Futures flat on fiscal cliff fears
Concerns over a budget deal overshadow Japanese easing.
U.S. equity futures were nearly unchanged in early Thursday trading on fears over the fiscal cliff, as Democratic leaders claim that the presentation of a Plan B by the Republican caucus represents a significant setback in talks. It now seems unlikely that a deal gets done before the holiday break for Congress.
In other news, the Bank of Japan launched a new round of asset purchases totaling 10 trillion yen, or approximately $120 billion, half of which would be in short-term government bills and the other half of which would be in longer-term government bonds.
Intercontinental Exchange (ICE) is in talks to purchase the NYSE Euronext (NYX), a move that last year was thwarted by regulators when ICE and Nasdaq OMX Group (NDAQ) launched a joint bid for the company.
Many banks are now calling for Spain to ask for a bailout in the first quarter of 2013, including Citi and Rabobank, according to eFX news.
- S&P 500 futures were essentially flat at 1,432.50.
- The EUR/USD was higher at 1.3246.
- Spanish 10-year government bond yields fell to 5.268%.
- Italian 10-year government bond yields rose to 4.4%.
- Gold rose 0.09% to $1,669.20. The recent slide in gold prices is being attributed to redemptions at the Paulson Gold Fund forcing massive amounts of selling.
Commodities were mixed overnight with strength seen in precious metals and weakness seen in energy. WTI crude futures fell 0.3% to $89.71 per barrel and Brent crude futures fell 0.25% to $110.08 per barrel. Copper futures dropped 0.85% $357.55 on news that RBA may not attempt to weaken the Aussie dollar as soon as expected. Gold was higher and silver futures rose 0.08% to $31.14 per ounce.
Currency markets showed broad yen strength overnight following the BoJ decision in a clear risk-off signal from the market. The EUR/USD was higher at 1.3246 and the dollar fell against the yen to 83.98. Overall, the Dollar Index fell 0.07% on weakness against the yen, the euro, the pound, and the Swiss franc. In addition, the AUD/JPY and the EUR/JPY crosses were both lower due to yen strength, even as the Aussie strengthened against the greenback.
Stocks moving in the premarket included:
- NYSE Euronext (NYX) shares gained 21.41% premarket on takeover rumors.
- Apple (AAPL) shares rose 0.37% premarket despite the company losing a key patent over its two-finger zoom functionality.
- BHP Billiton (BHP) shares rose 1.2% premarket trading following strength in Australian stocks. Wednesday, the shares were higher premarket but closed well lower.
- Limited Brands (LTD) shares fell 0.93% premarket.
Notable companies expected to report earnings Thursday include:
- Carnival Cruises (CCL) is expected to report fourth quarter earnings per share of $0.11 vs. $0.28 a year ago.
- Conagra Foods (CAG) is expected to report second quarter earnings per share of $0.55 vs. $0.47 a year ago.
- KB Homes (KBH) is expected to report fourth quarter earnings per share of $0.06 vs. $0.18 a year ago.
- Nike (NKE) is expected to report second quarter earnings per share of $1.00 vs. $1.00 a year ago.
- Research In Motion (RIMM) is expected to report a third quarter loss of $0.35 per share vs. a profit of $1.27 per share a year ago.
On the economics calendar Thursday, the latest revision of third quarter GDP is due out as well as jobless claims and corporate profits. Later, existing home sales, the Philly Fed Survey, the FHFA House Price Index, and the Conference Board's Leading Indicators are expected to be released. Lastly, the Treasury is to auction 5-year TIPS. Overnight, British GDP data and Spanish trade data highlight the economic calendar.
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With Europe mired in recession, China faltering, commodities declining and stocks looking vulnerable, investors seeking safety will look to the greenback.
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