Futures modestly lower on China, Italy fears
Disappointing data from both countries undermined last week's optimism, as markets also digested the European country's downgrade to BBB+ by Fitch.
U.S. equity futures traded slightly lower in early premarket trade following weaker than expected industrial production and inflation data from China.
Over the weekend, Chinese industrial production grew by 9.9% in February from a year ago, less than the forecast of 10.3% gain. Meanwhile, inflation in the country, as measured by CPI, grew faster than expected. Combined, the data raised new fears that the People's Bank of China would tighten policy earlier than expected in order to cool inflation, even as output indicators show slowing growth.
Adding to investor concerns, Fitch downgraded Italy to BBB+ late-day Friday. Also, data Monday showed Italy's economy shrank slightly more than expected in the fourth quarter, with GDP contracting 2.8% from the same period a year ago, slightly worse than the forecast rate of 2.7%.
Germany's trade balance was reported as in line with forecasts overnight. Exports and imports both grew faster than expected, showing slight underlying strength of the German economy in the face of a broad European recession.
Chinese auto sales dropped 13.6% in February from the same period a year ago. However, taking both the January and February data together, sales were higher by 14.7%, as the drop in February was due to the extended 2013 Lunar New Year holiday.
- S&P 500 futures fell 1.7 points to 1,549.60.
- The EUR/USD was flat at 1.3005.
- Spanish 10-year government bond yields fell to 4.73% from 4.77%.
- Italian 10-year government bond yields rose to 4.64% from 4.61%.
- Gold rose 0.11% to $1,578.70 per ounce.
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Asian shares were mixed overnight as Chinese shares lagged on the weak economic data released over the weekend. The Japanese Nikkei Index rose 0.53% and the Shanghai Composite Index fell 0.34% while the Hang Seng Index was flat. Also, the Korean Kospi fell 0.13% and Australian shares rose 0.46%.
European shares were mostly lower following Fitch's late-day downgrade of Italy Friday. The Spanish Ibex Index fell 0.75% and the Italian FTSE MIB Index declined 0.76% with banks falling over 3%. Meanwhile, the German DAX fell 0.21% and the French CAC fell 0.33% while U.K. shares were flat.
Commodities were lower as oil fell following the Chinese data. WTI crude futures fell 0.39% to $91.59 per barrel and Brent crude futures fell 0.72% to $110.04 per barrel. Copper futures fell 0.64% to $348.70 per pound also due to the weakness in China but also on some weak manufacturing data in Japan. Gold was higher and silver futures fell 0.06% to $28.93 per ounce.
Currency markets were quiet overnight as the yen weakened slightly. The EUR/USD was flat at 1.3005 and the dollar rose against the yen to 96.11. Overall, the Dollar Index rose 0.03% on strength against the yen, the pound, and the Swedish krone. Notably, the only real mover overnight was the yen with other major crosses trading near flat.
Stocks moving in the premarket included:
- Genworth Financial (GNW) shares rose 3.05% premarket following a positive article in Barron's this weekend which stated that the stock could double in the next year.
- Ford (F) shares fell 0.46% following the weaker than expected Chinese auto sales.
- IBM (IBM) shares fell 0.28% despite the company winning a new contract to help design a smart city in Montpellier, France.
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Notable companies expected to report earnings Monday include:
- Chiquita Brands (CQB) is expected to report a fourth quarter loss of $0.34 per share vs. a loss of $0.12 per share a year ago.
- CVR Energy (CVR) is expected to report fourth quarter earnings per share of $0.90 vs. $0.34 a year ago.
- Dick's Sporting Goods (DKS) is expected to report fourth quarter EPS of $1.06 vs. $0.76 a year ago.
- Renren (RENN) is expected to report a fourth quarter loss of $0.07 per share vs. a loss of $0.01 per share a year ago.
- Urban Outfitters (URBN) is expected to report fourth quarter EPS of $0.57 vs. $0.27 a year ago.
On the economics calendar Monday, the Treasury is expected to auction three-month and six-month bills. Overnight, German inflation, British industrial production, and Spanish and Italian bill auctions could move markets.
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