Benzinga Market Primer, Friday August 31
U.S. equity futures rose strongly early Friday as European leaders hinted at being closer to an ECB bond-buying plan while markets anticipated Federal Reserve Chairman Ben Bernanke's speech at Jackson Hole. The jump in European stocks was seen as German Chancellor Angela Merkel hinted that she was advising Italy and Spain to wait to request a bailout until all of the stability mechanisms have been ratified.
In other news around the markets:
- The Bank of England's Posen said at Jackson Hole that the Fed has room to ease policy further and that the ECB should be buying bonds without capping yields. He also hinted that a round of globally coordinated easing may be coming shortly.
- Benoit Coeure of the ECB has indicated that the ECB is evaluating multiple ways of intervening in markets without violating its mandate.
- Spanish and German retail sales declined in July, falling 0.9 percent in Germany and 7.3 percent in Spain.
- Inflation continued to increase in the Eurozone in August largely due to gains in commodities. CPI Inflation rose 3.2 percent on an annualized basis, higher than the expected 3.1 percent.
- S&P 500 futures rose 8.9 points to 1,406.0.
- EUR/USD rose to 1.2582.
- Spanish 10-year bond yields rose to 6.699 percent.
- Italian 10-year bond yields rose to 5.796 percent.
- Gold rose to $1,661.50 per ounce.
Overnight, Asian shares were mixed with more weakness seen than strength. The Japanese Nikkei Index fell 1.6 percent and Chinese shares fell 0.25 percent ahead of the release of the official PMI number. Australian shares rose modestly and shares in Singapore rallied as S&P maintained its bond rating at AAA. European shares were higher, with the move higher beginning with comments from Angela Merkel and other leaders who hinted at more stimulus. Italian shares rose nearly 2 percent and Spanish shares rose 1.7 percent while the German DAX rose 1.2 percent and the French CAC 40 rose 1.4 percent.
Commodities were modestly stronger in early trade, as WTI Crude futures rose 0.75 percent to $95.33 per barrel and Brent Crude futures rose 0.66 percent to $113.39 per barrel. Copper futures also rose in early trading by 0.42 percent to $346.15 per pound of copper. Gold rose and silver followed suit.
The dollar was very weak Friday morning on hopes of new rounds of easing expected by markets and renewed hopes that an outright collapse of the euro will be avoided. The Dollar Index fell 0.51 percent on notable weakness against the euro, the pound, and the nordic currencies. Moreover, weakness in dollars was apparent as the Aussie and Canadian dollars were also weak against the euro.
Splunk (NASDAQ: SPLK) and Omnivision (NASDAQ: OVTI) shares both jumped Thursday after they reported earnings that beat analyst expectations. Also, SAIC (NYSE: SAI) shares jumped as the company plans to split into two companies. On Friday, Frontline (NYSE: FRO) is expected to report a Q2 loss of $0.05 vs. $0.30 a year ago.
The Chicago PMI is set to be released at 9:45 am eastern Friday morning, however the economic calendar is overshadowed by Bernanke's speech at 10:00 am ET at Jackson Hole. Also, at 9:00 pm ET, the official Chinese PMI is due out and will surely set the tone for the start of next week's trading.
Good luck and good trading.
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