Stock futures fall on Ukraine fears; Amazon drops
New York (Apr 25) Stock futures fell Friday amid disappointing results from Ford Motor Co. and Visa Inc. and rising tensions over Russia, whose debt rating was cut to just above junk by Standard & Poor’s Ratings Services.
Shares of Amazon.com Inc. also were down in premarket trading.
On the data front, investors will watch for an important gauge of consumer sentiment after the market opens.
By 11:00am EST Dow Index was down 130 points to 16370.
Russian tensions were also hitting prices. The Central Bank of Russia hiked its key rate to 7.5% from 7% on Friday, while Standard & Poor’s cut its credit rating on the country to BBB-minus from BBB, keeping its outlook negative. Citing large capital outflows in the first quarter, the S&P warned of “additional significant outflows” due to the “tense political situation” between Russia and Ukraine further undermining already-weak growth prospects.
U.S. Secretary of State John Kerry late Thursday alluded to capital outflows from Russia, saying the government was headed for an “expensive mistake” if it doesn’t reverse course in Ukraine. A day prior, Russia ordered new military exercises on the border of Ukraine in response to a Kiev operation against pro-Russia separatists.
“The war of dialogues has already started between the U.S. and Russia, which is a déjà-vu for traders. This isn't looking good in any way for the equity markets and could easily trigger a lot of margin calls for investors, given the level of leverage we have in the markets,” said Naeem Aslam, chief market analyst at AvaTrade, in emailed comments.
Germany, the economic engine of Europe, is “heavily dependent” on Russia for its exports, and if sanctions are stepped up, the whole region will be hurt, Aslam said. The German DAX 30 index /quotes/zigman/2380246/realtime DX:DAX -1.72% led Europe stocks lower with a loss of over 1%, while Russia’s blue-chip MICEX index XX:MCX -2.15% was down 0.9%.
Risk is “getting real, faster,” for Russia, said Keigh McCullough, chief executive officer for Hedgeye Risk Management, in emailed comments.