Futures drop on Greece uncertainty
Discussions over next tranche of aid among Troika members are ongoing.
U.S. equity futures fell in premarket trading as uncertainty surrounding Greece's disbursement of its latest payment gripped markets. Greece has already agreed on the necessary cuts with the Troika to receive the payment, however, the current debate is an internal one amongst the Troika parties on how to give Greece more time to pay off its loans.
In other news, the separatist parties in the Catalan region of Spain won a majority in the Catalan Parliament, which could lead to the region seceding and forming its own nation. This movement has gained popularity since the austerity measures of Mariano Rajoy's government in Madrid have hurt growth and sent unemployment sky-rocketing.
The Eurogroup is set to send an additional 35 billion euros to Spain's bank bailout fund, the FROB, to aid recapitalizations in exchange for job cuts at the banks. Troubled Bankia Group is set to lay off an additional 6,000 employees for more funding.
ECB Governing Council Vice President Vítor Manuel Ribeiro Constâncio spoke overnight, stating that he expects Spain to apply for a Troika program and activate the OMT program launched earlier this year by President Mario Draghi.
- S&P 500 futures fell 6.3 points to 1,399.00.
- The EUR/USD was lower at 1.2960.
- Spanish 10-year government bond yields rose to 5.653%.
- Italian 10-year government bond yields rose to 4.788%.
- Gold fell 0.25% to $1,747.10 per ounce.
Asian shares were mixed overnight with Japanese shares continuing to rise on increased stimulus hopes and Chinese shares slumping. The Japanese Nikkei Index rose 0.24% while the Shanghai Composite Index fell 0.49% and the Hang Seng Index fell 0.24% in Hong Kong. Also, the Korean Kospi fell 0.15% while Australian shares rose 0.25%.
European shares were lower in early trading as European Finance Ministers met for the third straight week in attempt to reach an agreement on the Greek bailout. The Spanish Ibex Index fell 0.5% and the Italian MIB Index fell 0.42% while Greek shares dropped 0.22%. Meanwhile, the German DAX fell 0.31% and the French CAC 40 fell 0.69% while the U.K. FTSE 100 Index fell 0.47%.
Commodities were weaker overnight as risk sentiment faded from the shortened Thanksgiving trading week. WTI Crude futures fell 0.6% to $87.75 per barrel and Brent Crude futures fell 0.38% to $110.96 per barrel. Copper futures slipped 0.42% to $352.40 per pound, following the weakness in Chinese shares. Gold was lower and silver futures fell 0.35% to $34.09 per ounce.
Currency markets were rather quiet overnight and the only notable mover was the yen. The EUR/USD was slightly lower at 1.2960 and the dollar fell against the yen to 82.02, or 0.47%. Overall, the Dollar Index rose a mere 0.02% to 80.21, buoyed by strength against the Swedish Krone as oil prices dropped. The EUR/JPY cross fell 0.48% to 106.35 and the AUD/JPY cross fell 0.5% to 85.66, showing the broad yen strength.
Stocks moving in the premarket included:
- J.C. Penny (JCP) shares rose 1.21% in premarket trading in hopes that Thanksgiving shopping was strong at the retailer.
- Yum Brands (YUM) shares fell 0.88% in premarket as wage hikes in China are expected to hurt profitability at the company's large Chinese division.
- Apple (AAPL) shares rose 0.26% in premarket as Black Friday sales appeared strong, according to Mizuho, and the company filed a new lawsuit against Samsung.
- eBay (EBAY) shares rose 0.29% on hopes of a strong Black Friday for the company, despite CFO Robert Holmes Swan reporting to have sold 75,856 shares of company stock in the past week.
The earnings calendar is rather light Monday. Notable companies expected to report earnings Wednesday include:
- Joseph A Bank (JOSB) is expected to report third quarter EARNINGS PER SHARE of $0.55 vs. $0.54 a year ago.
- Teavan Holdings (TEA) is expected to report a third quarter loss of $0.01 per share vs. a profit of $0.02 a share a year ago.
On the economics calendar Monday, the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index are due out. Also, the Treasury is set to auction four-week, three-, and six-month bills. Overnight, the Federal Reserve's Fisher is set to speak; Spain is set to auction three- and six-month bills; and revised British third quarter GDP data is due out.
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