Strong Start Expected for Markets

LONDON -- Markets may open higher this morning, with futures markets at 7 a.m. EDT signaling a 0.28% opening gain for the Dow Jones Industrial Average (INDEX: ^DJI  ) and a 0.39% rise for the S&P 500 (INDEX: ^GSPC  ) .

Rating agency Standard & Poor's downgraded Spain's credit rating to one notch above "junk" status last night, helping to lift market futures as investors bet that the downgrade will increase the pressure on Spain to apply for a bailout -- an outcome seen as desirable by the markets, if not by Spain's politicians.

Today's economic data will also be closely watched, but it's not expected to deliver any big surprises. Weekly jobless claims are expected to have fallen from 367,000 to 365,000, while the trade deficit is expected to have widened from $42 billion to $44 billion in August. Both figures are due at 8:30 a.m., when September's import price index will also be published. At 10:30 a.m. EDT, the EIA weekly natural-gas report and weekly petroleum status report are due, followed at 2 p.m. EDT by September's federal budget.

Companies due to report quarterly results today include Safeway and Winnebago. Shares in restaurant chain Ruby Tuesday could also be active in trading this morning: The company reported disappointing earnings after the bell last night, and its shares fell by 7.8% in after-hours trading.

European markets
Several European markets rose this morning following Spain's credit rating downgrade last night. Anything that increases pressure on Spain to request a bailout is now seen as good news by Northern European markets. However, Spanish 10-year bond yields remained below 6% this morning, and it's widely expected that yields will have to rise further before a bailout request is made.

At 7 a.m. EDT, the DAX was up 0.8%, the CAC was up 0.6%, the FTSE MIB was up 0.2%, and Spain's IBEX was down 0.4%. In London, the FTSE 100 (INDEX: ^FTSE  ) climbed 0.6% during the morning, helped by a 10% surge from luxury-goods brand Burberry, which released a trading update announcing 8% growth in underlying revenue during the first half of this year. BAE Systems gained 2% through the morning as investors digested the company's latest trading statement, in which the company said it expected to deliver "modest growth in earnings per share" this year.

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Roland Head owns shares in BAE Systems but has no shares in any of the other companies mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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