Benzinga Market Primer, Monday September 10
U.S. equity futures fell in early Monday trading as new reports showed that global growth continued to slow despite efforts from global central banks to stimulate the economy. Chinese trade and industrial output slipped in August and Japanese GDP growth for the second quarter was confirmed at half of economist expectations. Markets now look to the Federal Reserve this Thursday to see if the Fed decides to take further action on the weak global economy.
In other news around the markets:
- Chinese Industrial Productions slipped to 10.1 percent annualized growth in August from 10.3 percent prior on expectations of a 10.2 percent annualized rate, showing that growth continued to slow in August. Also, export and import growth both missed expectations as the global economy weakens.
- Moody's, commenting on the new ECB bond buying plan, says that there is little new in the plan and that there are a lot of uncertainties remaining to be sorted out, leading them to believe that the new plan is not a fix for the crisis.
- German leaders spoke openly in support of the Constitutional Court, and many expect the court to rule the Fiscal Pact and the European Stability Mechanism legal on Tuesday.
- The U.S. Treasury is set to sell a further $18 billion of AIG (NYSE: AIG) stock with the bailed out insurer buying up to $5 billion of the offering. The sale would decrease the government's stake to a minority stake, the first time since the bailout in 2008.
- S&P 500 futures fell 2.7 points to 1,435.50.
- EUR/USD slipped to 1.2786.
- Spanish 10-year government bond yields rose to 5.64 percent.
- Italian 10-year government bond yields rose to 5.196 percent.
- Gold slipped 0.33 percent to $1,734.80.
Overnight, Asian shares were mixed despite the weak economic data. The Japanese Nikkei slipped 0.03 percent and the Korean Kospi fell 0.25 percent as the Shanghai Composite Index rose 0.34 percent and the Hang Seng Index rose 0.13 percent. Some of the strength in China is from a report from Daiwa in which the firm believes that a Chinese rate cut will happen this week. European shares were mostly lower in early trading, the Spanish Ibex falling 0.48 percent and the Italian MIB Index slipping 0.35 percent. The French CAC 40 also fell 0.07 percent and the German DAX eked out a gain of 0.05 percent.
Commodities were mixed in early trading, as WTI Crude futures fell 0.05 percent to $96.37 and Brent Crude futures rose 0.52 percent to $114.84. Copper futures continued to strengthen despite the weak Chinese figures, rising 1.43 percent to $369.70. Gold slipped and silver followed suit.
Last week's theme in currencies was euro strength, as the euro rallied against the dollar nearly 300 pips. It is interesting to note that the euro strength from the July/August lows is not due to the fact that the euro is fixed with Draghi's plan, but rather the euro is rallying because it will continue to exist. The EUR/USD currently trades just below 1.28. Overall, the dollar index rose 0.07 percent as the yen slipped slightly and the Canadian dollar fell against the greenback.
Last week, Smith and Wesson (NASDAQ: SWHC) beat earnings expectations and the stock rose on the news. Monday, there are no notable earnings expected to be released as earnings season winds down.
The economic calendar is rather empty Monday, with the government set to auction 4-week, 3-month, and 6-month bills this morning. Otherwise, there is nothing else notable on the calendar.
Good luck and good trading.
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