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Pre-Market Primer: Global Equities Continue to Drop on Europe


Spain's bond yields are approaching unsustainable levels, Greece is on its way out of the euro, and oil keeps sliding down.

MINYANVILLE ORIGINAL US stock futures are still reeling from political developments in Europe.

European and Asian equities markets fell overnight and US equity futures are pointing towards a sixth straight day of losses. At 8:35 a.m. EDT, Dow (^DJI) futures were down 0.73% at 12,773.00. S&P 500 (SPY) futures dropped 0.88% to 1,346.50, and Nasdaq (^IXIC) futures fell 0.79% to 2,602.00.

Markets this week have been reeling from the victory of anti-austerity parties in French and Greek elections. Alexis Tsipras, the leader of the left-wing Syriza party was reportedly seeking an audience with France's Socialist president-elect. Today, Tsipras will hold talks with New Democracy and Pasok to attempt to form a government. Yesterday, he said that the austerity measures that those two parties agreed to with international creditors were "null and void." Syriza gave the leaders of the two parties an ultimatum to renounce the austerity measures or be left out of the coalition government. If Syriza forms a government and does exactly what the Greek people elected them to do, it could result in a default and a possible exit from the eurozone.

Spain's 10-year borrowing costs spiked more than 20 basis points past the psychological threshold of 6%. Meanwhile, Germany's 10-year bond yield fell to a new record low of 1.532% as investors sought safety. Spain's government is preparing to bail out Bankia, which is holding about 32 billion euros of toxic debt. Spanish banks are loaded with non-performing debt from the housing bubble's burst in 2008. Spain's IBEX 35 index (^IBEX) is down 3.17% today.

France's trade deficit fell to 5.7 billion euros from 6.4 billion euros and Germany's trade surplus rose by 100 million euros to 13.7 billion euros in March. German imports and exports both rose to the highest levels ever. Exports to non-eurozone countries mitigated falling demand for German-made goods within the currency union.

The Young Presidents' Organization's Global Pulse index showed that CEO sentiment and expectations for the economy rose to the highest level since 2009 in the last quarter. The index rose to 63.8 from 62.1 in the previous quarter. Confidence was highest in Latin America.

Oil futures continue to fall 1.21% to $95.84/barrel today after Saudi Arabia's oil minister said that oil is still overvalued.

America Online (AOL) reported revenue and earnings that far surpassed analyst expectations. The Street was looking for earnings per share of $0.07 on $527 million in revenue, and AOL delivered $0.22 on $529 million. Global ad growth grew by 5%, but domestic display sales shrank by 1% and traffic to AOL's sites is down by 4%. Shares fell 0.31% in the pre-market.

"Domestic display advertising revenue declined primarily reflecting a decline in reserved impressions sold, partially offset by growth in reserved inventory pricing and Patch revenue," the company said in a press release. The dialup subscription business, which still accounts for a huge chunk of AOL's revenue, declined by 14%. CEO Tim Armstrong has admitted that AOL basically depends on dialup customers that simply don't realize that they can access the Internet without a subscription, or forgot that they are paying for one. This quarter's rate of decline was the lowest in five years. AOL also repurchased 1.8 million shares and sold 800 patents to Microsoft (MSFT) for $1.06 billion

The John Carter flop notwithstanding, Disney's (DIS) profit increased by 21% thanks to rising theme park and television revenue. The company's outlook for the future is buttressed by a record hit with The Avengers and a possible sequel to the movie.

Toyota (TM) shares rose 0.99% in the pre-market as the top Japanese automaker reported that profit quadrupled on a yearly basis as the company recovered from the devastating 2011 tsunami. The strong yen, however, weighed down on the exporter's competitiveness. High gasoline prices and concerns about climate change led to strong demand for fuel-efficient vehicle.

Ford (F) shares fell 1.13% after the company announced that it will recall 27,000 vehicles.

Twitter: @vincent_trivett
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