China hikes key rates over the weekend; Asia, Europe fall
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — U.S. stock futures were pointing to losses for Wall Street as investors return Monday after the long Christmas weekend, with rate hikes from China the first item of business with which to contend.
Futures for the Dow Jones Industrial Average fell 40 points, or 0.3%, to 11,482 and those for the S&P 500 index dropped 5 points, or 0.4%, to 1,248. Futures for the Nasdaq 100 index sank 4.75 points, or 0.2%, to 2,225.75.
Wall Street will reopen after closing Friday, the day before Christmas.
Weaker European and Asia markets were setting the tone after China hiked its key lending and deposit rates by a quarter of a percentage point each on Saturday. Analysts said the move could mean Beijing is now picking up the pace in efforts to slow the economy. See China’s hike signals no more soft touch
In Europe, stocks fell with auto makers leading the declines, as China is one of the world’s biggest car markets.
The Dow Jones Industrial Average (DJIA 11,573, +14.00, +0.12%) managed a two-year closing high on Thursday, up 14 points to 11,573.49, though the Nasdaq Composite (COMP 2,666, 0.00, 0.00%) and the S&P 500 (SPX 1,257, -2.07, -0.16%) fell. Markets were positive on the week, with the Dow Industrials up 0.7%, the S&P 500 up 1% and Nasdaq up 0.9%.
There is no major economic or corporate news on the calendar for Monday, though retailers could be in focus as heavy snowstorms battered the East Coast on Sunday, making it difficult for consumers to get out on one of the biggest shopping days of the year.
Airlines such as US Airways Group Inc. (LCC 9.91, 0.00, 0.00%) and United Continental Holdings (UAL 23.25, -0.16, -0.68%) could also be in the spotlight as travel was severely disrupted due to the storms that paralyzed several key airports in the region.
Ford Motor Co. (F 16.63, -0.15, -0.89%) on Monday said it plans to introduce start-stop technology on many cars in 2012 and will eventually be unveiled across all global markets. According to media reports, Ford is due to reveal the new fuel-saving measure in January at the North American International Auto Show in Detroit.
Shares of Cal-Maine Foods Inc. (CALM 33.82, +0.02, +0.06%) could be in focus after the egg producer said second-quarter net income fell 5.6% on 2.3% higher sales. While specialty-egg sales have continued to grow, feed costs hurt profits in the period and “remained a concern for fiscal 2011,” said Dolph Baker, president and chief executive.
In Europe, auto shares such as Volkswagen AG fell over 5%, while BMW and and Daimler AG fell by at least 4%, dragging the German and overall Stoxx Europe 600 index lower, in the wake of that China hike. Peugeot SA fell 2.5% in Paris.
Volume was lacking in Europe as well, with London markets closed until Wednesday for the Christmas holiday.
In Asia, China’s Shanghai Composite Index finished nearly 2% lower, led by financials such as China Construction Bank. One analyst said the hikes in China Saturday, plus other tightening moves in recent weeks, have triggered worries about the lending capability of Chinese banks.
In commodities, gold futures for February delivery rose $1.50 to $1,382 an ounce, while Februarydated crude fell 46 cents to $91.05 a barrel.
The dollar was mostly weaker across the board, off 0.3% against the euro at $1.3162.
