Futures drop on fiscal cliff fears

With no budget deal in sight, stocks appear set to extend Friday's losses in Monday's shortened session.

By Benzinga Dec 24, 2012 9:15AM
zurbar age fotostockU.S. equity futures dropped in thin premarket trade ahead of the half trading day as leaders failed to reach an agreement on the U.S. budget. It now appears likely that the U.S. will go over the fiscal cliff in some capacity, but leaders are still seem determined to reach a deal after the holidays.

In other news, China has launched a new round of measures to help decrease income disparity in the country. The government will give increased subsidies and land protections to farmers in rural areas in hopes of boosting incomes in those parts of the country.

The world's largest sovereign wealth fund, the Norwegian Government Pension Fund Global, is set to take a huge bet on the U.S. property market by investing in U.S. real estate. The move comes after the $682 billion fund had been investing in European sovereign debt for the past two years.

Italian Prime Minister Mario Monti has not ruled out a return to politics in the upcoming elections, stating that if the people wanted him and supported the economic reforms then he would run again.
  • S&P 500 futures fell 6.25 points to 1,419.75, where they have been essentially since the Asian open.
  • The EUR/USD was higher at 1.3212.
  • Spanish 10-year government bond yields rose to 5.267%.
  • Italian 10-year government bond yields rose to 4.479%.
  • Gold rose 0.16% to $1,662.40 per ounce after dropping recently on rumors of John Paulson being forced to sell large positions from his gold fund to cover redemptions.
Asian markets
Asian shares were mostly higher overnight with most regional indices rising and Japanese shares lagging. The Japanese Nikkei Index fell 0.99% while the Shanghai Composite rose 0.27% and the Hang Seng Index rose 0.16%. Also, the Korean kospi rose 0.07% and Australian shares rose 0.25%.

European markets
European shares were mostly lower in early trade in very thin volume. The Spanish Ibex Index fell 0.4% and the Italian MIB Index was nearly flat on the session. Meanwhile, the German DAX fell 0.47% and the French CAC declined 0.17% while U.K. shares rose 0.22%.

Commodities
Commodities were mixed overnight with energy futures showing notable weakness. WTI crude futures fell 0.02% to $88.63 per barrel and Brent crude futures dropped 0.25% to $108.70 per barrel. Copper futures were also weaker, declining 0.25% to $355.80 per pound and now copper has declined nearly $15 in the past two weeks or so. Gold was higher and silver futures rose 0.19% to $30.26.

Currencies
Currency markets showed a slight risk-on bias in thin trade overnight as the dollar and yen weakened and the euro rose. The EUR/USD was higher at 1.3213 and the dollar rose against the yen to 84.44. Overall, the Dollar Index fell 0.21% on weakness against the euro, the Swiss franc, and the Swedish krone. Also, the Australian dollar rose against the greenback overnight but has sold off over the past five hours or so after putting in an intra-day double-top.

Premarket movers
Stocks moving in the premarket included:
  • Apple (AAPL) shares rose 0.32% premarket even as investors fret over increased competition in the tablet market in 2013.
  • Bank of America (BAC) shares fell 0.8% premarket as politicians seem ready to let the U.S. go over the fiscal cliff, which would severely hurt the banking industry.
Earnings
No notable companies are expected to report earnings Monday.

Economics
There are no significant economic data to be released as the trading day is a half day and is in advance of the Christmas holiday.

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1Comment
Dec 24, 2012 11:50AM
avatar

It's pretty clear...

 

No new taxes, SLASH SPENDING!   The 47% have to begin to pay for Obamanomics.  They Cliff offers us that.  They can no longer pay ZERO.  

 

The defense cuts aare NEEDED, we cannot afford the current military.  Plain and simple.  Yes they crush democrat  districts and cripple unions.  So be it.

 

The other cuts are but a drop in the bucket of what is necessary.  We need need to slash 850 billion NOW not over 10 years. 

 

Obama got us into this mess with his massive spending for which we recieved next to nothing.  It is time for HIS "INVESTMENTS" to pay off or be liquidated.  We have nothing but a pile of debt, and Obama has mortgaged the future generations future.  They will have to pay for his mess.

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