Monday Morning Cheat Sheet: 3 Stories Moving Markets

The markets were mixed in Asia overnight. The Nikkei climbed 0.62 percent in Japan for a fifth consecutive day of gains. Meanwhile, the yen continues to weaken, trading at 93.14 to the dollar. The Hang Seng was off 0.16 percent, and the S&P/ASX 200 fell 0.28 percent.

The outlook is gloomy in Europe at mid-day. London’s FTSE 100 was off 0.69 percent, Germany’s DAX was off 0.62 percent, and the STOXX 50 was off a full 1.03 percent. Tremors of political tension in Italy and Spain threaten to create friction for the region’s struggling recovery effort. Brent crude was off about 0.62 percent to $116.04 per barrel.

U.S. futures at 8:10 a.m.: DJIA: -0.37%, S&P 500: -0.39%, NASDAQ: -0.34%.

Here are three stories to keep an eye on: Tighten Your Belt - Austerity

1) The probability of default is as high as 20 percent in Spain and Italy, according to Anshu Jain, co-CEO at Deutsche Bank. Bloomberg reports that the two countries still owe as much as 2 trillion euros to the world, and the weight of that debt is a considerable risk. Economists monitoring the region have expressed concerns that February voting in Italy could put former premier Berlusconi back in power, and corruption allegations in Spain could depose Premier Mariano Rajoy.

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Each situation poses a unique risk to international creditors and market participants who are relying on the region’s slow crawl out of recession and debt, and back to economic growth. Current leaders in both countries support severe austerity measures that came as a condition for financial support, while the new leaders have their eyes on easing spending cuts and eliminating tax hikes.