Futures flat on fiscal cliff deal hopes
Apple shares fell earlier to below $500 after a Citigroup downgrade.
U.S. equity futures were flat in early premarket trading as politicians continue to work toward a budget deal. Over the weekend, House Majority Leader Boehner reportedly proposed a bill that includes tax hikes for the rich. However, it is likely that the democratic leaders will reject the proposal and that no deal will be reached before the Christmas break.
In other news, the Liberal Democratic Party won the elections for Japan's Parliament, paving the way for expected Prime Minister-to-be Shinzo Abe to rewrite the Bank of Japan's mandate, pushing for stronger monetary easing and more fiscal stimulus.
Xinhua news reported overnight that the People's Bank of China will be open to further monetary stimulus in the new year. Over the weekend, China increased the amount that sovereign wealth funds and large investors could invest directly in the nation, a move to further open financial markets.
The eurozone trade balance was reported as a surplus of 7.9 billion euros in September, missing estimates of a surplus of 10.8 billion and below August's reading of 11.0 billion euros.
- S&P 500 futures rose 1.25 points to 1,413.58.
- The EUR/USD was lower at 1.3151.
- Spanish 10-year government bond yields rose to 5.418%.
- Italian 10-year government bond yields fell to 4.558%.
- Gold fell 0.32% to $1,691.50 per ounce.
Commodities were lower in overnight trade on global growth fears despite the positive news from Japan. WTI crude futures fell 0.14% to $86.61 per barrel and Brent crude futures fell 0.24% to $107.93 per barrel. Copper futures fell 0.41% to $366.80 in tandem with the weakness in China. Gold was lower and silver futures dropped 0.17% to $32.25 per ounce.
Currency markets were in flux overnight as the yen gapped higher at the open by nearly 100 pips but has since sold off and now remains near unchanged. The EUR/USD was lower at 1.3151 and the dollar was higher against the yen at 83.71. Overall, the Dollar Index rose 0.04% on strength against the yen, the euro, and the Swedish krone.
Stocks moving in the premarket included:
- Apple (AAPL) shares fell nearly 2% and below $500 for the first time since February after Citigroup downgraded the shares to "neutral" over the weekend. The stock fell with suppliers in Asian trade.
- Berkshire Hathaway (BRK.B) shares rose 1.18% in the premarket as investors became bullish over the increased share buyback program. Last week, the company announced it has bought back nearly $1.2 billion in shares and increased the premium for buybacks to 120% of book value per share.
- AIG (AIG) shares rose 1.8% premarket following the exit of the government from its stake in the insurer last week.
- Intel (INTC) shares rose 0.06% premarket as the company forecast a strong computer market in 2013.
On the economics calendar Monday, the Empire Manufacturing Index and TIC flows are due out and the Federal Reserve's Lacker is set to speak on the state of the economy and ECB President Draghi is also set to speak. In addition, the Treasury is expected to auction four-week, three-month, six-month, and two-year bills and notes.
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