After weakening sentiment unsteadied the market's footing last week, the mood brightened over the weekend. The catalyst was the G20 meeting in Toronto, where U.S. and European leaders agreed on a balance of austerity and growth plans.Concerns over the timing of austerity plans in the eurozone, to tackle sovereign debt challenges, and the net effect on the region's growth outlook have been weighing on the market. The same debate is being waged in the U.S. as well, only adding to market uncertainties.
All this is taking place just as corporations ready for the second quarter earnings season. The net result is potential heightened volatility.
G20 leaders agreed on tough capital rules, but at a more flexible time line for banks to build higher capital ratios. They also agreed to cut deficits in half by 2013 and to stabile their debt-to-output ratios by 2016.
U.S. equity futures had been indicating a slightly higher open, but have given up those modest gains.
Trading was mixed in Asia with the majors leaning into the red. Hong Kong and Korea closed slightly higher while the Nikkei fell 0.50%. Chinese markets also closed lower.
Europe is taking a more optimistic view. The FTSE, however, is underperforming the region after bank Standard Chartered confirmed economic uncertainty has hurt its business.
Shares in BP (BP) are on the rise following weather reports that Tropical Storm Alex is not expected to be a detriment to BP?s oil collecting efforts in the Gulf, which is lifting shares of both the super major and Transocean (RIG) premarket.
Over the weekend, reports surfaced that BP may be able to plug the well sooner than expected by way of the secondary relief wells that were not expected to be completed until August. The wells could reach the Macondo well by mid-July.
Also of note, there was some deal making in the drilling sector for which valuations have become attractive.Noble Corp. (NE) is purchasing FDR Holdings in an all-cash bid of $2.16 bln.
The economic calendar picks up pace throughout the week, culminating in the jobs report on Friday. Today, the personal spending report for May was released. Disposable income is going up and the personal savings rate is increasing -- a good combination for future spending.
For May, personal spending rose 0.2% (Briefing.com consensus 0.1%), personal income rose 0.4% (consensus 0.5%) and PCE prices-core rose 0.2% (consensus 0.1%). The slight miss relative to expectations on income is a wash since the prior month was revised up (to 0.5% from 0.4%) by the same amount as the May miss.A lack of any comment out of the G20 on China's revaluation of the renminbi left that currency unchanged at 6.7890. The dollar is up slightly against the euro at 1.2333.
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