Futures flat on weak German GDP
Markets remain concerned about US debt, while Fitch warns several countries of a potential downgrade.
In other news, reports surfaced late Monday that Treasury Secretary Tim Geithner believes that the Treasury could run out of money as soon as mid-February unless the debt ceiling is raised. Federal Reserve Chairman Ben Bernanke, speaking at the University of Michigan Monday, reiterated his stance that a deal needs to get done.
Fitch overnight has threatened the ratings of France, the U.S., and the U.K. citing the lack of a long-term fiscal plan in the U.S. and a poor European economy.
Former Italian Prime Minister and PM Candidate Silvio Berlusconi recently conducted a series of television interviews which have paid off, as his rating in opinion polls increased some 2.5% last month according to La 7.
- S&P 500 futures were flat at 1,463.70.
- The EUR/USD was was flat at 1.3384.
- Spanish 10-year government bond yields fell to 5.033%.
- Italian 10-year government bond yields fell to 4.169%.
- Gold rose 0.69% to $1,680.90.
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Asian shares were mixed overnight with Japanese shares gaining on stimulus hopes and Korean shares plummeting. The Japanese Nikkei Index rose 0.72% and the Shanghai Composite Index rose 0.6% while the Hang Seng Index fell 0.14% in Hong Kong. Also, the Korean Kospi declined 1.16% and Australian shares slipped 0.07%.
European shares were mostly flat to slightly higher in early trade with notable weakness seen in Spain. The Spanish Ibex Index fell 0.36% while the Italian MIB Index rose 0.41%. Meanwhile, the German DAX rose 0.06% and the French CAC gained 0.25% while U.K. shares rose 0.08%.
Commodities were mostly higher overnight, buoyed by energy strength. WTI crude futures rose 0.25% to $94.38 per barrel and Brent crude futures gained 0.4% to $112.33 per barrel. Copper futures declined with Australian mining stocks as futures lost 0.21% to $362.65. Gold was higher and silver futures rose 0.72% to $31.34 per ounce.
Currency markets were fairly quiet overnight with the exception being yen strength following comments from Japanese Economy Minister Amari that too much yen weakness too soon is not healthy. The EUR/USD was flat at 1.3384 and the dollar declined against the yen to 88.83. Overall, the Dollar Index fell 0.08% with weakness against the yen offset by strength against the Canadian dollar and Swiss franc. In addition, the AUD/JPY cross was the biggest mover, declining 0.83%, and the EUR/JPY followed the pair lower.
Stocks moving in the premarket included:
- Hewlett-Packard (HPQ) shares rose 0.29% premarket as the company announced that it is launching a new cloud computing unit.
- Bank of America (BAC) shares declined 0.39% ahead of its earnings report later this week.
Notable companies expected to report earnings Tuesday include:
- El Paso Pipeline Partners LP (EPB) is expected to report fourth quarter EPS of $0.55 vs. $0.51 a year ago.
- Forest Labs (FRX) is expected to report a third quarter loss of $0.14 per share vs. a profit of 1.04 per share a year ago.
- Interactive Brokers (IBKR) is expected to report fourth quarter EPS of $0.21 vs. $0.27 a year ago.
- Lennar (LEN) is expected to report fourth quarter EPS of $0.44 vs. $0.16 a year ago.
On the economics calendar Tuesday, Boston Fed President Eric Rosengren speaks ahead of the PPI and retail sales data releases. Also, the Empire State Manufacturing Index is due out as well as the Redbook and Naryana Kocherlakota of the Minneapolis Fed and Charles Plosser of the Philly Fed are set to speak. Lastly, business inventories data is due out and the Treasury is set to auction four-week bills. Overnight, Australian auto sales, Chinese FDI data, and a German one-year bund auction will set the tone for markets.
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