Futures plummet as Greece gets more time on bailout,
German Economic Sentiment Drops.
U.S. equity futures dropped precipitously in early Tuesday
trading following a day of think trading as only stock markets
were open in observance of Veterans Day Monday. Overnight,
European finance ministers and other leaders agreed to give
Greece two more years on its bailout agreement to pay back the
loans in exchange for further conditions and more austerity.
However, leaders will not vote on whether to disperse the next
bailout tranche until the meeting scheduled for November 20.
In other news around the markets:
- The German ZEW Economic Survey, a key indicator of economic
sentiment that is correlated to growth, unexpectedly dropped to
-15.7 in November from -11.5 in October, weaker than forecasts
of a -9.8 reading.
- Italy auctioned 6.5 billion euros of 12-month notes to
yield 1.762 percent, below the previous 1.941 percent. Also,
the bid-to-cover ratio fell slightly to 1.764 from 1.77 at the
- German Finance Minster Wolfgang Schaeuble spoke overnight,
stating that haircuts on Greek debt are out of the question but
that maturity extensions and loan rate cuts as possible. He is
concerned that hopes for Greece to sustain debt by 2020 are too
- S&P 500 futures fell 9.2 points to 1,380.0.
- The EUR/USD was lower at 1.2680.
- Spanish 10-year government bond yields rose to 5.937
- Italian 10-year government bond yields rose to 5.047
- Gold fell 0.37 percent to $1,724.50 per ounce.
Asian shares were lower overnight on global growth and
European fears. The Japanese Nikkei Index fell 0.18 percent and
the Shanghai Composite Index dropped 1.51 percent while the Hang
Seng Index fell 1.13 percent in Hong Kong. Meanwhile, the Korean
Kospi fell fell 0.59 percent and Australian shares dropped 1.53
percent on weak home price data.
European shares were also trading lower in early Tuesday
trade, though the magnitude of losses were less so than Asian
indexes. Spain's Ibex Index fell 0.67 percent and the Italian MIB
Index fell 0.44 percent while the Greek shares fell 0.6 percent.
Also, the German DAX fell 0.72 percent and the French CAC dropped
0.92 percent while U.K. shares slid 0.87 percent.
Commodities were lower overnight as energy once again led
prices lower. WTI Crude futures dropped 0.95 percent to $84.76
per barrel and Brent Crude futures fell 1.14 percent to $107.83.
Copper futures fell 0.88 percent to $343.75 per pound on global
growth fears. Gold was lower and silver futures fell 0.64 percent
Currency markets were in clear risk-off mode overnight as the
dollar gained and the euro fell. The EUR/USD was lower at 1.2680
and the dollar fell against the yen in classic risk-off fashion.
Overall, the Dollar Index gained 0.17 percent to 81.18 on
strength against the Swedish krone, the euro, the Swiss franc,
and the British pound. The AUD/USD also fell in line with the
risk-off atmosphere and the EUR/AUD continued its decline,
probing the lowest level in nearly three months.
Stocks moving in the pre-market included:
- Leucadia National Corp. (NYSE:
) shares fell 0.52 percent pre-market following a 3.03 percent
slide Monday as the company announced the purchase of Jefferies
). Jefferies needed to be rescued following its rescue of
Knight Capital Group (NYSE:
- Microsoft (NASDAQ:
) shares fell 0.82 percent pre-market as the company announced
that the head of its Windows division has been fired active
immediately and will be replaced by a company insider. The move
is said to be so that the company can have a new vision for the
next version of Windows.
- Smith and Wesson (NYSE:
) shares fell 0.28 percent following a 4.09 percent gain
yesterday as the company increased guidance.
Notable companies expected to report earnings Tuesday
- Dicks Sporting Goods (NYSE:
) is expected to report third quarter EPS of $0.37 vs. $0.32 a
- Cisco Systems (NASDAQ:
) is expected to to report third quarter EPS of $0.46 vs. $0.43
a year ago.
- Home Depot (NYSE:
) is expected to report third quarter EPS of $0.70 vs. $0.60 a
- The TJX Companies (NYSE:
) is expected to report third quarter EPS of $0.61 vs. $0.53 a
On the economics calendar Tuesday, the NFIB Small Business
Optimism Index is due out at 7:30 am eastern followed by the ICSC
Goldman Store Sales report and the Redbook. Later, the Treasury
is set to auction 4-week, 3-, and 6-month bills and the Treasury
budget statement is due out this afternoon. Also, Fed
Vice-Chairman Janet Yellen is set to speak at 3:30 at the
University of California, Berkley on central bank communications
and will answer questions.
Good luck and good trading.
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