Futures rise despite UK downgrade
Stocks set for higher open, overlooking Moody's downgrade of Britain's credit rating.
Investors appear to be shrugging off a couple of downbeat reports on Monday morning. Moody's announced a downgrade of the U.K.'s sovereign credit rating to Aa1 from AAA, and the China HSBC Flash Manufacturing PMI for February was released at 50.4, weaker than expectations of 52.2 and below the previous reading of 52.3.
In other news around the markets:
Japan has nominated Asian Development Bank Chief Haruhiko Kuroda to be the next Bank of Japan governor, with another candidate, Kukuo Iwata, was nominated as a deputy governor.
The Bank of Greece sees the Greek economy contracting 4.5% in 2013 with growth finally returning in 2014.
Italy auctioned two-year zero-coupon bonds to yield 1.682%, higher than the previous auction just hours before the initial results of the critical parliamentary elections are released.
S&P 500 futures rose 2.9 points to 1,517.50.
The EUR/USD was higher at 1.3258.
Spanish 10-year government bond yields rose to 5.16%.
Italian 10-year government bond yields rose to 4.45%.
Asian shares were mostly higher overnight led by Japanese shares following the Bank of Japan nominations. The Japanese Nikkei Index rose 2.43%, and the Shanghai Composite Index rose 0.5%, while the Hang Seng Index rose 0.17%. Also, the Korean Kospi fell 0.46%, and Australian shares rose 0.75%.
European shares were higher overnight ahead of the Italian election results. The Spanish Ibex Index rose 0.68%, and the Italian FTSE MIB Index rose 0.85%. Meanwhile, the German DAX rose 1.29%, and the French CAC rose 0.66% while U.K. shares rose 0.46%.
Commodities were stronger overnight after last week's massive weakness despite the worse-than-expected China data. WTI Crude futures rose 0.75% to $93.83 per barrel, and Brent Crude futures rose 0.91% to $115.14 per barrel. Gold was higher, and silver futures rose 2.03% to $29.10 per ounce.
Currency markets were in flux overnight as the euro strengthened, the pound weakened and the yen continued its slide. The EUR/USD was higher at 1.3258, the dollar rose against the yen to 93.87, and the cable fell to 1.5146. Overall, the Dollar Index fell 0.23% on weakness against the euro and the swiss franc. Also, the AUD/USD was weaker following the Chinese manufacturing data, and the EUR/GBP rose 0.62% following the U.K. downgrade, while the EUR/JPY rose 0.99%.
Stocks moving in the pre-market included:
- Chesapeake Energy (CHK) shares rose 1.95% pre-market as the company reported strong earnings last week and is expected to name a new CEO soon.
- Newmont Mining (NEM) shares rose 1.47% pre-market after reporting strong earnings last week and positive comments in this weekend's Barron's.
- Carnival (CCL) shares fell 0.97% pre-market as passengers of the Triumph, the ship that broke down at sea and filled with sewage, are launching a class action against the company.
- ADT (ADT) shares rose 1.11% after Barron's said the stock could rise 20% in the next year.
Notable companies expected to report earnings Monday include:
- Autodesk (ADSK) is expected to report fourth-quarter EPS of 49 cents vs. 46 cents a year ago.
- Big Lots (BIG) is expected to report fourth-quarter EPS of $1.99 vs. $1.75 a year ago.
- Three-D Systems (DDD) is expected to report fourth-quarter EPS of 38 cents vs. 16 cents a year ago.
- Vivus (VVUS) is expected to report a fourth-quarter loss of 44 cents per share vs. a loss of 14 cents per share a year ago.
On the economics calendar Monday, the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Survey are due out. Also, the Treasury is set to auction 3- and 6-month bills as well as 2-year notes. Lastly, the Fed's Dennis Lockhart is expected to speak.
In Europe, look for Italian exit polls to leak out approximately one hour after polls close at 9 a.m. Eastern. Overnight, look for clearer Italian election results as well as an Italian 6-month bill auction.
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