Futures Fall as Focus Shifts to Currencies
Stock index futures pointed to a lower open for Wall Street on Monday, following European markets down at the start of a week which will see investors focus on a meeting of G-20 leaders which will address currency policies.
After a week busy with U.S. news, including the mid-term elections and the Fed's decision to pump $600 billion in the economy, investors turned their attention to Europe, where the Irish bond market was suffering from the government's plans to double spending cuts and to increase taxes to trim its deficit.
Stocks and the U.S. dollar are likely to continue their inverse relationship a week after the stock market reached two-year highs.
The greenback gained 0.6 percent against a basket of foreign currencies and nearly a full percent against the euro.
President Obama travels to the G-20 meeting in Korea Thursday and Friday.Fellow G-20 members, such as China, Germany and Brazil, have been vocal about their dislike of quantitative easing and its impact on the declining dollar.
The gathering will also address China's resistance to a more flexible currency policy.
World Bank chief Robert Zoellick suggested the re-adoption of the gold standard could ease global currency tensions as demonstrators gear up for the upcoming G20 summit.
Writing in the Financial Times, Zoellick, the bank’s president since 2007, said a successor is needed to what he calls the “Bretton Woods II” system of floating currencies that has held since the Bretton Woods fixed exchange rate regime broke down in 1971.
Trade and weekly jobless claims are the highlights among U.S. economic data out this week, after the surprise gain in October employmentreported last week. The weekly report on U.S. jobless claims will come on Wednesday this week because the bond market is closed on Thursday for Veteran's Day.
The Treasury auctions $72 billion in 3-year notes, 10-year notes and 30-year bonds Monday through Wednesday.
Technology and media companies will be in focus on Monday after the Wall Street Journal reported on Sunday that AOL was exploring strategic options, which include a possible tie-up with Yahoo . AOL has retained financial advisers to do so.
Also, Amazon.com is reportedly planning to buy Diapers.com parent Quidsi in a $540 million deal.
In Europe, shares edged lower as investors took profit, although Greek banks lead financials higher as investors breathed a sigh of relief that the country’s Prime Minister did not call early elections.
McDonald's shares were slightly lower despite news the fast-food restaurant chain's same-store sales rose 6.5 percentin October, more than expected by Wall Street and the company.
GT Solar soared in pre-market trading after the solar-equipment maker reported its profit quadrupled, thanks to strong sales and higher margins. The company also boosted its 2010 guidance.
Shares in Rolls Royce fell in morning trade after Qantas Airways grounded its A380 fleetfor at least another three days.
On Tap Next Week:
MONDAY: St. Louis Fed pres Bullard speaks, Dallas Fed pres Fisher speaks, Fed governor Warsh speaks, 3-yr note auction.
TUESDAY: NFIB small biz optimism index, Wholesale trade, 10-yr note auction, SCOTUS hears AT&T class action case.
WEDNESDAY: Weekly mortgage apps, Jobless claims, International trade, Import & export prices, Oil inventories, CFTC hearing on Dodd-Frank, 30-yr bond auction, Earnings from GM, Macy’s and Cisco.
THURDSAY: Veterans Day – Bond market closed, stocks and futures markets open, G20 mtg. begins, Earnings from Kohl’s, Disney and Nvidia.
FRIDAY: APEC CEO summit, Consumer sentiment, Earnings from DR Horton and JCPenney