European stocks are expected to tumble at the open Tuesday, following heavy falls in Asian markets, where the Nikkei dropped more than 10% amid fears of a nuclear disaster in Japan.
U.S. stocks are also likely to open sharply lower, judging by losses in stock index futures. Meanwhile, the euro, oil and gold are all weaker in early European business, while the Swiss franc and German bunds are higher. The Japanese yen is mixed.
Capital Spreads called London's FTSE 100 index to open 130 points lower at 5645, Germany's DAX index down 139 points at 6728 and Paris's CAC-40 index 81 points lower at 3797.
News of a third explosion at the Fukushima Daiichi nuclear power plant heightened fears of a full nuclear catastrophe. These were compounded by Japanese prime minister Naoto Kan, who said there's a high risk of elevated levels of radiation from the country's nuclear reactors, and urged everyone within 30 kilometers of the plant to stay indoors.
Despite the sharply lower opening calls, Citigroup does not expect the events in Japan to overwhelm the world economic recovery or investors' risk appetite. "For Europeans, growth in emerging markets and the U.S. remains the most important macro driver and a negative shock for the Japanese economy is unlikely to be enough to push the world economy back into recession," it said.
"Furthermore, at the margin, the policymakers in the world are more likely to maintain cheap money to keep recovery on track to counteract any negative impact from Japan. Cheap money should be supportive to equity markets," Citigroup added.
On the macroeconomic calendar, U.K. house-price figures are due at 0930 GMT, while the German ZEW survey is at 1000 GMT. In the U.S, the Empire State manufacturing survey and import price index data are due at 1230 GMT and the National Association of Homebuilders' housing-market index is scheduled for 1400 GMT.
The Federal Open Market Committee rate decision is due after the close at 1815 GMT, where all eyes will be on Federal Reserve chairman Ben Bernanke's speech. No change in policy rate is expected, but "market participants will evaluate the shift in tone regarding improved labor market conditions and inflation expectations, given recent developments," said Credit Agricole and Investment Bank.
On Wall Street Monday, stocks fell as investors tried to assess the financial fallout from Japan's earthquake and tsunami.
The Dow Jones Industrial Average closed down 0.4% at 11,993.16, the Nasdaq Composite fell 0.5% to 2700.97 and the Standard & Poor's 500 index shed 0.6% to 1296.39.
"The triple issue of the earthquake, tsunami and now the nuclear plant is enough to make anyone afraid," said James Dailey, portfolio manager of the Team Asset Strategy Fund.
Peter Tuz, president of Chase Investment Counsel, said he continues to worry about the situation in the Middle East and North Africa as well. Japan's earthquake "may have knocked the Middle East turmoil off the TV screen, but it's still there," he said.
In Asia, stock markets tumbled Tuesday, dragged down by a sharp drop in Tokyo's headline stock-market index amid widespread worries about the possibility of a Japanese nuclear catastrophe.
Japan's Nikkei Stock Average pared earlier losses but was still down 10.6%, Australia's S&P/ASX 200 fell 2.1% and South Korea's Kospi Composite lost 2.4%, while the Shanghai Composite Index fell 2.1% and Hong Kong's Hang Seng Index dropped 3.4%.
In China, "there is panic selling in A-share market as investors are fretting over the reactor leaks in Japan, and further downside is likely to depend on whether the leaks in Japan can be placed under control," said Tang Yonggang, an analyst from Hong Yuan Securities.
In the European foreign exchanges, the euro was weaker, having gained Monday on news of the EFSF extension. By 0720 GMT, the euro was trading at $1.3911, down from $1.3993 late Monday in New York.
By contrast, the Swiss franc gained from 'safe-haven' flows while the Japanese yen was mixed: down against the dollar but up against the euro.
Among commodities, spot gold was at $1415.30 per troy ounce, down $10.45 from New York, while April Nymex crude oil futures were down $2.10 at $99.09 per barrel.
In the bond markets, the June bund futures contract was up 1.01 at 123.20. Among U.S. stock index futures, the June Dow Jones Industrial Average contract was down 1.7% while the S&P 500 contract was down 1.9%.
U.S. stocks are also likely to open sharply lower, judging by losses in stock index futures. Meanwhile, the euro, oil and gold are all weaker in early European business, while the Swiss franc and German bunds are higher. The Japanese yen is mixed.
Capital Spreads called London's FTSE 100 index to open 130 points lower at 5645, Germany's DAX index down 139 points at 6728 and Paris's CAC-40 index 81 points lower at 3797.
News of a third explosion at the Fukushima Daiichi nuclear power plant heightened fears of a full nuclear catastrophe. These were compounded by Japanese prime minister Naoto Kan, who said there's a high risk of elevated levels of radiation from the country's nuclear reactors, and urged everyone within 30 kilometers of the plant to stay indoors.
Despite the sharply lower opening calls, Citigroup does not expect the events in Japan to overwhelm the world economic recovery or investors' risk appetite. "For Europeans, growth in emerging markets and the U.S. remains the most important macro driver and a negative shock for the Japanese economy is unlikely to be enough to push the world economy back into recession," it said.
"Furthermore, at the margin, the policymakers in the world are more likely to maintain cheap money to keep recovery on track to counteract any negative impact from Japan. Cheap money should be supportive to equity markets," Citigroup added.
On the macroeconomic calendar, U.K. house-price figures are due at 0930 GMT, while the German ZEW survey is at 1000 GMT. In the U.S, the Empire State manufacturing survey and import price index data are due at 1230 GMT and the National Association of Homebuilders' housing-market index is scheduled for 1400 GMT.
The Federal Open Market Committee rate decision is due after the close at 1815 GMT, where all eyes will be on Federal Reserve chairman Ben Bernanke's speech. No change in policy rate is expected, but "market participants will evaluate the shift in tone regarding improved labor market conditions and inflation expectations, given recent developments," said Credit Agricole and Investment Bank.
On Wall Street Monday, stocks fell as investors tried to assess the financial fallout from Japan's earthquake and tsunami.
The Dow Jones Industrial Average closed down 0.4% at 11,993.16, the Nasdaq Composite fell 0.5% to 2700.97 and the Standard & Poor's 500 index shed 0.6% to 1296.39.
"The triple issue of the earthquake, tsunami and now the nuclear plant is enough to make anyone afraid," said James Dailey, portfolio manager of the Team Asset Strategy Fund.
Peter Tuz, president of Chase Investment Counsel, said he continues to worry about the situation in the Middle East and North Africa as well. Japan's earthquake "may have knocked the Middle East turmoil off the TV screen, but it's still there," he said.
In Asia, stock markets tumbled Tuesday, dragged down by a sharp drop in Tokyo's headline stock-market index amid widespread worries about the possibility of a Japanese nuclear catastrophe.
Japan's Nikkei Stock Average pared earlier losses but was still down 10.6%, Australia's S&P/ASX 200 fell 2.1% and South Korea's Kospi Composite lost 2.4%, while the Shanghai Composite Index fell 2.1% and Hong Kong's Hang Seng Index dropped 3.4%.
In China, "there is panic selling in A-share market as investors are fretting over the reactor leaks in Japan, and further downside is likely to depend on whether the leaks in Japan can be placed under control," said Tang Yonggang, an analyst from Hong Yuan Securities.
In the European foreign exchanges, the euro was weaker, having gained Monday on news of the EFSF extension. By 0720 GMT, the euro was trading at $1.3911, down from $1.3993 late Monday in New York.
By contrast, the Swiss franc gained from 'safe-haven' flows while the Japanese yen was mixed: down against the dollar but up against the euro.
Among commodities, spot gold was at $1415.30 per troy ounce, down $10.45 from New York, while April Nymex crude oil futures were down $2.10 at $99.09 per barrel.
In the bond markets, the June bund futures contract was up 1.01 at 123.20. Among U.S. stock index futures, the June Dow Jones Industrial Average contract was down 1.7% while the S&P 500 contract was down 1.9%.
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