The major U.S. index futures are pointing to a lower opening on Monday, with the euro zone sovereign debt crisis likely to be the most potent nemesis of the markets in today's session. Concerns about the domestic growth are likely to be pushed to the backburner, given the fact that there are very little catalysts to give clues on the economy's health. A large scale sell-off could drag the Dow below its recent multi-year lows hit early August this year.
U.S. stocks declined sharply in the holiday-shortened week ended September 9th, as traders remained concerned about the economic uncertainty amid the release of some mixed data.
Last Tuesday, the markets extended the weak job numbers-induced sell-off of the previous week and remained stuck mostly below the unchanged line, hurt by economic uncertainties. The major averages all retreated moderately. However, stocks got a reprieve on Wednesday following the release of some positive global data points and a decision by a German court upholding Germany's participation in the bailout of Greece.
However, the major averages declined by about 1 percent each on Thursday after the jobless claims report showed a bigger than expected increase in first time claims and some global data came in disappointing. Meanwhile, stocks retreated on Friday, unimpressed by Obama's jobs package and due to concerns surrounding the European sovereign debt crisis following the resignation of European Central Bank board member Jurgen Stark.
Consequently, the Dow Industrials ended the week down 2.21 percent at 10,992 and the Nasdaq Composite closed 0.50 percent lower at 2,468. Meanwhile, the S&P 500 Index ended at 1,154, down 1.68 percent.
Commodity, Currency Markets
Crude oil futures are retreating $1.49 to $85.75 a barrel after advancing $0.79 or 0.91 to $87.24 a barrel in the week ended September 9th. Last Tuesday, oil retreated, adding to the previous Friday's losses, with the commodity dropping modestly. Oil staged a turnaround and advanced over $3 a barrel on Wednesday amid the equity market rally.
The commodity fell modestly on Thursday before retreating sharply on Friday due to an increase in the risk aversion, which strengthened the dollar.
Gold futures, which fell $17.40 or 0.93 percent to $1,859.50 an ounce in the previous week, are currently sliding $9.70 to $1,849.80 an ounce.
Among currencies, the U.S. dollar strengthened against most currencies in the week ended September 9th, as risk aversion drove traders to the currency. The euro came under sever selling pressure in the past week amid some soft domestic data points, including an unexpected drop in German exports, and Stark's resignation that was construed by the markets as a reflection of a lack of consensus among the Euro zone nations for the resolution of the sovereign debt crisis.
The dollar added 0.94 percent against the yen last week before ending at 77.611 yen, while it rose 3.13 percent against the euro before closing at $1.3657.
The greenback is currently trading at 77.048 yen and is valued at $1.3661 against the euro.
Asia
The major Asian markets retreated sharply, as some negative events surrounding the European sovereign debt crisis unfolded, which intensified fears of a default by Greece. The resignation of Stark and some statements from German government officials set in motion talks about a default by Greece even as the Mediterranean nation embarks on severe austerity measures to plug the gaping deficit.
Adding fuel to fire, reports suggested that Moody's may downgrade European banks this week due to their exposure to Greek government debt. Meanwhile, the Independent Commission on Banking on Monday made a call to banks to segregate their retail operations from their investment banking business by 2019.
Japan's Nikkei 225 average opened sharply lower and moved sideways before closing down 201.99 points or 2.31 percent at 8,536, the lowest closing level since April 1, 2009. The market witnessed a broad based sell-off.
Australia's All Ordinaries ended at 4,125, down 152.30 points or 3.56 percent, while Hong Kong's Hang Seng Index closed down 836.09 points or 4.21 percent at 19,031.
Europe
In Europe, the epicenter of the crisis, sentiment was markedly negative. The French CAC 40 Index and the German DAX Index are slipping 4.83 percent and 3.73 percent, respectively, while the U.K.'s FTSE 100 Index is receding 2.49 percent.
U.S. Economic News
Readings on manufacturing, inflation and consumer spending are likely to be in focus in the unfolding week, as the economy navigates through a crucial phase. Traders are expected to pay attention to the results of the New York and Philadelphia Federal Reserves' manufacturing surveys for September, the Federal Reserve's industrial production report, the Commerce Department's retail sales report for August and the weekly jobless claims report.
Additionally, the preliminary reading of the Reuters/University of Michigan's consumer sentiment survey and the producer and consumer price inflation reports for August may garner some attention. The Labor Department's import and export prices report for August, the business inventories report for July, the Treasury Budget for August, a Fed speech and The Treasury auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.
The fragile consumer confidence and worsening economic environment may have held back consumers to some extent in August. Therefore, the month may have seen a slowdown in the pace of spending following a robust 0.5 percent gain in the previous month. Nevertheless, supported by July's strong performance, consumer spending is expected to turn in a decent showing in the third quarter after nearly stagnating in the second quarter.
The results of the manufacturing sector surveys of August do not bode well for industrial production, as they pointed to a contraction in activity. Industrial production growth may have seen a marked slowdown. Additionally, BMO Capital Markets noted that production may have been hurt by power outages and distribution delays in the Northeast, dragging down utility output. However, mining production is expected to have seen some strength.
After the abysmal performance in August, manufacturing conditions could have rebounded slightly in September. The Philadelphia and the New York Federal Reserves' surveys may have seen some improvement, although they are expected to stay put in contraction territory.
Dallas Federal Reserve President Richard Fisher is due to speak on monetary policy in a global context to NABE annual meeting in Dallas at 5 pm ET.
Stocks in Focus
Global Industries (GLBL) is likely to be in focus after it announced a deal to be acquired by France's Technip for $8 per share or $1.076 billion, including $136 million of net debt. The deal is expected to close in 2012.
Toyota (TM) could be in focus after rating agency Fitch downgraded its rating on the company's long-term debt by one notch to "A" on the premise that the company stands to suffer due to a stronger yen. The outlook was left at "stable."
Skywest (SKYW) may see some activity after it said its load factor for August rose 0.2 points to 80.6 percent from the year-ago period, with the airline benefiting from its ExpressJet Airlines acquisition.
Verizon Wireless, a joint venture between Verizon (VZ) and Vodafone (VOD) said it may not adopt a policy of paying out annual dividend and would in turn focus on acquisitions of businesses or radio spectrum.
NetLogic Microsystems (NETL) may gain ground after it announced a deal to be bought by Broadcom (BRCM) for $50 per share.
McGraw-Hill (MHP) is also expected to be in focus after it announced that it is separating into two public companies, namely McGraw-Hill Markets and McGraw-Hill Education.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.