Benzinga Market Primer, Monday July 23

Financial markets were in risk-off mode Monday morning with Spanish fears dominating the market. The seemingly endless stream of bad news out of Spain on Friday has spooked markets and the chances that Spain may need a full sovereign bailout increase. Spanish 10-year yields blew out for the second consecutive day, rising to 7.49 percent in early European trading. According to Bloomberg, the yield touched a high of 7.57 percent, a euro-era record for Spanish bonds.

In news around the market:

• The Troika is set to suspend Greek bailout payments until Greece can get back on track with the required reforms.
• The 30-year U.S. Treasury bond fell to a record low yield of 2.49 percent.
• Italian bond yields widened with Spanish ones, 10-year yields rising as high as 6.43 percent.
• Germany auctioned 12-month bills as a yield of negative 0.054 percent, well below the previous auction and showing the continued flight to safety and risk-off in the markets.
• S&P 500 futures fell 16 points to 1342.
• NASDAQ futures fell 34 to 2618.
• EUR/USD 1.2128 after trading below 1.21 in earlier trading.
• Gold fell 12 to $1,570.00.

Overnight, Asian shares plummeted on European fears and domestic indexes fell across the continent. The Hang Seng Index fell nearly 3 percent in Hong Kong trading and Chinese measured by the Shanghai Composite Index fell 1.26 percent. European shares could only be described as a blood-bath early Monday, as Spain's Ibex fell over 5 percent and Italy's MIB Index fell over 4.85 percent. Trading in both regions continued the risk-off trend on the European fears.

In commodities, futures were weak in early Monday trading on the risk-off environment. WTI Crude futures fell over 3 percent to $88.93 per barrel and Brent Crude futures fell just shy of 3 percent to $103.81 per barrel. Even corn and soybean futures, which have soared to new highs following the drought in the U.S., fell. Copper fell 2.75 percent to $335.35, even as inventories continue to fall. Falling inventories can be bullish for copper if demand picks up, as warehouses will need to buy more to meet demand. Gold prices fell and silver fell 1.42 percent to $26.92.

Following strong earnings from bell-weather companies last week, the earnings calendar heats up Monday. Nearly 200 companies are set to report earnings today. Notable companies reporting earnings include:

• Flowserve (NYSE: FLS) is expected to report Q2 earnings of $1.91 vs. $1.76 a year ago.
• Green Mountain Coffee Roasters (NASDAQ: GMCR) is expected to report Q3 EPS of $0.50 vs. $0.49 a year ago.
• McDonald's (NYSE: MCD) is expected to report Q2 EPS of $1.38 vs. $1.35 a year ago.
• Teva Pharmaceuticals (NYSE: TEVA) is expected to report Q2 EPS of $1.28 vs. $1.10 a year ago.
• Texas Instruments (NYSE: TXN) is expected to report Q2 earnings of $0.41 vs. $0.57 a year ago.

Currencies told one story Monday morning and that story is yen and dollar strength and euro weakness. The yen was stronger against nearly every major currency and the USD/JPY fell to 78.12, a recent low. The dollar was stronger against nearly every other major pair aside from the yen, as the EUR/USD fell below 1.21, a new two-year low, before rallying back above the 1.21 level. The euro was broadly weak, with the EUR/AUD falling to another record low before bouncing back to 1.7776 and the EUR/JPY falling to an 11-year low before bouncing back to 94.68.

Good luck and good trading.

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