U.S. equity futures slipped in early trade Tuesday as fears over
the finances of Spain once again dominated the markets. Rising bond
yields for Spain may force it into a bailout, allowing ECB
President Mario Draghi to launch his new plan and purchase Spanish
bonds to keep yields lower. Also, investors have become
increasingly worried over the relations between China and Japan as
the two nations continue to dispute the territorial control of
islands in the South China Sea. At stake is a trade relationship of
more than $340 billion.
In other news around the markets:
Spain sold 4.6 billion euros of 12-month bills at 2.835 percent,
lower than the previous auction's 3.07 percent.Multiple measures of
British inflation released overnight pointed to an economy that
continued to slow in the past month, and house price gains also
slowed. Investors may be expecting the Bank of England to do more
at its next policy meeting, either by cutting rates or increasing
the size of its Quantitative Easing program.The German Zew Economic
Sentiment Index, a survey with strong correlation to growth
metrics, rose faster than economists estimated, rising to -18.2
from -25.5 prior and better than economist estimates of -19.0.Dole
Foods (NYSE:
DOLE
) rose 9.49 percent in the pre-market as the company announced it
is selling an Asian business to Itochu for $1.69 billion.S&P
500 futures fell 2.8 points to 1,451.20.The EUR/USD fell to
1.3068.Spanish 10-year government bond yields fell to 5.935 percent
after rising as high as 6.056 percent.Italian 10-year government
bond yields fell to 5.084 percent after rising as high as 5.169
percent.Gold slipped 0.68 percent to $1,758.60.
Overnight, Asian shares traded lower save for the Korean Kospi,
which rose 0.13 percent. However, the Japanese Nikkei fell 0.39
percent and the Shanghai Composite Index fell 0.91 percent as the
dispute between the two nations heats up. Japanese automakers, such
as Toyota (NYSE:
TM
), have even began shutting down factories in China in fear of
escalating tensions. The Hang Seng Index fell 0.27 percent and
Australian shares slid 0.18 percent after the Royal Bank of
Australia released minutes that were rather dovish. In Europe,
shares were lower led by the periphery, as Italian shares dropped 2
percent and Spanish shares skidded 1.76 percent. Germany's DAX
slipped 0.95 percent and the French CAC fell 1.07 percent.
Commodities continued to fall following the flash crash in oil
prices yesterday that remains unexplained. Oil prices fell more
than 3.0 percent in nearly one minute and other commodities dropped
with oil. WTI Crude futures fell 0.4 percent to $96.23 per barrel
and Brent Crude futures fell 0.18 percent to $113.58 per barrel.
Copper futures were weak following the weakness in China, as the
front month future fell 0.95 percent to $375.60 per pound. Gold
fell and silver slid 0.6 percent to $34.16 per ounce.
Currencies continued the trend from yesterday of dollar strength
as the Dollar Index rose 0.13 percent. The EUR/USD boosted the
index as the pair fell 0.4 percent. The index rose even as the yen
gained against the dollar, as the USD/JPY fell 0.1 percent to
78.60. The Aussie dollar was the notable weak currency, falling
more than 0.5 percent against all major pairs, as the Royal Bank of
Australia hinted that rate cuts could be coming in the future.
Movers in the pre-market included Dole Foods (NYSE:
DOLE
), which rose markedly on the asset sale. Apple (NASDAQ:
AAPL
) also rose in the pre-market, crossing the $700 mark by rising
0.34 percent. Advanced Micro Devices was notably weak in the
pre-market, falling 4.49 percent. Cliff's Natural Resources (NYSE:
CLF
) was once again weak in the pre-market with shares slipping 2.86
percent.
In earnings, FedEx (NYSE:
FDX
) released fiscal first quarter earnings this morning, beating
analyst estimates for sales and EPS, however the company slashed
guidance for the next few quarters and shares fell.
On the economic front, same store sales data will be released at
7:45 am eastern and the President of the Chicago Fed Charles Evans
is set to speak at 8:00 am. The Redbook is due out at 8:55 am and
the Fed's Dudley and Lacker are set to speak later in the day.
Also, the weekly crude inventory reports are due out after the
close.
Good luck and good trading.
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