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Thursday, April 8, 2010

Indications: Stock futures slip as worries over Greece continue

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By Simon Kennedy, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures pointed to another session of losses Thursday, with worries about Greece's increasingly desperate finances in the fore as China appears ready to boost the yuan's value, retailers report growing same-store sales and airlines talk mergers.

S&P 500 futures fell 5.3 points to 1,173.70 and Nasdaq 100 futures lost 6 points to 1,969.00. Futures on the Dow Jones Industrial Average dropped 42 points.

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The highlight of the U.S. economic calendar Thursday will be the latest weekly jobless claims figures at 8:30 a.m. Eastern. The Bank of England kept interest rates unchanged and the European Central Bank is expected to do so as well.

European shares were lower, with the German DAX 30 index losing 1.1% as worries about Greece continued to hit markets after Wednesday's news that banks in the country wanted access to a 28 billion euro government support package.

The premium demanded by investors to hold 10-year Greek government bonds hit 4.4 percentage points Thursday, the highest level since the debut of the euro in 1999. See full story on Greek debt.

Strategists at Deutsche Bank said they believe international support for Greek debt will continue to wane until there are explicit details of a support package.

"The market is in the mood to force the hand of the authorities over this," Deutsche Bank said. "Greek banks this week asking for assistance from their government is ironic as they were the main buyer of last week's 7-year deal. So once the major and largest marginal buyer of stressed Greek government debt require help themselves then one can see how the funding problem can become a vicious circle," it added.

The dollar edged higher against the euro, but was slightly lower against the yen /quotes/comstock/21o!x:susdjpy (CUR_USDYEN 93.1200, -0.1300, -0.1394%) , dropping 0.4% at 92.84 yen,

The move came amid renewed talk of a potential revaluation of the yuan in China. A recently appointed adviser to the People's Bank of China reportedly urged that the currency should switch back to the managed-float foreign exchange regime in place before the financial crisis, saying conditions that required China to freeze the value of its currency to the dollar have shifted. See full story on the yuan.

Crude oil futures slipped, with the May-dated light crude contract falling below $85 a barrel.

On the corporate news side, UAL Corp. /quotes/comstock/15*!uaua/quotes/nls/uaua (UAUA 18.95, -0.52, -2.67%) and US Airways Group /quotes/comstock/13*!lcc/quotes/nls/lcc (LCC 6.82, -0.26, -3.67%) will be in focus after a New York Times report that the two companies are engaged in merger talks. US Airways jumped 19% in premarket trade and UAL edged up over 1%. British Airways and Iberia inked a merger pact as well.

Retailers were reporting March same-store sales figures, with Hot Topic /quotes/comstock/15*!hott/quotes/nls/hott (HOTT 7.06, -0.04, -0.56%) jumping 23% after also authorizing a special $1-a-share dividend alongside a smaller-than-forecast fall in sales. Abercrombie & Fitch /quotes/comstock/13*!anf/quotes/nls/anf (ANF 47.54, -0.29, -0.61%) fell over 4% following smaller-than-anticipated sales growth.

The International Council of Shopping Centers expects retailers to report March same-store sales climbing between 8% and 10%.

U.S. stocks closed lower on Wednesday as a bigger-than-expected drop in consumer credit weighed on markets, along with comments from Federal Reserve officials over how to deal with economic concerns. The Dow Jones Industrial Average closed down over 72 points, the Nasdaq Composite fell 5.65 points and the S&P 500 slipped 6.99 points.

Simon Kennedy is the City correspondent for MarketWatch in London.


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