Futures flat ahead of Fed meeting minutes
Investors are cautious as the Federal Reserve's tapering of its stimulus program remains in the spotlight.
Speculation around whether or not the U.S. Federal Reserve will begin tapering its stimulus program remained in the spotlight and has kept investors from making any aggressive moves.
In other news around the markets:
The U.S. manufacturing sector has been making a comeback and could be competing with the likes of China in the near future. The U.S. trade deficit on manufactured goods fell to $225 billion from $227 billion last year.
At least 850 people are confirmed dead in Egypt since violence between ousted President Mohamed Mursi's supporters and the Egyptian military broke out on Wednesday. The clashes have affected crude prices as investors worry about interruptions at the Suez Canal.
Data show that the correlation between similar stocks' movements has fallen over the past year, suggesting that investors are focusing more on individual companies rather than making wide bets on a group of stocks.
Engineering company Kentz Corporation of London confirmed that it had rejected an unsolicited proposal from Amec pl.c Kentz shares increased more than 20% following the announcement.
Asian markets were mixed on Monday, with the Nikkei index in Tokyo up 0.1% due to a weakening yen. Volatile trading on Friday resulted in a 0.2% slip for China's Shanghai Composite after the benchmark jumped 5.6% on an Everbright Securities computer glitch that flooded the market with buy orders. Brokerage shares are paying the price for the mishap as Haitong Securities Co. and Citic Securities Co. were both trading more than 3% down. The Hang Seng Index in Hong Kong dropped 0.2% on weak trade and Australian shares remained flat.
European stocks slipped lower on Monday as speculation about the Fed's minutes, to be released on Wednesday, played into worries about a disorderly pullback of the Fed's stimulus spending. The region's Stoxx 600 index lost 0.4% while the UK's FTSE 100 index retreated 0.3%. The German DAX fell 0.6% and France's CAC-40 followed suit with a 0.7% loss.
Commodities also suffered under the Fed's tapering speculation, although oil prices were lifted by worries about unresolved tension in the Middle East. October Brent crude futures gained 0.1% and traded at $110.48 per barrel while U.S. crude held at $107.47, little changed from Friday's closing price of $107.46. Precious metals also traded higher riding on the back of a weaker dollar. Gold was up 0.32% on Monday and traded at $1,375.30 an ounce while silver remained near its previous close at $23.31 an ounce.
The dollar index climbed 0.1% to 81.333 after U.S. 10-year Treasury yields hit a two-year high on Friday. The dollar remained steady against the yen at ¥ 97.55 to the dollar and is expected to remain between ¥ 97 and ¥ 98 for the remainder of the day. The euro remained strong against the dollar at $1.337 as investors looked ahead for another stream of positive data this week. The Indian rupee hit a new low against the dollar, declining 1.3% to 62.44.
Earnings reported Friday
Key companies that reported earnings Friday include:
UTStarcom Holdings Corporation (UTSI) reported second quarter loss with earnings per share of $0.05 on revenue of $47.7 million
Notable companies expected to report earnings Monday include:
- Vanguard Health Systems (VHS) is expected to report fourth quarter earnings per share of $0.19 vs. $0.23 on last year's revenue of $1.45 billion.
- Bob Evans Farms, Inc. (BOBE) is expected to report first quarter earnings per share of $0.58 on $335.19 million worth of revenue compared to the same earnings per share for a revenue $409.72 million a year ago.
- Urban Outfitters, Inc. (URBN) is expected to report second quarter earnings per share of $0.48 on revenue $768.76 million, up from last year's EPS of $0.42 on $676.27 million.
- International Rectifier Corporation (IRF) is expected to report a fourth quarter loss of $0.10, an improvement from last year's loss of $0.20 on $269.68 million worth of revenue.
On Monday's economics calendar, New Zealand will release inflation expectations and the Reserve Bank of Australia will release its monthly policy meeting minutes. Also notable will be the release of Hong Kong's unemployment rate.
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The last time bond investors were this bullish, the 10-year yield saw an extraordinary rise.
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