Futures flat despite strong Chinese data
For the third day in a row, stocks may open lower.
U.S. equity futures were flat in premarket trading for the third straight day despite stronger than expected industrial production data from China, a proxy of the country's growth. The National Bureau of Statistics in China reported that industrial production grew at an annualized rate of 9.6%, better than forecasts of a 9.4% gain.
In other news, former Treasury Secretary Larry Summers spoke overnight, stating that Europe's woes were more urgent than the fiscal cliff and said that he is not sure who will fill Federal Reserve Chairman Ben Bernanke's seat when he retires in 2014. Summers is widely regarded as the top choice of the president for the post.
The Royal Bank of Australia cut its growth estimate for the Australian economy to 2.25%-3.25% from 2.75%-3.25% in its monetary policy statement, following its rate decision last week.
French industrial output fell 2.7% in September for the prior month, much weaker than forecasts of a 1.0% drop. Also, industry investment is only seen rising 1.0% in 2012, lower than previous estimates of a 5.0% increase.
Andreas Dombret, Bundesbank board member in charge of financial stability, statistics, and risk control, spoke overnight about central bank bond purchases, calling them no substitute for winning back investor trust. On the banking union, Dombret said it would help break the link between the sovereigns and the banks and its goal would not simply to be pool risk.
- S&P 500 futures fell 1.1 points to 1,374.20.
- The EUR/USD was lower at 1.2724.
- Spanish 10-year government bond yields rose to 5.853%.
- Italian 10-year government bond yields fell to 5.038%.
- Gold rose 0.41% to $1,733.10 per ounce.
Commodities were mixed overnight as prices were relatively flat overnight. WTI crude futures fell 0.06% to $85.04 per barrel and Brent crude futures rose 0.08% to $107.34 per barrel. Copper futures fell 0.71% to $344.50 per pound on the RBA growth cut despite the strong Chinese data. Gold was higher and silver futures rose 0.14% to $32.29 per ounce.
Currency markets were in clear risk-off mode as the dollar and the yen reigned and the euro slipped. The EUR/USD was lower and the dollar fell against the yen to 79.24 and U.S. yields have moved lower over the past three days. Overall, the Dollar Index rose 0.11% to 80.90 on strength against the euro, the Swedish krona, the pound, and the Swiss franc. The Aussie dollar was stronger against the U.S. dollar and the euro but weaker against most other counterparts including the yen, the Canadian dollar, and the New Zealand dollar.
- Groupon (GRPN) shares fell 17.09% after the company reported weak earnings and dismal sales data from Europe.
- Disney (DIS) shares fell 2.62% premarket following the company reporting weaker than expected earnings.
- Goldman Sachs (GS) shares rose 0.5% as coverage was reinstated with a "buy" rating at Bank of America.
- Safeway (SWY) shares fell 7.62% after the company reached a new labor agreement with its union workers in Northern California.
Rarnings season is slowing and fewer companies are reporting for the next few weeks. J.C. Penney (JCP) is expected to report third quarter earnings per share of -$0.07 vs. $0.11 a year ago.
On the economic calendar Friday, import and export prices and trade data is due out. Also, consumer confidence data is expected. Later Friday, Chinese trade data is due out and will shed further light on the state of global trade.
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