Futures cautious on Syria tension
Investors weigh the consequences of a possible military action in response to the use of chemical weapons.
U.S. Secretary of State John Kerry issued a statement on Monday saying there was undeniable evidence that the Syrian government had used chemical weapons against its own civilians.
Now, as UN investigators gather information from the site where the weapons were supposedly used, the U.S. is inching closer to using military action against Syrian President Bashar al-Assad.
Meanwhile, the U.S. has postponed an August 28 meeting with Russia, at which to two were to talk about a peaceful resolution of the Syrian civil war. Russian Deputy Foreign Minister Gennady Gatilov remarked on Twitter that Russia regrets the meeting was cancelled.
In other news, the Japanese Ministry of Finance is expected to request 23.5 trillion yen for debt servicing costs for the 2014 fiscal budget.
U.S. Secretary of Treasury Jack Lew announced that he expects the U.S. to hit its $16.7 trillion debt limit in mid October.
China's Vice Finance Minister Zhu Guangyao said that despite the difficult challenges China faces in the future, he is confident that the nation will achieve a 7.5% growth rate in 2013.
The U.S. housing market is suffering as mortgage rates rise on expectations of the Federal Reserve tapering. Home prices are increasing and new home sales dropped 13.4% in July, the largest drop in three years.
Asian markets were under pressure as the situation between the U.S. and Syria moved closer to military action. The Indonesian JSX composite suffered the largest losses with a 3.15% loss. The Japanese NIKKEI index lost 0.69%, but China's mainland Shanghai and Shenzhen composites gained 0.34% and 0.45%, respectively, after data showed that industrial profits at Chinese companies climbed in July.
Political turmoil coupled with the possibility of military involvement in Syria dragged European markets down on Tuesday morning. The German DAX lost 1.21% and France's CAC 40 were down 1.22%. The STOXX 600 was down 1.04%, and Italy's FTSE MIB was down 1.08%. The Spanish IBEX suffered the largest loss, falling 1.58%.
Energy futures gained from the rising tension in Syria. Brent futures were up 0.10% and WTI futures added 0.20%. Precious metals also got a boost on Tuesday morning. Gold gained 0.74% and climbed to $1,403.40 per ounce, and Silver jumped 0.89% to $24.27 per ounce. Industrial metals prices similarly increased with copper up 0.27% and aluminum up 0.48%.
Investors flocked to the dollar for a safety net as talk of military action in Syria increased. The Indian rupee slipped to record lows, falling 2.47% against the dollar to ₹65.88. The dollar strengthened 0.31% against the euro and 0.42% against the British pound. Only the yen gained on the greenback and climbed 0.64%.
Stocks moving in the premarket included:
Tyson Foods (TSN) continued to drop in premarket trade, shedding 2.29%.
Newell Rubbermaid (NWL) slid 2.27% ahead of market opening after rising 1% on heavy volume on Monday.
Expedia (EXPE) was up 3.06% in premarket trade after reports that the company would join forces with the online travel agency website, Travelocity.
Hasbro (HAS) gained 2.60% in premarket trade after news that the company launched a new Funny or Die board game.
Cabot Oil & Gas (COG) lost 2.19% in premarket trade after hitting a 52-week high on Monday.
Notable companies set to release earnings on Tuesday include:
Bank of Montreal (BMO) is expected to release third quarter earnings per share of $1.54 on revenue of $4.02 billion, compared to earnings per share of $1.49 on revenue of $3.88 billion a year ago.
Brown Shoe Company (BWS) is expected to release second quarter earnings per share of $1.32 on revenue of $1.70 billion, compared to last year's earnings per share of $1.19 on revenue of $1.83 billion.
Regis Corporation (RGS) is expected to release fourth quarter earnings per share of $1.84 on revenue of $2.45 billion vs. last year's earnings per share of $1.34 on revenue of 2.45 billion.
Tiffany & Co. (TIF) is expected to release second quarter earnings per share of $0.74 on revenue of $941.21 million, compared to last year's earnings per share of $0.72 on revenue of $886.5 million
Tuesday is another quiet day for economic releases. U.S. consumer confidence data is due out. The German business climate index was released (105.7), and Hong Kong will releasec trade balance data.
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As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
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