Benzinga Market Primer, Thursday August 9

Matthew Kanterman, Benzinga Staff Writer

August 09, 2012 7:09 AM

Tickers: BROAD, DIS, EWI, EWP, EZU, FIO, FXI, GOLD, KSS, M, NWSA, SLF, SLW, SPY, VGK

Markets showed caution early Thursday following mixed data out of China overnight and renewed fears over the European Debt Crisis. Chinese CPI inflation fell to 1.8 percent on an annualized rate, lower than the 2.2 percent rate seen in June but better than expectations of a 1.7 percent annualized rate. However, the PPI inflation rate contracted 2.9 percent in July, below the previous 2.1 percent rate of contraction and missing expectations of a 2.5 percent rate of contraction.

Later in the Asian session, Chinese industrial production data, retail sales, and fixed investment all missed estimates. Industrial production rose 9.2 percent in July, less than the both the previous rate of 9.8 percent annualized growth and below estimates of a 9.5 percent rise. Retail sales were also weak and fixed investment missed estimates slightly.

In other news around the markets:

The Bank of Japan kept rates at 0.1 percent as expected, as Japan's economy continues to grow ever so slowly.
The European Central Bank, in its Monthly Report, expects 2012 inflation to run at a 2.3 percent rate, 2013 inflation at a 1.7 percent, and 2014 at a 1.9 percent rate. The ECB sees growth in the Eurozone in 2013 and 2014 following a contraction in 2012.
Der Spiegel reports that the ECB is continuing a backdoor bailout of Greece to prevent it from defaulting in the near future. Greece has a bond redemption, all due to the ECB, on August 20.
S&P 500 futures flat.
EUR/USD down sharply to 1.2300.
Spanish 10-year bond yield rose to 6.817 percent, 2-year bond yield rose to 3.895 percent.
Italy 10-year bond yield fell to 5.878 percent, 2-year bond yield rose to 3.299 percent.
Gold flat.

Asian shares rose overnight, despite the mixed data in China. Some believe that the slowing inflation signals further easing policies are imminent by China, and so that could have supported risk sentiment. The Korean Kospi rose 1.96 percent and the Nikkei rose 1.1 percent while Chinese shares rose 0.61 percent. In Europe, most domestic indexes remained near flat, with the German DAX falling the most, down 0.47 percent, one day after Germany was maintained at AAA by Fitch. However, Fitch warned that further bailouts could jeopardize its AAA. Italian shares were also weak in early trading.

WTI Crude futures rose 0.31 percent to $93.64 per barrel following a large drop in crude inventories reported Wednesday. Brent Crude futures also rose 0.4 percent to $112.95 per barrel. Copper and gold futures were effectively unchanged and silver futures fell 0.21 percent to $28.015 per ounce.

The euro was weak across the board in early Thursday trading, as the EUR/USD dropped near 1.23 and the EUR/JPY dropped below 96.50. Also, the EUR/AUD traded back near record lows at 1.1639. The dollar's strength against the euro boosted the dollar index, as the index rose 0.19 percent. The U.S. dollar was weak against the Yen but was strong against the other major currencies that make up the dollar index including the Aussie dollar, which retreated from cycle highs against the greenback.

News Corp (NASDAQ: NWSA) reported Q2 earnings that were mostly in line with analyst estimates, however revenue fell short and the stock sold off after hours. Disney (NYSE: DIS) beat earnings estimates but missed on revenue and Macy's (NYSE: M) raised its guidance for the rest of the year. Notable companies reporting earnings Thursday include:

Fusion IO (NYSE: FIO) is expected to report Q2 EPS of $0.04 vs. $0.015 a year ago.
Kohl's Corp. (NYSE: KSS) is expected to report Q2 EPS of $0.96 vs. $1.08 a year ago.
Randgold Resources (NASDAQ: GOLD) is expected to report Q2 EPS of $1.25 vs. $1.22 a year ago.
Silver Wheaton (NYSE: SLW) is expected to report Q2 EPS of $0.43 vs. $0.42 a year ago.
Sun Life Financial (NYSE: SLF) is expected to report Q2 EPS of $0.61 vs. $0.73 a year ago.

Jobless claims and trade data mark a rather empty economic calendar today.

Good luck and good trading.

Tags: Bank of Japan, Der Spiegel, European Central Bank, Fitch Ratings, Germany

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