Futures edged higher Tuesday after an Italian bond auction which saw record yields but sold close to the top end of its targeted range, and ahead of another meeting of euro zone finance ministers under pressure to solve the debt crisis.
Stocks rallied on Monday but after Monday’s closing bell rating agency Fitch gave the United States until 2013 to come up with a “credible plan” to address its budget deficit or risk losing its AAA rating.
Possible rating agency downgrades pressured stocks in Europe in Tuesday morning trade.
French newspaper La Tribune reported Standard & Poor’s could cut its France’s AAA rating outlook within days, while Moody’s said it could downgrade the subordinated debt of 87 banks across 15 countries on fears that governments will not be able to bail them out.
Euro zone ministers are expected to approve the sixth tranche of aid for Greece as well as find a deal on leveraging the euro zone’s rescue fund. They will also be preparing for next week’s heavily-anticipated summit of EU heads of state.
Meanwhile Italy paid more than 7 percent to sell three and 10-year paper on Tuesday in an auction that saw decent demand for the shorter-maturity debt.
"It is certainly not as bad as the disaster in Germany where they failed to sell the 10-year," Nick Parsons, Head of Strategy at National Australia Bank said.