Benzinga Market Primer: Wednesday, April 3
Futures Higher On Strong Chinese Services Data
U.S. equity futures rallied in early pre-market trade following stronger than expected data on China's services sector. The official Non-Manufacturing PMI in China rose to 55.6 in March from 54.5 in February and the HSBC China Non-Manufacturing PMI rose to 54.3 in March from 52.1 in February. All in all, better data out of China is creating a slight risk-on environment in equities.
In other news around the markets:
- The Bank of Japan began its first policy meeting under its new leadership and Governor Kuroda is expected to launch new rounds of easing. Policy choices include abolishing the bank note rule, combining the asset purchase programs, and purchasing longer-dated JGB's in its programs.
- Eurozone inflation slowed to 1.7 percent in March from 1.8 percent in February and was in line with expectations. The cooling inflation does give the European Central Bank room to ease tomorrow should it want to do so.
- Reserve Bank of Australia chief Clenn Stevens was appointed to an additional three-year term at the bank following his successful time in his previous term.
- S&P 500 futures rose 2.7 points to 1,567.10.
- The EUR/USD was slightly higher at 1.2831.
- Spanish 10-year government bond yields fell to 4.9 percent from 4.94 percent.
- Italian 10-year government bond yields fell to 4.59 percent from 4.62 percent.
- Gold fell 0.53 percent to $1,570.30 per ounce.
Asian shares were mixed overnight as Japanese shares popped on hopes of additional easing coming from the BoJ meeting. The Japanese Nikkei Index rose 2.99 percent and the Shanghai Composite Index fell 0.11 percent while the Hang Send Index fell 0.14 percent. Also, the Korean Kospi fell 0.15 percent and Australian shares declined 0.56 percent.
European shares were mostly lower in early trade following the inflation data which showed a continued slowdown in the economy. The Spanish Ibex Index declined 0.38 percent and the Italian FTSE MIB Index fell 0.54 percent. Meanwhile, the German DAX declined 0.13 percent and the French CAC slipped 0.38 percent while U.K. shares fell 0.31 percent.
Commodities were significantly lower across the board overnight after Credit Suisse issued a note slashing its price forecasts for nearly all commodities on supply factors. WTI Crude futures slipped 0.39 percent to $96.90 per barrel and Brent Crude futures declined 0.43 percent to $110.29 per barrel. Copper futures slid 0.44 percent to $336.05 per pound. Gold was lower and silver futures dropped 0.73 percent to $27.10 per ounce.
Currency markets were rather quiet overnight once again as the yen resumed its sell-off and the Australian dollar continued to strengthen. The EUR/USD was slightly higher at 1.2831 and the dollar rose against the yen to 93.62. Overall, the Dollar Index slipped 0.02 percent on weakness against the euro, the pound, the Canadian dollar, and the Swiss franc. The Australian dollar was also notably strong in overnight trade, rising 0.25 percent against the greenback to 1.0476 and 0.43 percent to 98.0580 against the yen.
Stocks moving in the pre-market included:
- Cliffs Natural Resources (NYSE: CLF) shares rose 1.21 percent pre-market after analysts at J.P. Morgan released a note on the company indicating that shares could double in the next year. They rate the stock outperform.
- General Mills (NYSE: GIS) shares fell 0.84 percent pre-market in the wake of its downgrade at Morgan Stanley on Monday.
- IBM (NYSE: IBM) shares slipped 0.63 percent pre-market after the company won a new contract to build cloud computing systems for the Thai government owned telecom company CAT.
- Caterpillar (NYSE: CAT) shares fell 0.59 percent on fears that sales in China will slow as the manufacturing sector stagnates and also on fears that commodity prices are set to drop.
Notable companies expected to report earnings Wednesday include:
- ConAgra Foods (NYSE: CAG) is expected to report third quarter EPS of $0.57 vs. $0.51 a year ago.
- Monsanto (NYSE: MON) is expected to report second quarter EPS of $2.58 vs. $2.28 a year ago.
On the economics calendar Wednesday, the ADP Employment Report is due out and should give a good preview of Friday's Non-Farm Payroll Report and the ISM Non-Manufacturing Index is also expected. In addition, MBA Purchase Applications are expected and speeches from Fed members John Williams and James Bullard are expected as well. Overnight, the Bank of Japan decision is expected as well as Eurozone and British services PMI's and the BoE and ECB Interest Rate Decisions should all move markets.
Good luck and good trading.
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