Muted Start Likely for Dow


LONDON -- Stock index futures at 7 a.m. EST suggest that the Dow Jones Industrial Average may open down by 0.08% this morning, while the S&P 500 is expected to fall by 0.16% when trading starts.

No major economic news is scheduled for today, which means the markets are likely to be focused on political developments at home and abroad. At the top of the agenda will be the ongoing fiscal-cliff negotiations. President Obama and Republican Speaker John Boehner are reported to have met at the White House on Sunday to discuss a possible deal as pressure mounts to find a solution by the end of the year.

Disappointing figures for Chinese exports may affect sentiment after China's exports grew by just 2.9% last month -- much less than the 9% forecast -- despite a 10.1% increase in industrial production. Finally, investors may be cautious ahead of the Federal Open Market Committee meeting later this week, when the Fed may announce further easing measures.

Companies expected to report quarterly results today include ABM Industries, Ferrellgas, Orchard Supply, and Casey's General, while Texas Instruments is expected to release a mid-quarter update. Ingersoll-Rand could also be actively traded this morning after Reuters reported that the company may sell its security division.

European markets
European markets fell this morning following Saturday's news that Italian Prime Minister Mario Monti will resign once he has passed the country's budget, as he no longer commands a majority in both houses of parliament.

The yield on 10-year Italian government bonds rose by 0.34% to 4.9% this morning, and the cost of insuring Italian government debt also rose sharply. Markets are concerned that an election in Italy might lead to the reelection of former Prime Minister Silvio Berlusconi on an anti-austerity platform. News that Italy's industrial output fell by 1.1% in October, much worse than the 0.2% which was expected, has also dampened investors' spirits.

At 7 a.m. EST, the DAX was down 0.52%, the CAC 40 was down 0.57%, the Italian FTSE MIB was down 3.2%%, and Spain's IBEX 35 was down 1.66%. In London, the FTSE 100 was down 0.25%, with insurance group Aviva down by 2.5% due to investors' concerns about its exposure to Italian and Spanish government debt.

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Roland Head owns shares in Aviva but does not own shares in any of the other companies mentioned in this article. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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