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.
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:
) shares fell 2.32 percent in New York Tuesday as French
President Francois Hollande threatened to nationalize the
- 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
- 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
- Italian 10-year government bond yields fell to. 4.661
- Gold fell 0.06 percent to $1,743.70 per ounce.
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 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 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.
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
Stocks moving in the pre-market included:
- Freeport McMoRan Copper and Gold (NYSE:
) shares rose 1.84 percent on renewed optimism that the company
could beat already low earnings estimates in the current
- Time Warner Inc (NYSE:
) shares fell 0.97 percent as the stock goes ex-dividend
- Caterpillar (NYSE:
) shares fell 0.49 percent pre-market as investors feared that
the global growth slowdown is starting to impact the
- Yum! Brands (NYSE:
) shares fell 0.42 percent pre-market as the weakness in
Chinese markets weighed on the company.
The earnings calendar is rather light Wednesday. Notable
companies expected to report earnings Wednesday include:
- Aeropostale (NYSE:
) is expected to report third quarter EPS of $0.29 vs. $0.30 a
- American Eagle Outfitters (NYSE:
) is expected to report third quarter EPS of $0.39 vs. $0.27 a
- Express (NYSE:
) is expected to report third quarter EPS of $0.17 vs. $0.37 a
- The Fresh Market (NASDAQ:
) is expected to report third quarter EPS of $0.26 vs $0.19 a
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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