Futures flat despite better US economic data
The European Central Bank has reportedly broken its own rule, which could spell trouble for Spain.
U.S. equity futures were flat in early Monday trading as positive sentiment from better U.S. economic data was offset by bad news out of Spain.
Over the weekend, German paper Die Welt reported that the European Central Bank may have broken its own rules in collateralized financing operations with Spanish banks, which could result in up to 17 billion euros ($21.7 billion) collateral calls on the Spanish banking system. For perspective, this would be some 17% of the entire bank bailout.
The number of unemployed people in Spain rose by 2.7% from September to October, the government reported. The rise marked the third consecutive monthly rise since the end of tourist season.
The British service sector expanded slower than expected in October, according to new data. The British services PMI slipped to 50.6 from 52.2 in September, weaker than forecasts of a slight drop to 52.0.
The recent agreements surrounding the Greek bailout may be voided by one of a few parties involved in the talks, resulting in Greece not getting its bailout funds. This could result in Greece outright defaulting, which some economists say it should have done years ago.
The Washington Redskins lost Sunday, potentially predicting a Romney victory in Tuesday's presidential election, as AFP reported.
- S&P 500 futures slipped 0.8 points to 1,404.70.
- The EUR/USD was lower at 1.2792 on the Spanish headlines.
- Spanish 10-year government bond yields rose to 5.738%.
- Italian 10-year government bond yields rose to 4.987%.
- Gold futures for December delivery rose 0.19% to $1,678.40 per ounce following the large drop on Friday.
Commodities were mostly weaker in early Monday trade save for gold futures. WTI crude futures slipped 0.25% to $84.65 per barrel and Brent crude futures fell 0.26% to $105.40 per barrel. Copper futures declined 0.62% to $346.00 per pound and Gold was stronger while silver futures fell 0.1% to $30.83 per ounce.
Currency markets showed broad euro weakness overnight following the news from Spain. The EUR/USD was lower in early trade at 1.2792 and the dollar fell against the yen to 80.24. Overall, the Dollar Index rose 0.14% to 80.71 on strength against the euro, the pound, and the Swiss franc. The euro was broadly weak as the single currency fell against most major pairs, including the Aussie dollar which was stronger ahead of the Royal Bank of Australia's rate decision. In addition, Turkey's bonds were raised to investment grade sending the lira higher.
- Ford (F) shares rose 1.97% premarket as the company reported strong sales in China.
- DuPont (DD) shares fell 1.0% premarket as the company cut fiscal year 2012 guidance and laid off workers.
- Citigroup (C) shares fell 0.93% in premarket trading as the bank is set to waive fees for customers affected by Sandy.
- Hewlett-Packard (HPQ) shares fell 0.44% on despite a positive article on Seeking Alpha highlighting a potential turnaround at the company.
- CF Industries (CF) is expected to report third quarter earnings per share of $5.70 vs. $5.16 a year ago.
- EOG Resources (EOG) is expected to report third quarter earnings per share of $1.12 vs. $0.83 a year ago.
- Express Scripts (ESRX) is expected to report third quarter earnings per share of $0.99 vs. $0.79 a year ago.
- Humana (HUM) is expected to report third quarter earnings per share of $2.05 vs. $2.67 a year ago.
- Silver Wheaton (SLW) is expected to report third quarter earnings per share of $0.42 vs. $0.38 a year ago.
- Tesla (TSLA) is expected to report a third quarter loss of $0.90 per share vs. a loss of $0.55 per share a year ago.
- Transocean (RIG) is expected to report third quarter earnings per share of $0.76 vs. $0.70 a year ago.
On the economic calendar Monday, the ISM non-manufacturing index is set to be released and will give investors a better view into the largest portion of the U.S. economy. Also, the Treasury is set to auction four-week, three-, and six-month bills. Overnight, the Royal Bank of Australia is set issue its rate decision and European service PMI's for several nations including Spain, Italy, and Germany are expected.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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