Benzinga Market Primer: Thursday, April 4
Futures Higher on BoJ Easing, Eyeing BoE, ECB
U.S. equity futures rose on new rounds of easing from the Bank of Japan in hopes that continued and increased central bank stimulus can continue to prop up the global economy.
The BoJ is to increase purchases to seven trillion yen per month, or about $73.7 billion per month, switch its policy to targeting to expand the monetary base from lowering overnight rates, double its holdings of JGBs in two years and suspend the bank note rule, allowing additional easing. The BoJ expects to achieve the two percent inflation goal in two years.
In other news around the markets:
- Spain sold 4.3 billion euros of 3-, 5-, and 8-year bonds when it expected to sell only 3-4 billion euros of bonds. Yields were slightly higher than the previous auction in the shorter maturities but the 8-year auction was the strongest.
- The Eurozone Services PMI dropped to 46.4 in March from 46.5 in February on expectations of a reading of 46.5. Weakness in Germany and France weighed while Italy and Spain's services PMIs were slightly stronger than expected.
- The British services PMI jumped to 52.4 in March from 51.8 in February when economists were expecting a decline to 51.5.
- S&P 500 futures gained 7.1 points to 1,556.30.
- The EUR/USD was lower at 1.2799.
- Spanish 10-year government bond yields fell to 4.83 percent from 4.9 percent.
- Italian 10-year government bond yields fell to 4.52 percent from 4.59 percent.
- Gold declined 0.46 percent to $1,545.70 per ounce, briefly touching a low of $1,540.00, the lowest since May of 2011.
Asian shares were mostly lower save for Japan on fears of a North Korean nuclear threat. The Japanese Nikkei spiked 2.2 percent as the Shanghai Composite Index and the Hang Seng Index were closed. Also, the Korean Kospi declined 1.2 percent and Australian shares fell 0.89 percent.
European shares were mostly higher ahead of interest rate decisions and policy statements from the Bank of England and the European Central Bank. The Spanish Ibex Index rose 1.51 percent following the strong debt auction and the stronger than expected services PMI and the Italian FTSE MIB Index gained 1.48 percent on the services PMI. Meanwhile, the German DAX rose 0.39 percent and the French CAC gained 0.74 percent while U.K. shares slipped 0.08 percent.
Commodities were once again laggards overnight as most major commodities traded lower. WTI Crude futures slid further to $94.40 per barrel and Brent Crude futures rose 0.23 percent to $107.29 per barrel. Copper futures slid 0.3 percent to $332.30 as the bearish sentiment in copper continues to reign. Gold was sharply lower and silver futures were flat at $28.62 per ounce.
Currency markets were in flux with the yen absolutely tanking overnight following the massive easing moves from the Bank of Japan. The EUR/USD was lower at 1.2799 and the dollar strengthened against the yen to 95.43, a gain of 2.57 percent. Overall, the Dollar Index gained a whopping 0.68 percent on strength against the yen, the euro, the pound, the Swiss franc, and the Canadian dollar. Notably, the Australian dollar reversed recent strength against the greenback overnight and the yen was weak across the board.
Stocks moving in the pre-market included:
- Sarepta Therapeutics (NASDAQ: SRPT) shares rose 1.53 percent pre-market following a new rating at Baird of outperform with a price target of $63, representing about 85 percent upside in the stock.
- Compuware (NASDAQ: CPWR) shares fell 2.99 percent after the company issued weak preliminary fourth quarter results.
- Zynga (NASDAQ: ZNGA) shares fell 2.55 percent pre-market after jumping Wednesday on news that the company is set to launch real money gaming in the U.K. this week.
- Facebook (NASDAQ: FB) shares gained 1.37 percent pre-market following positive comments from OTR Global.
Notable companies expected to report earnings Thursday include:
- Greenbrier Companies (NYSE: GBX) is expected to report second quarter EPS of $0.37 vs. $0.57 a year ago.
- RPM International (NYSE: RPM) is expected to report third quarter EPS of $0.06 vs. $0.05 a year ago.
On the economics calendar Thursday, the Bank of England and the European Central Bank are expected to release policy statements. Also, jobless claims are due out ahead of the Non-Farm Payrolls report tomorrow and speeches from Fed President Charles Evans and Chairman Ben Bernanke are expected. Overnight, Eurozone GDP and German Factory Orders should move markets.
Good luck and good trading.
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