- Pre-Market Indications

Friday, November 12, 2010

Indications: U.S. futures rattled by China rate worries

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By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) â€" U.S. stock futures were sharply lower on Friday, indicating a rough day on Wall Street as fears resurfaced that China could instigate further monetary tightening.

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Futures for the Dow Jones Industrial Average fell 83 points, or 0.7%, to 11,159, after an earlier drop of more than 1%. Futures for the S&P 500 index fell 11 points, or 0.9%, to 1,200.

Futures for the Nasdaq 100 fell 20.75, or 1%, to 2,151.75.

In Asia, most stocks were sharply lower, with the Shanghai Composite index closing down 5.2%, its worst percentage fall in more than a year.

Chinese media reported Friday that the country is setting out new rules that will forbid foreign companies from buying property there and limit foreigners to buying just one residential unit for their own use.

Gold futures tumbled nearly $20 to $1,383.60, while silver and copper also fell as investors concluded China â€" a big user of natural resources â€" was looking to cool off its economy. See story on Asia markets

“Equity markets are now geared up for a rise in interest rates in China,” said David Buik, strategist at BCG Partners. “This retrenchment followed in the wake of a dispiriting session in New York . . . thanks in the main to an adverse reaction to Cisco’s results.”

U.S. stocks finished lower on Thursday, dragged down by a weak forecast from Cisco Systems Inc. /quotes/comstock/15*!csco/quotes/nls/csco (CSCO 20.52, -3.97, -16.21%) . Those shares suffered the biggest 1-day drop in 16 years, and helped drag the Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,556, -23.26, -0.90%)  down 0.9%.

Merkel speaks on G-20

German Chancellor Angela Merkel speaks about growth, imbalances and protectionism.

Markets were also keeping a wary eye on the G-20 meeting in Seoul, South Korea, where leaders in a joint communique urged that markets be allowed to set foreign-exchange rates. See G-20 calls for market forex rates

Stocks in focus for Friday include Walt Disney Co. /quotes/comstock/13*!dis/quotes/nls/dis (DIS 35.93, -1.06, -2.87%) , which reported a 7% profit decline on lower earnings at its ESPN cable channel and theme parks late Thursday.

Shares of Nvidia Corp. /quotes/comstock/15*!nvda/quotes/nls/nvda (NVDA 12.61, -0.13, -1.01%)  could also be a focus after posting a 21% profit drop after Wall Street closed.

Ahead of the opening bell, J.C. Penney /quotes/comstock/13*!jcp/quotes/nls/jcp (JCP 32.22, -0.45, -1.38%)  is due to report quarterly results.

Economic data on the schedule include the Reuters/University of Michigan consumer sentiment index for November, due at 10 a.m. Eastern time.

Europe stocks also were having a rough day, with worries over Irish debt compounding nervousness about fresh rate hikes from China.

Resource stocks were especially hard hit, with mining stocks down in London and oil stocks also under pressure with shares of Total /quotes/comstock/24s!e:fp (FR:FP 39.33, -0.37, -0.93%)  down 4.2% in Paris.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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