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Pre-Market Primer: Futures Rise on China Stimulus Hopes, Durable Goods Orders Surge


Stocks are looking up today ahead of the EU summit. Also, the courts just threw some cold water on Google's tablet ambitions.

MINYANVILLE ORIGINAL Stock futures rose today on better-than-expected factory data and hopes that China will stimulate its economy.

Ahead of the European Union summit tomorrow, the future for eurobonds is getting murky. Just before her first trip to Paris to meet Francois Hollande, with whom she has deep-seated differences, German Chancellor Angela Merkel called the idea of eurobonds "wrong" and "counterproductive."

"Guarantees and controls must go hand-in-hand. There can only be joint liabilities when sufficient controls have been put in place," she said, speaking in Berlin. "Apart from the fact that instruments like eurobonds, eurobills, debt redemption schemes, and much more are not compatible with the constitution in Germany, I consider them wrong and counterproductive."

Some unexpected good news came out of Italy today. Italian business confidence unexpectedly rose this month, after hitting a three-year low. The 10-year Italian bond yield fell eight basis points today after the government auctioned short term debt at a lower average yield, but a similar bid-to-cover ratio from the most recent auction. Spain's borrowing costs also fell to 6.845% as Prime Minister Mariano Rajoy confirmed that he will seek more help at the summit.

"The most important thing today is being able to finance ourselves in the markets; that's the main issue, and on that point Spain, Italy, and other countries are going to push for reasonable decisions to be made," Rajoy said, speaking in Parliament today. "We can't finance ourselves at the prices we are paying for very long."

In US economic news, durable goods orders came in much better than expected. Orders rose 1.1%, which is more than the 0.4% expected. Excluding transportation, orders only rose 0.4%

Stock futures rose higher after the data releases. Dow (^DJI) futures rose 0.05% to 12,492.00. Futures contracts on the S&P 500 (SPY) gained 0.16% to 1,317.60, and the Nasdaq (^IXIC) futures are up 0.11% to 2,551.00.

At 10:00 a.m. EDT, the National Association of Realtors will release May pending home sales data. Pending sales are expected to show a 1.2% increase after falling 5.5% in April.

Reports in the China Securities Journal suggested that the government might take a "more proactive" approach to stimulate growth. The second-largest economy's growth machine is slowing of late, and today's report is in tune with others that point towards government intervention.

Today, Google (GOOG) will kick off its I/O developer conference where it is expected to unveil an Android tablet computer aiming to poach some market share from Apple's (AAPL) iPad. The tablet is expected to be co-branded with Taiwan's Asustek Computer. Unfortunately for the Android universe, Judge Lucy Koh granted Apple a preliminary injunction against Samsung (SSNLF) Galaxy Tablets for violating Apple's design patents.

The Athens office of Microsoft (MSFT) was attacked by arsonists who drove a stolen van into the building's entrance and set fire to it. The building was empty, and no one was hurt. Attacks of this sort against foreign companies, banks, and politicians have become more frequent as Greek extremists protest against fiscal austerity.

Twitter: @vincent_trivett
No positions in stocks mentioned.
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