26th Jun 2015 12:57
WASHINGTON (Alliance News) - The major US index futures are pointing to a mixed opening on Friday, with sentiment suggesting nervousness as the Greek debt crisis is yet to reach a conclusion. With the action now shifting to Saturday, when the two parties central to the crisis, namely Greece and its creditors, are expected to restart their negotiations, uncertainty looms large. The tough stance taken by the IMF and the domestic constraints under which Greece is negotiating the deal are turning out to be bottlenecks. The dollar is firmer and commodities are mostly lower.
US stocks retreated on Thursday, extending their losses for a second straight session, as the stalemate in the Greek debt talks weighed on the markets. The major averages opened higher, as traders savored positive jobless claims and consumer spending data. However, after holding above the unchanged line till afternoon trading, the indexes came under pressure and ended lower for the session.
The Dow Industrials ended up 75.71 points or 0.42% at 17,890, the S&P 500 Index closed 6.27 points or 0.30% lower at 2,102 and the Nasdaq Composite finished at 5,112, down 10.22 points or 0.20%.
Twenty-five of the thirty Dow components closed lower, with 3M (MMM), Chevron (CVX), Caterpillar (CAT) and American Express (AXP) retreating sharply in the session. On the other hand, UnitedHealth (UNH) rallied 2.65%.
Among the sectors, oil service and computer hardware stocks came under significant selling pressure.
On the economic front, the Labor Department reported that jobless claims rose to a less than expected 271,000 in the week ended June 20th from an upwardly revised 268,000 in the previous week. The four-week average slipped to 273,750 from 277,000. However, continuing claims calculated with a week's lag rose by 22,000 to 2.247 million in the week ended June 13th.
The Commerce Department also released a report showing that personal income rose 0.5% month-over-month in May, equaling the growth in the previous month and slightly better than the 0.4% growth expected by economists. Personal spending jumped 0.9%, notably faster than the 0.1% rate in the previous month and also above the 0.7% growth expected by economists.
In real terms, personal spending was up 0.6%. The core price consumption expenditure index was up 1.2% year-over-year, slower than the 1.3% rate in April.
The flash estimate of Markit's survey of conditions in the US service sector showed a slowdown in the pace of expansion. The service sector PMI slipped to 54.8 in June from 56.5 in May.
The Kansas Federal Reserve's regional manufacturing survey showed that the PMI improved to -9 in June from -13 in May, although it suggested that manufacturing activity is still depressed.
Currency, Commodity Markets
Crude oil futures are slipping USD0.54 to USD59.16 a barrel after sliding USD0.57 to USD59.70 a barrel on Thursday. An ounce of gold is currently trading at USD1,172, up USD0.20 from the previous session's close of USD1,171.80. On Thursday, gold fell USD1.10.
On the currency front, the US dollar is trading at 123.72 yen compared to the 123.63 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at USD1.1200 compared to yesterday's USD1.1205.
Asia
The major Asian averages retreated, as Greek worries intensified. The Chinese market led the slide, with the Shanghai Composite Index plunging more than 7%. On the other hand, the New Zealand and South Korean markets bucked the downtrend with modest gains.
The Japanese market succumbed to the strength of the yen, which gained ground on rising risk aversion. The Nikkei 225 Index languished below the unchanged for much of the session before ending down 65.25 points or 0.31% at 20,706.
Oil, real estate, food, mining, pharma and export stocks were among the worst performers of the session. On the other hand, paper, chemical, telecom and financial stocks gained ground.
Australia's All Ordinaries Index fell sharply in early trading and then moved sideways at lower levels. The index closed 83.80 points or 1.49% lower at 5,536.
A majority of sectors came under selling pressure, with energy, utility, industrial, material and real estate stocks among the worst decliners of the session.
China's Shanghai Composite plummeted 334.91 points or 7.40% before closing at 4,193, and Hong Kong's Hang Seng Index ended at 26,664, down 481.88 points or 1.78%.
On the economic front, a trio of reports released by the Japanese Ministry of International Affairs and Communications showed fairly positive results.
Annual Japanese consumer price inflation slowed to 0.5% in May from 0.6% in April. Economists expected a tamer inflation rate of 0.4%. Core consumer prices were up 0.1%.
Meanwhile, core consumer prices for the Tokyo region, considered a precursor for the whole of Japan, rose 0.1% year-over-year in June, in line with estimate but slower than the 0.2% rate in May.
The jobless rate for Japan remained unchanged at 3.3% in May, in line with estimates. Meanwhile, household spending rose 4.8% year-over-year in May, ahead of the 3.6% increase expected by economists. Average income per household rose 1.5% compared to a 7.5% increase in the average consumption expenditure per household.
Europe
European stocks opened moderately lower and languishing in the red in early trading, as the Greek debt talks have been pushed to Saturday. The averages have currently turned mixed.
If Greece and its creditors agree to something by Saturday or Sunday, the Greek and German parliaments need to ratify the package before it can be implemented.
The situation remains critical, as Greece needs to unlock the last 7.2 billion euros of its EU-IMF bailout in order to pay a loan installment to the IMF on June 30th. Greece's current EU bailout also expires on Tuesday.
In corporate news, the UK's Tesco reported a small decline in group sales, excluding fuel and VAT, for the first quarter, although the decline was less than expected.
On the economic front, a report released by the German Federal Statistical Office showed that import prices in Germany fell 0.8% year-over-year in May compared to the 0.6% decline in April and the 0.4% decrease expected by economists. Import prices have been declining since January 2013. On the other hand, export prices rose 1.4%, slower than the 1.6% increase in April.
Money supply growth in the eurozone unexpectedly slowed in May and loans to the private sector increased, the European Central Bank reported. The M3 money supply advanced 5% year-over-year, slower than the 5.3% growth seen in April. The money supply was expected to improve to 5.4%.
US Economic Reports
The University of Michigan will release its final US consumer sentiment index for June at 10 am ET. Economists expect the index to rise to 94.6 in June from 90.7 in May, unrevised from the preliminary estimate released in mid-June.
Kansas City Federal Reserve Bank President Esther George is scheduled to speak on the payments system in Kansas City, Missouri at 12:45 pm ET.
Stocks in Focus
Nike (NKE) reported fourth quarter earnings and revenues that exceeded estimates. The company also said worldwide futures orders for delivery from June through November 2015 were up 2% year-over-year at USD13.5 billion. The growth was a steeper 13% on a currency neutral basis.
Finish Line's (FINL) first quarter results exceeded estimates and it reaffirmed its full year guidance.
Micron (MU) reported third quarter adjusted earnings that trailed estimates and its revenues also missed expectations. The company's fourth quarter revenue guidance was also weak.
Potash Corp. of Saskatchewan (POT) confirmed that it has made a private proposal to acquire Germany's K+S.
Copyright RTT News/dpa-AFX