Futures slip on Spanish fears
Troubles in Europe are not confined to one country and according to a report, France is a ticking 'time bomb.'
U.S. equity futures slipped in early Friday trade as fears of the finances of Spanish banks resurfaced. The Spanish government has placed a freeze on evictions of homes due to increasing suicide rates of people who lost their homes. This will be costly to the banks in the end.
In other news, the Economist has published a scathing article of the French economy in this weekend' s edition, with cover headline calling France the ticking time bomb at the heart of Europe.
Israeli officials and Hamas leaders failed to reach a cease fire overnight and Israel' s missile defense system shot down all 66 missiles fired from Gaza.
Japanese opposition candidate for Prime Minister Shinzo Abe reiterated his stance on the Bank of Japan overnight, stating that the BoJ should adopt a 3% inflation target (currently 1%) and commit to unlimited QE to weaken the yen.
CCLA Chief Investment Officer James Bevan, in an interview with Bloomberg television, called Europe the ultimate value trap and warned investors from trying to call a bottom on the continent.
- S&P 500 futures fell 3.5 points to 1,347.80.
- The EUR/USD was lower at 1.2735.
- Spanish 10-year government bond yields fell to 5.863%.
- Italian 10-year government bond yields fell to 4.876%.
- Gold slipped 0.23% to $1,709.80 per ounce.
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Commodities were weaker overnight as European fears weighed on risk appetite. WTI crude futures fell 0.25% to $85.24 per barrel and Brent crude futures slipped 0.06% to $107.94 per barrel. Copper futures dropped 0.49% to $345.65 per pound, gold was lower, and silver futures slipped 1.16% to $32.30 per ounce.
Currency markets were in clear risk-off mode as the dollar rallied against most partners save for the yen. The EUR/USD was lower at 1.2735 and the dollar fell against the yen to 81.11. Overall, the Dollar Index rose 0.19% to 81.23 as a report from analysts at Citigroup (C) highlighted that the dollar has been rallying as the Federal Reserve has yet to act under its QE3 program. The dollar saw relative strength overnight against the euro, the Swiss franc, and the Swedish krone. The Australian dollar fell slightly against the greenback but rose 0.24% against the euro.
- Nike (NKE) shares jumped 1.09% premarket after the company announced a 2-for-1 stock split and increased its dividend by 17%.
- Hewlett-Packard (HPQ) shares fell 0.61% premarket ahead of its earnings report next week.
- Gamestop (GME) shares fell 1.11% in premarket trade after the company reported earnings that beat forecasts but was cautious on the key holiday season.
- Target (TGT) shares fell 0.24% premarket after the company reported earnings that beat forecasts.
- Foot Locker (FL) is expected to report third quarter earnings per share of $0.54 vs. $0.43 a year ago.
- J.M. Smucker Co. (SJM) is expected to report second quarter earnings per share of $1.44 vs. $1.36 a year ago.
On the economics calendar Friday, the Treasury International Capital (TIC) flows report is due out and will shed light on foreign holdings of U.S. government debt. Also, industrial production and e-commerce retail sales are due out. Lastly, Dennis Lockhart of the Atlanta Fed is set to speak after the close.
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