Futures lower as emerging markets struggle
Markets are set to decline at the open as investors await US durable goods orders.
As the Federal Reserve tapering of its stimulus program approaches, emerging markets are finding it difficult to find solid ground. The fresh turmoil prompted policy makers at the Jackson Hole summit to consider the benefits of capital controls in such a situation. Over the weekend, a paper was presented at the summit that defended capital controls contrary to conventional economic thinking.
In other news, Bank of Finland Governor Erkki Liikanen reassured investors that although the market has eased the EU was showing uncertain positive signals. He also noted that Finland still had a long road of reforms ahead, even as the crisis eases.
Tension between the U.S. and Syria reached a new high over the weekend as the UN investigated the possible use of chemical weapons by the Syrian government. Syrian President Bashar al-Assad has said that the claims his government used chemical weapons were unfounded and politically motivated.
The Japanese government is set to decide on one of two sales tax hikes on October 7. Originally, the government planned to increase the sales tax by 3% in April. However, to soften the blow to the Japanese economy, the nation's policy makers are thinking of raising the sales tax by 1% annually instead.
New Zealand's trade deficit came in much higher than expected at $774 million, the highest it has been since September of 2012. Original estimates were for a deficit of $16 million.
The Chinese statistics bureau announced that the nation's economy was showing signs of growth stabilization and that China's PPI shows improving demand for commodities.
After the Chinese Statistics Bureau announced that China's economy has been showing signs of growth stabilization, the Shanghai and Shenzhen composites went up 1.90%. The Japanese Nikkei Index and New Zealand NZ50 didn't fare as well, dropping 0.18% and 0.13% respectively. The Hang Seng index climbed 0.65% and Australia's ASX 200 was up 0.23%.
European markets got off to a rough start on Monday as investors waited for U.S. goods data. The STOXX600 was down 0.26% and the Spanish IBEX 35 was down nearly 1%. The German DAX slipped 0.32% and France's CAC 40 fell 0.69%. UK markets were closed for a bank holiday.
Energy futures were mixed with anticipation of the Fed taper and escalating tension in the Middle East. Brent futures were down 0.17% but WTI gained 0.18%. Gold was little changed, but silver was up 1.32% and copper climbed 0.74%.
Currency markets were flat this morning. The euro settled in at $1.3367 as investors weighed up the region's recovery. The yen gained 0.26% against the dollar. Emerging markets' currencies continued to struggle, but the Brazilian real was flat, holding on to Friday's gains following the Brazilian central bank's announcement of a currency intervention plan.
Earnings reported Friday
Notable companies that reported earnings on Friday included:
ANN Inc. (ANN) reported second quarter earnings per share of $0.76 on revenue of $638.20 million, compared to last year's earnings per share of $0.66 on $594.87 million worth or revenue.
Foot Locker (FL) reported second quarter earnings per share of $0.45, just short of expectations. The company's revenue was $1.45 billion, in line with expectations.
Stocks moving in the premarket included:
Tyson Foods (TSN) was the biggest loser in premarket trade, shedding 1.52%.
Exxon Mobil (XOM) gained half a% in premarket trade after the company agreed on Friday to pay $2.4 million in fines for violations at its Baton Rouge plants.
Citigroup (C) gained 0.72% ahead of market opening as company stepped up its hiring in Europe
There are no notable companies set to report earnings Monday.
Monday's economic calendar is relatively light. The U.S. is set to release durable goods orders. Singapore will release industrial production data and Mexico's trade balance is due as well.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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