Futures rise after Monday's pummeling
US markets set to open higher, despite yesterday's huge losses on the heels of Italy's murky election results.
U.S. equity futures gained in Tuesday's premarket trading after massive losses Monday following the turmoil over the Italian elections. It appears as though no party can form a majority, which could mean Italians will go back to the polls to try to elect a majority government.
In other news around the markets:
In a speech given overnight, Federal Reserve Bank of Atlanta President Dennis Lockhart sees Fed asset purchases continuing at least into mid-2013.
Recapping the Italian elections, market favorite Pier Luigi Bersani has won a majority in the lower house of Parliament, but opposition parties led by Silvio Berlusconi and Beppe Grillo have won enough seats to block a majority in the senate.
Japan is set to vote on the new Bank of Japan appointments on March 14 and 15, and the central bank should have a new governor at that time.
S&P 500 futures rose 3.8 points to 1,490.80.
The EUR/USD was higher at 1.3096.
Spanish 10-year government bond yields rose to 5.32%.
Italian 10-year government bond yields rose 33 basis points to 4.81%.
Asian shares were lower overnight in reaction to the unsettled Italian election results. The Japanese Nikkei fell 2.26% as the yen strengthened, the Shanghai Composite Index fell 1.4% and the Hang Seng Index dropped 1.32%. Also, the Korean Kospi declined 0.47%, and Australian shares fell 1.03%.
European shares were also lower overnight, led by Italian banks following the election results. The Spanish Ibex Index fell 2.84%, and the Italian FTSE MIB Index tumbled 4.52%. The German DAX fell 1.8%, the French CAC dropped 2.07% and U.K. shares declined 1.28%.
Commodities were weak overnight as the market had a broad risk-off tone after the election results. WTI Crude futures fell 0.84% to $92.23 per barrel, and Brent Crude futures dropped 0.99% to $113.32 per barrel. Copper futures fell 0.32% overnight as Australian stocks slid and the country's central bank members warned on further rate cuts. Gold was higher, and silver futures fell 0.25% to $28.98 per ounce.
Currency markets were more stable overnight after Monday's massive volatility, which saw major pairs trade in massive ranges. The EUR/USD was higher at 1.3096, and the dollar rose against the yen to 92.02. Overall, the Dollar Index rose 0.05% on strength against the yen, the Swiss franc and the Canadian dollar. It's important to note that the EUR/JPY traded in an astounding six-figure range Monday, seemingly flushing out the levered longs.
Stocks moving before Tuesday's trading included:
- Autodesk (ADSK) shares fell 2.24% premarket after the company reported earnings and lowered guidance.
- McDonald's (MCD) shares rose 1.29% as the company ramps up operations in Russia.
- Dow Chemical (DOW) shares rose 3.17% as the company spoke of benefits from America becoming energy independent.
- General Motors (GM) shares rose 2.54% as the government looks to sell the last of its stake in the automaker.
Notable companies expected to report earnings Tuesday include:
- AutoZone (NYSE: AZO) is expected to report second-quarter earnings per share of $4.75 vs. $4.15 a year ago.
- Bank of Montreal (BMO) is expected to report fourth-quarter EPS of $1.47 vs. $1.42 a year ago.
- First Solar (FSLR) is expected to report fourth-quarter EPS of $1.76 vs. $1.26 a year ago.
- Home Depot (HD) is expected to report fourth-quarter EPS of 64 cents vs. 50 cents a year ago.
- Macy's (M) is expected to report fourth-quarter EPS of $1.99 vs. $1.70 a year ago.
- Priceline.com (PCLN) is expected to report fourth-quarter EPS of $6.54 vs. $5.37 a year ago.
- RadioShack (RSH) is expected to report a fourth-quarter loss of 5 cents vs. EPS of 12 cents a year ago.
- TiVo (TIVO) is expected to report a fourth-quarter loss of 11 cents vs. EPS of 6 cents a year ago.
On the economics calendar Tuesday, Fed Chairman Ben Bernanke begins his two-day testimony in Washington. Also, chain store sales and the Redbook are due out, followed by the FHFA House Price Index, the Case-Shiller Home Price Index and new home sales.
In addition, consumer confidence data and the Richmond Fed Manufacturing Index are expected. Lastly, the Treasury is set to auction 4-week bills and 5-year notes. Overnight, British GDP data and Italian auctions should move markets.
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