Futures Drop on Fiscal Cliff Fears
U.S. equity futures fell in pre-market trading as traders
renewed fears over the fiscal cliff saw stocks skid Tuesday and
futures continue to move lower overnight. Comments from Senate
Majority Leader Harry Reid Tuesday that Congressional leaders
were not close to a deal spooked investors and brought back fears
that had receded over the past 7 trading days.
Top News
In other news around the markets:
- Spanish banking group Bankia had its shares halted in
Madrid overnight as the company is set to receive approximately
40 billion euros in additional financing from the government,
which had previously been announced earlier this week.
- ArcelorMittal (NYSE:
MT
) shares fell 2.32 percent in New York Tuesday as French
President Francois Hollande threatened to nationalize the
company.
- It appears likely that newly nominated Bank of England
Governor Mark Carney will be much more inventive in monetary
policy than his predecessor Mervyn King according to new
reports, as internal Fed communications showed that Chairman
Ben Bernanke took some policy ideas from the former Bank of
Canada chief.
- S&P 500 futures 2.1 points to 1,395.3.
- The EUR/USD was was lower at 1.2927.
- Spanish 10-year government bond yields fell to 5.443
percent.
- Italian 10-year government bond yields fell to. 4.661
percent.
- Gold fell 0.06 percent to $1,743.70 per ounce.
Asian Markets
Asian shares were lower overnight as fears of U.S. leaders not
being near a deal over the fiscal cliff created a risk-off tone
broadly. The Japanese Nikkei Index fell 1.22 percent and the
Shanghai Composite Index fell 0.89 percent while the Hang Seng
Index fell 0.62 percent. The Shanghai Composite Index is now near
the 2009 lows. In addition, the Korean Kospi dropped 0.65 percent
and Australian shares fell 0.21 percent.
European Markets
European shares were also lower on fiscal cliff fears and also
on doubts over the newly reached Greek aid deal. The Spanish Ibex
Index fell 0.83 percent and the Italian MIB Index fell 0.15
percent in early trading. Meanwhile, the German DAX fell 0.09
percent and the French CAC 40 fell 0.28 percent while U.K. stocks
dropped 0.23 percent.
Commodities
Commodities were lower overnight for similar reasons as other
risk assets. WTI Crude futures fell 0.3 percent to $86.92 per
barrel and Brent Crude futures dropped 0.24 percent to $109.61
per barrel. Copper futures slipped 0.18 percent to $354.45 per
pound on global growth fears. Gold was lower and silver futures
dropped 0.06 percent to $34.06 per ounce.
Currencies
Currency markets saw growth currencies actually outperform
overnight, bucking the risk-off trend seen in other markets, as
developed currencies fell. The EUR/USD was lower at 1.2927 and
the dollar fell against the yen to 81.86. Overall, the Dollar
Index was flat at 80.39 on strength against the euro, the pound,
and the Swiss franc and weakness against the yen. In addition,
the Aussie dollar gained against the greenback, the euro, and the
yen.
Pre-Market Movers
Stocks moving in the pre-market included:
- Freeport McMoRan Copper and Gold (NYSE:
FCX
) shares rose 1.84 percent on renewed optimism that the company
could beat already low earnings estimates in the current
quarter.
- Time Warner Inc (NYSE:
TWX
) shares fell 0.97 percent as the stock goes ex-dividend
today.
- Caterpillar (NYSE:
CAT
) shares fell 0.49 percent pre-market as investors feared that
the global growth slowdown is starting to impact the
company.
- Yum! Brands (NYSE:
YUM
) shares fell 0.42 percent pre-market as the weakness in
Chinese markets weighed on the company.
Earnings
The earnings calendar is rather light Wednesday. Notable
companies expected to report earnings Wednesday include:
- Aeropostale (NYSE:
ARO
) is expected to report third quarter EPS of $0.29 vs. $0.30 a
year ago.
- American Eagle Outfitters (NYSE:
AEO
) is expected to report third quarter EPS of $0.39 vs. $0.27 a
year ago.
- Express (NYSE:
EXPR
) is expected to report third quarter EPS of $0.17 vs. $0.37 a
year ago.
- The Fresh Market (NASDAQ:
TFM
) is expected to report third quarter EPS of $0.26 vs $0.19 a
year ago.
Economics
On the economics calendar Wednesday, MBA Purchase Applications
and New Home Sales are due out followed by EIA Petroleum Report
and the Beige Book. In addition, the Sandra Pinalto of the
Cleveland Fed is set to speak and the Treasury is expected to
auction 5-year notes.
Good luck and good trading.
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