Growth Fears Prompt Flat Start for Dow
LONDON -- Markets are expected to open broadly flat as last week's flight from risk slows. Stock index futures are suggesting that the Dow Jones Industrial Average (INDEX: ^DJI) will open slightly lower this morning, with small gains expected for the Nasdaq and S&P 500 indexes.
The only major economic data due today is the Factory Orders data release for April. Forecasts suggest that the rate of change turned positive in April, but this is unlikely to be enough to stem the negative sentiment arising from last week's disappointing employment figures. CNN's Fear and Greed Index hit a new "extreme fear" low of seven after U.S. stocks fell by more than 2% on Friday.
Expectations are now growing that the Federal Reserve will initiate another round of quantitative easing to help support the slowing economy. Fed Chairman Ben Bernanke is due to testify to Congress on Thursday this week, and his remarks will be closely scrutinized for clues regarding the Fed's intentions.
Fears of weakening growth in both the U.S. and China have also helped depress oil prices, which have now fallen to their lowest levels in at least eight months. On Friday, London-traded Brent Crude fell below $100 per barrel for the first time since October.
In Europe, there is little concrete news today, but concerns over Spain's banking crisis continue, with analysts at UBS suggesting that Spanish banks may need as much as 120 billion euros of new capital to cope with the impact of delinquent property loan portfolios. Almost 100 billion euros of capital has been withdrawn from Spanish banks so far this year, equivalent to about 10% of Spain's GDP.
Indeed, Spain seems likely to be the primary focus of European news this week as pressure mounts on the European Central Bank to provide some further assistance to the region's economies. Spanish prime minister Mariano Rajoy suggested on Friday that more centralized control of eurozone countries' budgets is now needed, hinting at support for closer fiscal union in the eurozone -- an attitude that will be welcomed in Germany.
London markets are closed today for a public holiday, leaving the FTSE 100 (INDEX: ^FTSE) unchanged since Friday's close, but other major European markets experienced mixed trading during the morning session. Germany's DAX index was down by about 1% at 7 a.m. EDT with just three companies -- led by Deutsche Bank AG (NYS: DB) -- managing gains. However, the French CAC 40 was up about 0.7%, and Spain's leading IBEX 35 index was up by more than 2.5%, perhaps reflecting hopes that Wednesday's ECB rate-setting meeting will result in new measures aimed at helping Spain's debt-ridden banks.
Earnings data is due later today from retailer Dollar General (NYS: DG) , a firm in which Warren Buffett's company Berkshire Hathaway has a 1.07% stake. Although most of Buffett's holdings are in American companies, he does have a few foreign holdings, including one notable 5% interest in a major U.K. blue-chip brand that has global expansion potential. You can read all about Buffett's investment in this blue-chip giant -- including the price he paid -- in this special free report.
Other stocks to watch in trading today include Groupon (NAS: GRPN) and Hewlett-Packard, which both fell heavily on Friday.
Are you looking to profit from this uncertain economy? "Ten Steps To Making A Million In The Market" is The Motley Fool's latest report. We urge you to read it today -- your wealth could be transformed. Click here now to request your free, no-obligation copy. The Motley Fool is helping Britain invest. Better.
Further investment opportunities:
At the time this article was published Roland Head owns no shares of the companies mentioned. The Motley Fool owns shares of Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.