Benzinga Market Primer, Wednesday September 5
U.S. equity futures slipped in early Wednesday trading as global growth fears sent shares lower around the globe. Weak PMI data in both China and the eurozone as well as a weak GDP report in Australia caused fears of a large global economic slowdown to resurface among investors. However, investors now await the ECB interest rate decision Thursday and also the press conference of President Mario Draghi in which he will hopefully outline further details of a bond buying plan.
In other news around the markets:
- Chinese HSBC Services PMI slipped to 52.0 in August from 53.1.
- German services PMI was in line with expectations but still showed contraction and French services PMI missed expectations in August and the composite Eurozone services PMI missed as well.
- Germany auctioned 10-year bonds at 1.42 percent, the same as the previous auction but with demand slipping.
- Australian GDP rose 0.6 percent quarter-over-quarter in the second quarter, below expectations and slower than the previous quarter's 1.4 percent rate of expansion.
- S&P 500 futures fell 4.8 points to 1,401.20.
- Spanish 10-year bond yields fell to 6.543 percent and 2-year bond yields rose to 3.14 percent.
- Italian 10-year bond yields fell to 5.622 percent and 2-year bond yields rose to 2.473 percent.
- Gold slipped 0.12 percent to $1,693.90.
Asian shares were weak across the board overnight following further signs that a hard landing could be coming in China. The Japanese Nikkei slipped 1.09 percent and the Korean Kospi slipped 1.74 percent on these fears and Chinese shares also fell 0.29 percent. The Hang Seng Index closed lower as well down 1.47 percent. In Europe, most domestic indexes were lower as Italy's MIB Index fell 0.59 percent and the British FTSE fell 0.4 percent. The German DAX was modestly higher by 0.34 percent and the French CAC slipped 0.14 percent.
Commodities were weak on global growth fears, as WTI Crude futures fell 0.17 percent to $95.14 per barrel and Brent Crude futures fell 0.3 percent to $113.84 per barrel. Copper futures fell 0.16 percent to $346.35 on further fears over both China's and Australia's economy and that the resource boom may be ending. Gold fell and silver followed, dropping 0.79 percent to $32.155 per ounce.
The Australian dollar slipped to a six-week low against the U.S. dollar early Wednesday following the weak data. The AUD/USD fell to 1.0189 after reaching 1.05 only a few weeks ago. The Aussie was also weak against the euro, as the EUR/AUD rose back above 1.23. The U.S. dollar was broadly stronger as the dollar index rose 0.23 percent on strength against the euro and the pound. The EUR/USD fell to 1.2553 and the GBP/USD fell to 1.5894.
Tuesday, Campbell's Soup (NYSE: CPB) released earnings that beat expectations and the company raised guidance for the full year. However, Fedex (NYSE: FDX) cut its full year guidance by more than 5 percent on fears that the global economy is slowing. Notable earnings releases for Wednesday include:
- H&R Block (NYSE: HRB) is expected to report a loss of $0.37 for the quarter.
- VeriFone Systems (NYSE: PAY) is expected to report EPS of $0.70 for the past quarter.
- Verint Systems (NASDAQ: VRNT) is expected to report EPS of $0.52 for the previous quarter.
The economic calendar Wednesday is rather empty as investors await the monthly employment report Friday. Investors will receive data on same store sales, productivity and costs, and the Redbook on Wednesday. Looking forwards, Thursday's docket is much more full, with data such as the ADP employment report due out and also the ISM Non-Manufacturing Index set to be released. All of this data builds up to the Non-Farm Payrolls Report Friday.
Good luck and good trading.
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