US Stock Futures Signal Higher Open But Fiscal Cliff Fear Persists

on November 12 2012 4:17 AM

 

The U.S. stock index futures point to a higher open Monday but investors are expected to be guarded amid the concerns about the looming “fiscal cliff,” which consists of tax increases and spending cuts, at the beginning of next year.

The futures on the Dow Jones Industrial Average were up 0.17 percent, the futures on the Standard & Poor's 500 Index were up 0.15 percent and those on the Nasdaq 100 Index were up 0.16 percent.

On Friday, the U.S. stocks made small gains as investors remained cautious with the concerns that President Barack Obama would face the colossal task of resolving the fiscal cliff. Following the projection of Democrats controlling the Senate and Republicans retaining the House of Representatives, the U.S. Congress is expected to be divided. This may present a challenge to Obama while pushing for economic reforms.

“Following U.S. elections the reality of the task ahead to resolve the looming fiscal cliff has cast a long shadow of markets, leaving risk assets under pressure. Despite comments from the US administration and Congressional leaders of willingness to compromise, markets remain unconvinced, especially given the unchanged underling stance of both Democrats and Republicans, the former towards taxing the wealthiest and the latter towards no tax hikes,” Credit Agricole said in a note.

According to the data reported Friday by the Labor Department, the import price index, which measures the change in the price of imported goods and services purchased domestically, rose 0.5 percent in October, down from a 1.1 percent increase in September. Meanwhile, according to the data reported Friday by the University of Michigan, the index of consumer sentiment, which rates the relative level of current and future economic conditions, rose to 84.9 in November, up from 82.6 in October.

The Dow Jones Industrial Average marginally rose 0.03 percent, the S&P 500 Index was up 0.17percent and the Nasdaq Composite Index gained 0.32 percent.

European markets made marginal gains Monday but investors were watchful amid the concern that there will be more time needed for releasing the next tranche of bailout package from the European Central Bank to Greece.

London's FTSE 100 was up 10.63 points, Germany's DAX 30 index rose 11.93 points and France's CAC 40 declined 5.18 points.

Asian markets fell Monday as investor sentiment was weighed down by the concern that the downturn in the global economic condition continued to weaken Japan’s economy. According to the data released Monday by the Cabinet Office, Japan’s gross domestic product shrank to 0.9 percent in the quarter ending September 30, down from a 0.1 percent rise in the previous three months.       

 Japan’s Nikkei was down 81.16 points, South Korea’s Kospi Composite Index fell 3.54 points and India's BSE Sensex declined 31.32 points.

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