.39 vs. $4.68 a
- Bank of Montreal (NYSE:
) is expected to report fourth quarter EPS of $1.43 vs. $1.27 a
- Big Lots (NYSE:
) is expected to report a third quarter loss of $0.24 vs. a
profit of $0.06 a year ago.
- Pandora Media (NYSE:
) is expected to report EPS of $0.01 vs. $0.02 a year ago.
On the economics calendar Tuesday, there is not much today
expected in what is to be a rather full economic week. Same store
sales and the Redbook are expected to be released the Treasury is
expected to sell 4-week bills. Lastly, Fed Governor Daniel
Tarullo is expected to speak at the Brookings Institution on
Good luck and good trading.
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