Futures drop on Greece uncertainty

Discussions over next tranche of aid among Troika members are ongoing.

By Benzinga Nov 26, 2012 9:41AM

Zurbar age fotostockU.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 Markets

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 Markets

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

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.

 

Currencies

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.

 

Premarket movers

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.

Earnings

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.

Economics

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.

4Comments
Nov 26, 2012 11:16AM
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Giving more money to Greece is not a solution to the problem.  In fact, it not even a temporary fix.  Greece created their own mess so let them figure out how to fix it.
Nov 26, 2012 11:17AM
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Futures drop on Greek uncertainty ? Who cares about Greece we have our own problems in this country ? If this is what drives the American stock market we are certainly in serious trouble ! TAKE YOUR MONEY AND RUN !
Nov 26, 2012 11:50AM
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Greece is not going to end well.

In spite of all the efforts, their budget is still way out of balance, spending far above their tax revenue.  Greece already is taxing the top earners so much, most have fled to keep what they earn reducing the revenue stream even more.

Greek socialism cannot be saved.  Let them collapse and go back to the drawing board.  

It is doubtful France can be saved either.  Their massive tax hikes have caused a huge drop in revenue, thus making their budget deficits far worse.  I doubt the French middle class will allow the doubling of taxes which is what their welfare state requires.

Spain?  Italy?   Are any of their budgets balanced?  Are the paying down debt or adding to it at an alarming rate?

For that matter  the USA?  We are adding 1.3 trillion per year, or 4200/person (16,400/family) in debt.  We need to either REDUCE spending 16,400/family or increase taxes 16,400/family or a combination of both.   Of course the democrats want to enshrine all 800 Billion of Obama's new spending.   As a starting point for any discussions we need to roll back all of his special interest payback spending that he used to buy the election.

Nov 26, 2012 12:29PM
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Well the FUD and market manipulators are back in full force. Here comes the pessimists and the sky's falling crowd to make sure their calls, puts and short strategies work before we have a Santa Claus rally in Greek and Fiscal Cliff solutions before year end fund rebalancing kicks end. This story is getting boring and old.
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