US Pre-Open Call
May 16, 2012
DJIA down 50 at 12,582
S&P down 6 at 1,325
All those investors hoping for a bounce this morning have been disappointed so far. US stock index futures are lower again following steep falls in Asian Pacific markets overnight, and euro weakness. Technically, the Dow has broken below support in the 12,650/700 area while the S&P crashed through support at 1,342. The European debt crisis continues to stand front-and-centre for investors, and it is proving impossible for US markets to ignore.
Greece will go to the polls again within the next month, and the fear is that the anti-austerity vote will grow. The big issue is how this squares with the Greek's desire to keep the euro as their currency. As the probability of a Greek exit from the euro zone increases, the strains are being felt in Italy and Spain - respectively the third and fourth largest euro zone countries when ranked by GDP. Both countries are experiencing a sharp spike higher in their government bond yields which translates into big mark-to-market losses for their banks. There is also growing evidence of funds coming out of Greek, Spanish and Italian banks and searching for safer havens. This is raising fears of bank runs and compounds these countries' problems.
With Europe's problems escalating following three months of relative calm, many investors are relying on further central bank intervention to support asset prices. This evening sees the release of minutes from the April FOMC meeting. It will be interesting to see how the FOMC's official statement squares with more dovish comments from Ben Bernanke in his subsequent press conference. Before then we have Housing Starts, Building Permits, Capacity Utilisation, Industrial Production and Mortgage Delinquencies. In addition, there are a number of significant retailers reporting today including Abercrombie and Fitch, Staples and Target.
S&P down 6 at 1,325
All those investors hoping for a bounce this morning have been disappointed so far. US stock index futures are lower again following steep falls in Asian Pacific markets overnight, and euro weakness. Technically, the Dow has broken below support in the 12,650/700 area while the S&P crashed through support at 1,342. The European debt crisis continues to stand front-and-centre for investors, and it is proving impossible for US markets to ignore.
Greece will go to the polls again within the next month, and the fear is that the anti-austerity vote will grow. The big issue is how this squares with the Greek's desire to keep the euro as their currency. As the probability of a Greek exit from the euro zone increases, the strains are being felt in Italy and Spain - respectively the third and fourth largest euro zone countries when ranked by GDP. Both countries are experiencing a sharp spike higher in their government bond yields which translates into big mark-to-market losses for their banks. There is also growing evidence of funds coming out of Greek, Spanish and Italian banks and searching for safer havens. This is raising fears of bank runs and compounds these countries' problems.
With Europe's problems escalating following three months of relative calm, many investors are relying on further central bank intervention to support asset prices. This evening sees the release of minutes from the April FOMC meeting. It will be interesting to see how the FOMC's official statement squares with more dovish comments from Ben Bernanke in his subsequent press conference. Before then we have Housing Starts, Building Permits, Capacity Utilisation, Industrial Production and Mortgage Delinquencies. In addition, there are a number of significant retailers reporting today including Abercrombie and Fitch, Staples and Target.
Posted by David Morrison. Posted In : Pre-open call
