Benzinga Market Primer, Thursday September 6
U.S. equity futures rose ahead of the ECB's interest rate decision and looming announcement of a bond buying plan to stabilize peripheral yields. For a full preview of the decision, read here. The Bank of England did remain on hold this morning, keeping its benchmark interest rate at 0.5 percent and keeping its Quantitative Easing program constant at 375 billion pounds.
In other news around the markets:
- Spain is preparing to request for a formal bailout as early as October, as long as the conditions are not much more strict than the conditions that are already in place. This would pave the way for the ECB to buy Spanish bonds.
- Eurozone Q2 GDP growth was confirmed at -0.2 percent quarter-over-quarter in the second quarter in the latest revision and the annualized rate of growth was revised down to -0.5 percent from -0.4 percent.
- Der Spiegel questioned whether the European Stability Mechanism, the permanent bailout fund, will actually work and wonders if the focus on the legal case against it is misguided.
- Saudi Arabia is expected to run out of oil by 2030, new reports shows.
- S&P 500 futures rose 8.1 points to 1,411.60.
- EUR/USD rose back above 1.26 to 1.2611.
- Spanish 10-year government bond yields fell to 6.229 percent.
- Italian 10-year government bond yields fell to 5.441 percent.
- Gold rose 1.04 percent to $1,711.60.
Overnight, Asian shares were largely higher on hopes of further central bank stimulus. The Japanese Nikkei rose 0.01 percent and the Shanghai Composite Index rose 0.7 percent. The Australian S&P-ASX Index was also strong, rising 0.8 percent, and the Korean Kospi rose 0.38 percent. In Europe, the Spanish Ibex rose 1.6 percent and the Italian MIB Index rose 1.36 percent as investors expected debt relief for the two nations to come from the ECB later this morning. Also, the German DAX rose 1.27 percent and the French CAC rose 0.99 percent as well.
Commodities were stronger in early U.S. trading as WTI Crude futures rose 1.17 percent to $96.48 per barrel. Also, Brent Crude futures have risen 0.72 percent to $113.90. Copper futures did fall in early trading, falling 0.47 percent to $351.25 per pound but gold rose and silver jumped 1.66 percent to $32.865 per ounce.
Currencies showed U.S. dollar weakness this morning, as the EUR/USD jumped back above 1.26 to 1.2611. The GBP/USD also jumped back above 1.59 and the EUR/CHF rose to multi-week highs above 1.2040 on rumors that the Swiss National Bank may hike the peg against the euro in the near future, likely to 1.30. The Aussie dollar climbed back above 1.02 against the U.S. dollar and the Canadian dollar was stronger against the U.S. dollar.
ECB President Mario Draghi is set to announce the bank's interest rate decision at 7:45 am eastern and then will most likely announce some bond buying program at the press conference later. Also, the ADP employment report and initial jobless claims will help investors get a better picture of the labor market ahead of Friday's Non-Farm Payroll report. Lastly, the ISM Non-Manufacturing Index is due out at 10:00 am.
Good luck and good trading.
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