Before the bell: Futures slightly higher with Dubai debt woes, retail in focus

Posted Nov 30th 2009 8:00AM by Melly Alazraki
Filed under: Before the Bell, International Markets, Middle East, Market Matters, Economic Data, Oil, Financial Crisis

U.S. stock futures declined Monday morning with Wall Street keeping its attention on the unfolding debt situation in Dubai and on retail, with early results from the holiday shopping season beginning to emerge.

[Update: Futures turned direction and are now pointing to a higher start on Wall Street as investors were somewhat encouraged by the United Arab Emirate's central bank saying it would guarantee Dubai's World debt, and by the modest increase seen in holiday sales this season.]

In a shortened session on Friday, just as U.S. shoppers went scouring for Black Friday deals, U.S. markets sharply retreated, finishing the week with losses. Wall Street thus joined the decline in world markets, fueled by fears that Dubai World could default on $60 billion in debt. Global investors worried this could be a symptom of broader financial instability elsewhere in a still fragile world economy.

Dubai and Abu Dhabi exchanges plummeted Monday as they opened after the Eid Al Adha holiday. Dubai market dropped over 7% and Abu Dhabi's sank over 8%. These declines were greater than witnessed in world markets. The United Arab Emirates' central bank pledged to make extra funding available to all banks in the country, including foreign institutions with local branches. But this, analysts say, is the bare minimum and fears of the fallout and contagion worldwide persisted.

Overseas, Asian markets rebounded by about 3% after falling Thursday and Friday on the Dubai news. European stock markets fell again Monday after being relatively steady Friday.

Also in focus this morning is the retail sector. Consumers spent significantly less per person at the start of the holiday season this weekend, but shoppers did turn out in force. As they zeroed in on highly discounted items and showed more discipline in terms of buying only what's needed and using far less credit cards, some are concerned about the shopping season.

Consumers said they will have spent nearly 8% less on average, or about $343 per person, over the weekend, according to the National Retail Federation. Traffic to stores and websites rose to 195 million people from 172 million in 2008, but shoppers were focused on buying low-priced items, like $10 toys and $9 books, the NRF said. Total spending for the holiday weekend rose to an estimated $41.2 billion, up 0.5% from a year earlier, NRF said. Online sales Thursday and Friday, however, rose 11% to $913 million, according to data released Sunday by comScore, an Internet research firm. The NRF trade group said Sunday it's sticking to its forecast for holiday sales to decline 1% from last year.

Only one economic indicator is out today, the November Chicago Purchasing Managers Index survey due at 9:45 a.m. Eastern, and may have ticked back in the month. Meanwhile, oil rebounded to near $77 a barrel Monday after declining last week in reaction to the Dubai's debt problems.

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