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Stocks May Open Roughly Flat Amid Focus Overseas - U.S. Commentary


With traders keeping a close eye on developments overseas, stocks may show a lack of direction in early trading on Monday. The major index futures are currently pointing to a roughly flat open, with the Dow futures down by just 2 points.

Uncertainty about the political situation in Italy is likely to weigh on investor sentiment following news that Prime Minister Mario Monti intends to resign.

Monti's decision to step down came after he lost the support of former Prime Minister Silvio Berlusconi's People of Freedom party. Monti said he would try to pass a budget for 2013 before resigning.

Peter Boockvar, managing director at Miller Tabak, said, "If there is one certainty in Italian politics, it's uncertainty. As the U.S. has had just 12 President's since WWII, Italy has had 26 different PM's."

"The difference now though of course is the fragile state of the country's finances where consistent policy is most desired," he added.

However, the negative sentiment generated by the news out of Italy has largely been offset by upbeat Chinese economic data, including reports showing strong industrial output and retail sales growth.

Chinese industrial output rose 10.1 percent year-over-year in November following a 9.6 percent increase in October, while annual Chinese retail sales growth accelerated to 14.9 percent from 14.5 percent.

Trading could also be impacted by developments in Washington, with lawmakers continuing to struggle to reach an agreement to avoid the looming fiscal cliff.

While some Republicans have indicated they would be willing to accept higher tax rates on wealthy Americans, they want the increase in taxes to be combined with significant spending cuts and reform to entitlement programs.

With traders digesting relatively upbeat employment data while also expressing continued concerns about the fiscal cliff, stocks turned in a mixed performance on Friday. A notable loss by Apple (AAPL) weighed on the tech-heavy Nasdaq once again.

The major averages finished the session on opposite sides of the unchanged line, with the Nasdaq in the red. While the Nasdaq fell 11.23 points or 0.4 percent to 2,978.04, the Dow climbed 81.09 points or 0.6 percent to 13,155.13 and the S&P 500 rose 4.13 points or 0.3 percent to 1,418.07.

For the week, the major averages also turned in a mixed performance. The Nasdaq fell by 1.1 percent, while the Dow advanced by 1 percent and the S&P 500 inched up by 0.1 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. While Japan's Nikkei 225 Index edged up by 0.1 percent, Hong Kong's Hang Seng Index rose by 0.4 percent and China's Shanghai Composite Index jumped 1.1 percent.

Meanwhile, the major European markets have moved to the downside on the day. The U.K.'s FTSE 100 Index has slipped by 0.2 percent, while the French CAC 40 Index and the German DAX Index are both down by 0.3 percent.

In commodities trading, crude oil futures are climbing $0.68 to $86.61 a barrel after sliding $2.98 or 3.4 percent to $85.93 a barrel in the week ended December 7th. Gold futures, which fell $7.20 or 0.4 percent to $1,705.50 an ounce last week, are rising $11.70 to $1,717.20 an ounce.

On the currency front, the U.S. dollar was little changed against the yen last week, ending the week at 82.49 yen. The greenback rose 0.5 against the euro before ending the week at $1.2927. The dollar is currently trading at 82.22 yen and is valued at $1.2935 versus the euro.

by RTTNews Staff Writer

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