Benzinga Market Primer, Thursday August 2
U.S. equity futures rose ahead of the interest rate decisions from both the Bank of England and the European Central Bank. Also, the People's Bank of China reported that it has not cut rates this month as some had expected. Recall that before the previous two Bank of England decisions, China had cut rates. The Bank of England decision is due out at 7:00 am EST with Governor Mervyn King's press conference following. The European Central Bank is expected to release its interest rate decision at 7:45 am EST with President Mario Draghi's press conference following at 8:30 am.
In other news around the markets:
- Spain auctioned 3.13 billion euros of 2-, 4-, and 10-year bonds Thursday to mixed results. Spain sold 1.06 billion euros of 2-year bonds to yield 4.774 percent from 3.592 percent at the last auction, 1.024 billion euros of 4-year bonds to yield 5.971 percent from 5.536 percent, and 1.046 billion euros of 10-year bonds to yield 6.647 percent from 6.43 percent.
- Eurozone PPI fell 0.5 percent in July, the same drop as in June and less than economist expectations.
- California warns that its tax revenue could miss estimates due to the drop in Facebook (NASDAQ: FB) shares.
- J.P. Morgan (NYSE: JPM) estimates that revenue losses at Knight Capital (NYSE: KCG) could total as much as $170 million following the market issues Wednesday.
- S&P 500 futures rose 6.10 points to 1,376.50.
- EUR/USD slightly higher to 1.2285.
- Spanish 10-year bond yield 6.646 percent, Spanish 2-year bond yield 4.816 percent.
- Italian 10-year yield 5.818 percent, 2-year yield 3.469 percent.
- Gold rose $2.60 to $1,609.90.
Asian shares remained mixed for a second consecutive session following some decent economic reports in Australia. The S&P ASX 200 Index rose 0.16 percent following some strong data on retail sales and trade data. However, China's Shanghai Composite Index fell 0.57 percent and Korean shares fell 0.56 percent. European shares are higher across the continent as markets await the central bank decisions. British, German, French, Greek, Spanish, and Italian indexes all rose at least 0.24 percent.
Commodities also gained on hopes of further easing efforts. WTI Crude futures rose 0.66 percent to $89.50 per barrel and Brent Crude futures rose 0.99 percent to $107.01. Gold futures rose $2.60 to $1,609.90 per ounce and silver futures fell slightly by 0.04 percent to $27.525 per ounce. Copper futures also fell 0.04 percent to $337.35 per pound.
Dollar weakness reigns in currencies early Thursday, as the dollar index fell 0.26 percent. The U.S. dollar was weak against every major pair aside from the pound ahead of the Bank of England. Of note is the EUR/CHF cross probing the top end of a multi-month range near 1.2020, above the peg of 1.20. Also, the EUR/AUD resumed its downtrend after rising following the weaker than expected Chinese manufacturing data late Tuesday night.
Earnings to watch Thursday include:
- Fortress Investment Group (NYSE: FIG) is expected to report Q2 EPS of $0.09.
- Lear Corp. (NYSE: LEA) is expected to report Q2 EPS of $1.29.
- DirecTV (NASDAQ: DTV) is expected to report Q2 EPS of $1.14.
- Kraft (NASDAQ: KFT) is expected to report Q2 EPS of $0.66.
- LinkedIn (NASDAQ: LNKD) is expected to report Q2 EPS of $0.16.
Aside from the central banks, the economic calendar is still rather full. Initial jobless claims and factory orders data are due out Thursday. Also, the EIA is expected to report on natural gas inventories. However, the central banks will trump the docket and should set the tone for the markets during Thursday's trading session.
Good luck and good trading.