LONDON -- After Friday's disappointing jobs figures left the Dow Jones Industrial Average (INDEX: ^DJI) and the S&P 500 substanially lower, Dow futures are suggesting that Monday's news from Europe could cause a further sell-off. The latest U.S. consumer credit figures could also provide some direction if they differ substantially from expectations.
Both Greece and France staged national elections over the weekend, with the Greek elections ending in uncertainty as the electorate rejected the country's two largest parties and gave their votes to a raft of more radical alternatives.
The only two Greek parties to have supported the IMF bailout did not win enough votes to form a coalition, meaning that a wider coalition will be required. This increases the risk that the austerity program will fail, leading to an uncontrolled default. The Athens Stock Exchange was down by more than 7% by lunchtime, with Greek banking stocks plunging by as much as 20%. The yield on 10-year Greek government debt rose to more than 20%, highlighting the increased default risk.
In France, the election of socialist Francois Hollande was less of a surprise, but his anti-austerity stance has cast doubt on the ability of the EU's leading powers to orchestrate future important decisions. The STOXX 50 index of leading European blue-chip companies was down slightly by midday, and although London markets are closed today for a public holiday, FTSE 100 (INDEX: ^FTSE) futures suggest that further falls are likely tomorrow.
In U.S. company news, after falling on Friday, AIG (NYSE: AIG) shares were down again in pre-market trading, probably due to news that the Treasury has agreed to sell a further $5 billion of AIG stock at a share price of $30.50, somewhat below Friday's closing level of $32.83. This will reduce its stake in the insurer from 70% to 63%. Also trending down in pre-market trading this morning were two of AIG's fellow bailout recipients: Citigroup (NYSE: C) and General Motors (NYSE: GE).
Over in Europe, trading volumes were low, thanks to the U.K. public holiday. However, if you would like to know which famous British blue chip recently inspired billionaire Warren Buffett to invest more than $1 billion, you can discover the name of the company and the price he paid in this latest free report.
At home, shares of Buffett's Berkshire Hathaway may slip further following lower-than-forecast earnings, while Tyson Foods releases quarterly results and Walt Disney shares may get a lift following the company's record U.S. box office receipts for The Avengers, which made $200 million at the box office in its opening weekend.
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