Stock markets around the world are under pressure this morning amid concerns about the implications of last week's failed health-care plan. U.S. equity futures are currently lower by around 0.9%. Futures are off of overnight lows but still signalling a sizable drop at the open.
The prospects for tax reform, regulatory change and fiscal stimulus have helped fuel the post-election market rally, but last week's failed attempt at healthcare reform has put a dent in confidence around the administration's ability to effectively accomplish those initiatives.
Although markets finished Friday's session mixed despite the failure of the bill, there is a greater level of uncertainty evident this morning. Market volatility, as measured by the CBOE Volatility Index, hit its highest level since the election this morning and investors are seeking shelter in safe-haven assets such as gold, treasuries and the yen. The U.S. dollar is lower by 0.5%. Oil futures are lower by 1.0% and copper futures are down 1.8%.
While there is plenty of macro market volatility this morning, corporate news is relatively light. G-III Apparel (GIII) is trading lower by 11% after missing top and bottom line estimates and issuing downside guidance. In M&A news, Moneygram (MGI) entered into confidentiality agreement with Euronet Worldwide (EEFT) to further consider Euronet's competing bid to acquire Moneygram for $15.20 per share. MoneyGram had previously agreed to merge with Ant Financial Services Group.
Earnings due after the close tonight include Synnex (SNX) and Red Hat (RHT), among a few others.
There is no economic data due out today but the U.S. Treasury will begin this week's auctions of $88 billion of coupon securities with a $26 billion two-year note auction. Additionally, Chicago Fed President Charlie Evans, speaks at 1:15 pm ET, followed by a speech from Dallas Fed President Kaplan tonight. Both Evans and Kaplan are FOMC voters, but it's doubtful they'll say anything groundbreaking in terms of the Fed's viewpoints.
With the market starting the week at its lowest level in a month, it seems like investors might now require a greater level of clarity and confidence before buying back into the pro-growth initiatives up next on the administration's agenda.