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16:10 Forex News. Global Selloff Slams Futures | |
Stocks are expected to open sharply lower amid a global stock market selloff sparked by worries about European banks... More than three hours before the open, futures on the Dow Jones Industrial Average were down 219 points to 9824, indicating the blue chip index is at risk of closing below the 10,000 mark for the first time since Feb. 8. S&P 500 futures fell 28 points to 1043.00 and Nasdaq 100 futures dropped 41.75 points to 1770.70. Political tensions between North and South Korea have risen since a team of international investigators concluded that Pyongyang was to blame for the deadly sinking of a South Korean naval warship in March. "[The Korea developments] have put panic into Asian markets which has had a knock-on effect globally," said Alastair McCaig at Worldspreads in London. However, he said, thin volumes are exaggerating market movements. The euro continued its descent as worries over European banks' solvency following the Spanish bailout pushed up libor rates. "[The euro] is still above levels where you would expect it to bounce. While it's in the $1.20s, it's in longer-term range rather than breaking new ground," said McCaig. Yields on 10-year U.S. Treasury bonds fell 0.09 percentage point to 3.11%, indicating strong demand for safe-haven bonds. Seemingly every other asset dropped, with copper futures falling over 3% and oil futures sliding $2.46 to $67.64 a barrel. The euro was slammed another 1%, falling to $1.2214. "The encouraging part of the newsflow is that, under extreme pressure, it seems that European governments have started to address their problems," said Philip Gisdakis, a strategist at UniCredit, pointing to budget cuts in Greece, Portugal and Spain, reform in the Spanish banking sector, and discussion about structural reform in the euro zone. "The bad news for investors is that due to the reforms, markets will turn more negative before they will improve. Harsh austerity measures and a reform of the banking system in the midst of a deflating property bubble is definitely not supporting growth." The U.S. Treasury is selling $42 billion in five-year notes, and on the data front, the S&P/Case-Shiller home price index for March is due at 9 a.m. At 10 a.m., the Conference Board consumer confidence gauge for May and the FHFA house price gauge for March also are due for release. "Though leading indicators still point to a steady expansion this summer, fears are growing that a collapse in confidence could undo the positive growth impulses that are still present today, with tensions in money markets resulting in dollar liquidity drying up," said Kenneth Broux, senior market economist at Lloyds TSB Corporate Markets. Oil futures were sliding sharply after an overnight selloff accelerated after European stock markets opened, pushing the front-month U.S. and European oil futures contract down 3.4%. Spot gold was trading almost unchanged from its close while platinum and palladium were reversing gains made Monday as equities fell and commodities generally traded down. U.S. stocks dropped sharply Monday after Spain seized a regional lender and a critical report from the International Monetary Fund on Spain's finances was unveiled. The Dow Jones Industrial Average fell 127 points, or 1.2%, and other leading indexes also fell. The three-month dollar LIBOR inter-bank lending rate hit 0.5% for the first time since July in a sign of the stresses in markets—though it's still well below the 4.82% reached at the peak of the credit crunch in October 2008. WSJ.com | |
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