US Shares to Open Lower; Italian Debt Woes Spook Markets
U.S. stock index futures pointed to a lower open on Wall Street Wednesday as investors still watched Europe with caution after Italian Prime Minister Silvio Berlusconi announced he would step down once a series of austerity measures had been put in place.
The austerity program could in theory be completed by Christmas, and observers suggested a government of technocrats could run the country until scheduled elections in 2013, although Berlusconi himself suggested Tuesday night that new elections would be preferable.
The yield on Italian sovereign debt, however, rose as high as 7 percent in morning trade after LCH.Clearnet raised the initial margin call applied to Italian debt by between 3.5 and 5 percentage points across all maturities of BTP and inflation-linked BTP bonds.
That led European markets, which had opened the day higher on the announcement of the Italian premier’s resignation, into negative territory.
The FTSEurofirst 300 index of top European shares fell 1.4 percent at 969.84 points, reversing Tuesday's 0.9 percent rise.
Elsewhere a plan for former European Central Bank vice-president Lucas Papademos to lead a Greek government of national unity also ran run into trouble, party sources said on Wednesday, prolonging a political hiatus as that country heads toward bankruptcy.
Christine Lagarde, head of the International Monetary Fund, warned Europe's debt crisis risked plunging the global economy into a "lost decade," and said it was up to rich nations to shoulder the burden of restoring growth and confidence.
Economic data due out on Wednesday includes the weekly look at the mortgage market from the Mortgage Bankers Association for the week ending November 4, released at 8:00 a.m. New York time. The mortgage market index read 665.6 and the refinancing index was 3,539.3 in the previous week.
Federal Reserve Chairman Ben Bernanke gives a welcome and opening remarks at 10:30am before the Small Business and Entrepreneurship During an Economic Recovery conference.
At 11:00 in New York, the Commerce Department releases wholesale inventories for September. Economists polled by Reuters forecast inventories to rise 0.5 percent versus a 0.4 percent increase in August.
In earnings news, the largest U.S. automaker, General Motors, reports earnings before the bell.
Cisco the maker of Internet networking gear, will report first-quarter financial results after U.S. markets close.
Shares in Adobe Systems and Blue Nile fell 4.7 percent and 17 percent respectively in late trading on Tuesday after the companies announced results.
SINA Corp reversed losses to gain 1.1 percent, while Activision Blizzard was up 4.1 percent after the bell.
Meanwhile, China's annual inflation rate fell sharply in October to 5.5 percent in a further pullback from July's three-year peak, giving Beijing more room to fine-tune policy to help an economy feeling the chill of a global slowdown.