Futures lower on weak Chinese data, Italy fears
US market are set for a lower open following weak data from China and ongoing concern Italians will have to go for another round of elections.
U.S. equity futures fell in early premarket trade Monday following weaker than expected data from China and on continued fears surrounding the state of Italian politics.
New data showed that China's services sector grew at its slowest pace in five months in February, days after the official manufacturing PMI also showed slower than expected growth in the month. Also, markets feared the need for another round of elections in Italy, creating more uncertainty in world politics.
In other news, Warren Buffett noted in his annual letter to Berkshire Hathaway (BRK.A)(BRK.B) shareholders that the company's performance in 2012 was lackluster as he failed to hunt an "elephant" to acquire until January 2013. He expects to continue making acquisitions to drive book value growth.
Spain's unemployment rate rose to a massive 27% in February as more than 59,000 workers filed for new unemployment claims in Spain. The increase was actually the slowest rise in unemployment in Spain for the month of February in five years, potentially showing that a bottom is near.
Federal Reserve Chairman Ben Bernanke spoke over the weekend, dismissing fears of an early Fed exit, or "Fexit," as he noted that the risks of the Fed taking away liquidity too early far outweigh the risks of not taking it away soon enough.
- S&P 500 futures fell 4.3 points to 1,512.40.
- The EUR/USD was fell 0.19% to 1.2993, breaking below the psychological 1.30 level for the second consecutive trading day.
- Spanish 10-year government bond yields fell to 5.06%.
- Italian 10-year government bond yields rose to 4.81%.
- Gold rose 0.29% to $1,577.00.
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Asian shares were mostly lower except for Japan, led lower by China following the weaker than expected manufacturing and service sector PMI's. The Japanese Nikkei Index rose 0.4% and the Shanghai Composite Index fell 3.65% while the Hang Seng Index slipped 1.5%. Also, the Korean Kospi fell fell 0.66% and Australian shares declined 1.49%.
European shares were mostly lower save for Spain in early trade on fears of a global slowdown led by China and on Italian political fears. The Spanish Ibex Index rose 0.23% on the better than expected employment data and the Italian FTSE MIB Index fell 0.92%. Meanwhile, the German DAX fell 0.47% and the French CAC fell 0.04% while U.K. shares declined 0.42%.
Commodities were mixed overnight as energy futures were mostly lower and metals futures rose. WTI crude futures fell 0.19% to $90.51 per barrel and Brent crude futures rose 0.05% to $110.46 per barrel. Copper futures rose rose 0.1% to $350.50 per pound despite weakness in China and Australia. Gold was higher and silver futures rose 0.84% to $28.73 per ounce.
Currency markets were in clear risk-off mode as the dollar and the yen reigned and the euro fell. The EUR/USD was lower at 1.2993 and the dollar fell against the yen to 93.57. Overall, the Dollar Index rose 0.08% on strength against the euro, the pound, the Canadian dollar, and the Swiss franc. Notably, the Australian dollar was weak on fears of a Chinese slowdown and also on negative comments from Moody's on the nations sovereign debt rating, saying that the strong currency is a risk to debt payments should it devalue.
Stocks moving in the premarket included:
- Best Buy (BBY) shares rose 1.92% in premarket trading after beating earnings last Friday.
- Joy Global (JOY) shares fell 1.97% premarket on fears that new orders from China and Asia could slow if the broad economy slows.
- Hewlett-Packard (HPQ) shares fell 0.74% premarket after the company rolled out a slew of new services over the weekend.
- Pfizer (PFE) shares fell 0.66% premarket as the FDA approved a drug made by Bayer to compete with its intestine cancer drug.
Notable companies expected to report earnings Monday include:
- Arena Pharmaceuticals (ARNA) is expected to report a fourth quarter loss of $0.03 per share vs. a loss of $0.16 per share a year ago.
- Boyd Gaming (BYD) is expected to report a fourth quarter loss $0.13 per share vs. a loss of $0.03 per share a year ago.
- Navistar (NAV) is expected to report a first quarter loss of $1.73 per share vs. a loss of $0.91 per share a year ago.
- Transocean (RIG) is expected to report fourth quarter earnings per share of $0.82 vs. $0.24 a year ago.
On the economics calendar Monday, the Treasury is set to auction three- and six-month bills. Also, the TD Ameritrade investor movement index should shed light on retail flows in February. Overnight, the RBA rate decision is expected, followed by the European service PMI's for both the broad eurozone and for individual countries.
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