Current Futures: Dow -36.00, S&P -4.70, NASDAQ -13.75

European equity markets opened lower, following the negative momentum seen in the Asian markets and U.S. futures. The markets turned lower after some poor earnings results came in from the financial sector.

Over the last month, the equity markets were pulled higher by banks announcing they were profitable in the first part of the year. However, not all of them were, since UBS announced a 2 billion Swiss franc loss in the first quarter. The same toxic assets continued to be a drag on UBS’s balance sheet, causing a 3.9 billion franc loss over the first three months of the year. In order to reduce costs, UBS plans to reduce 7,500 work places by 2010, or a little more than 10% of the current global work force.

“UBS is the first major bank to report losses in the first quarter. Among other things, it shows that the conditions in the credit market have still not improved noticeably. Because UBS operates in the same global market as Goldman and Well Fargo, this might be a clue that the pre-announced Q1 earnings received a face-lift from the new accounting rules,” Trade Team notes. “Ironically, UBS was among the banks that said it was profitable in the first quarter, some time back”

If additional data is needed to highlight the tough times in the corporate debt market, just take a look at Rio Tinto. The largest mining company in the world, Rio, sold $3.5 billion of debt at 3% higher than a similar sale one year ago. To make the matters worse, the spread between Rio’s debt and the government debt is at an alarming size. Rio sold $2 billion of debt with a five-year maturity at 8.95%, 752 points higher than what the government pays for a similar loan, and $1.5 billion with a 10-year maturity, that has a 660 point spread over a similar Treasury loan. 

Overnight, the Nikkei fell 99.72 points (1.13%) to 8,742.96. The Australian S&P/Asx fell 5.40 points (0.14%) to 3,747.50. The U.K. Ftse fell 9.69 points (0.24%) to 3,979.30, while the German Dax declined 56.78 points (1.25%) to 4,500.23

Crude oil for May delivery was recently trading at $49.05 per barrel, down by $0.30.

Gold for May delivery was recently trading down by $1.30 to $890.70.