Euro Fear, Dollar Strength Yanks Markets
Bob Pisani is off; this post was written by CNBC producer Robert Hum.
Most major European indices are down 1 percent to 2 percent, as more sovereign debt contagion worries spread. Europe’s FT Deutschland newspaper reported that euro zone countries are seeking to push Portugal to accept a bailout package to prevent its bigger neighbor Spain from doing the same. Portugal has denied the report, but Spanish stocks are lagging the most, falling 2.5 percent to a 4.5-month low.
The worries in Europe are causing the euro to fall to $1.33 and the dollar to rise for the 4th time in the last 5 days. The Dollar Index broke the 80 and is now at a 2-month high.
Ahead of the opening bell, many commodity stocks are down 2 percent on the dollar strength and all the major European banks are sharply lower on the Europe worries, with ING and Banco Santander down 5 percent, and Credit Suisse , Barclays , Deutsche Bank , and UBS all down 4 percent. Additionally, Irish banks continue to get hit hard with Bank of Ireland dropping 10 percent and Allied Irish Banks plunging 12 percent.
Also weighing on futures this morning — escalating tensions between North Korea and South Korea/U.S. amid harsh rhetoric and military drills. (See: North Korea's Artillery Attack - In Pictures)
How frustrating is it for traders (at least those who are working this week) to trade in these markets. Talk about a seesaw market…take a look at the last 4 days for the Dow: Last Friday up 22 points, Monday down 25 points, Tuesday down 142 points, Wednesday up 151 points…with a 100+ point decline likely to start out this morning.
1) A big week for private equity: following TPG/Leonard Green’s buyout of J Crew earlier this week, Del Monte Foods rises another 4 percent after a group led by private equity firm KKR announced it will acquire the food processor for $5.3 billion, including debt. That offer will give Del Monte shareholders $19 per share, a 21 percent premium from where shares traded a couple of weeks ago prior to the takeover chatter.
2) Rio Tinto announced that it seeks to increase its production of iron ore by 50 percent over the next 5 years, due to continued strong demand out of China. The Australian miner also intends to triple its capital expenditures to $11 billion next year.
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