Benzinga Market Primer, Thursday September 27
U.S. equity futures rose in early Thursday trading as rumors of a new round of stimulus in China reversed investor sentiment from the past few days, sending markets higher. Rumors circulated that Chinese officials were planning a massive stimulus plan and also were going to announce new measures to reform the IPO process sent Chinese shares higher, boosting investor sentiment and sending risk assets higher.
In other news around the markets:
- Chinese industrial profits fell 6.2 percent in August as compared to a year ago and have fallen 3.1 percent year-to-date, highlighting the domestic and global slowdown.
- Spanish retail sales fell 2.1 percent in August as compared to the same month a year ago, a slower rate of contraction than economists had predicted. Also, it is slower than the 7.4 percent fall seen in July.
- Greek bank deposits fell 0.3 percent in August as compared to the month before and Spanish bank deposits fell 1.1 percent as capital flight continued to plague the crisis-stricken nations. Meanwhile, Italian bank deposits rose 0.1 percent.
- Italy sold 10-year bonds at 5.24 percent, less than the previous auction's 5.82 percent.
- The U.K. economy contracted less than previously estimated in the second quarter, as final second quarter GDP contracted 0.4 percent quarter-over-quarter, less than the previous estimate of a 0.5 percent contraction.
- S&P 500 futures rose 5.4 points to 1,432.3.
- The EUR/USD was lower at 1.2856.
- Spanish 10-year government bond yields fell to 6.042 percent after rising as high as 6.108 percent.
- Italian 10-year government bond yields rose to 5.227 percent.
- Gold rose 0.29 percent to $1,758.60 per ounce.
Overnight, Asian shares rose, led by Chinese shares, as the news of stimulus and IPO reform boosted shares. The Shanghai Composite Index jumped 2.6 percent as the Japanese Nikkei rose 0.48 percent and the Hang Seng Index rose 1.14 percent. Australian and Korean shares also closed higher. European shares rose as well despite Spain's Ibex continuing its multi-day decline. The Ibex fell 0.6 percent as Italy's MIB Index rose 0.04 percent. Core stocks were stronger, as the German DAX rose 0.37 percent and the French CAC rose 0.45 percent.
Commodities were higher in early Thursday trading, a reversal of the trend seen most of this week. WTI Crude futures rose 0.29 percent to $90.24 per barrel and Brent Crude futures rose 0.26 percent to $110.33 per barrel. Copper futures 0.42 percent on the China news to $372.55 per pound. Gold was higher and silver futures rose 0.4 percent to $34.15.
Currencies reversed broad moves from the beginning of the week in early trade, as the Aussie dollar rebounded. The EUR/USD was slightly lower and the dollar fell against the yen. Overall, the dollar index fell 0.03 percent as the pound and the Canadian dollar gained against the greenback. Also, the AUD/USD gained 25 pips and trades just shy of the 1.04 level and the EUR/AUD fell, conveying Aussie strength.
Stocks moving in the pre-market included Apple (NASDAQ: AAPL), which rose 0.24 percent in pre-market trading despite supplier Jabil Circuit (NYSE: JBL) reported weaker than expected earnings. Also, a new report found a flaw in the iPhone 5's camera, where pictures taken with certain light sources have a purple halo in the photo. Hewlett Packard (NYSE: HPQ) shares fell 1.46 percent, giving back some of Wednesday's 2.39 percent gain. FedEx (NYSE: FDX) also fell 0.46 percent in the pre-market.
Notable companies reporting earnings Tuesday include:
- Discover Financial (NYSE: DFS) is expected to report quarterly EPS of $1.03 vs. $1.18 a year ago.
- Micron Techology (NASDAQ: MU) is expected to report a quarterly loss $0.22 per share vs. a loss of $0.14 a year ago.
- Nike (NYSE: NKE) is expected to report quarterly EPS of $1.12 vs. $1.36 a year ago.
- Research in Motion (NASDAQ: RIMM) is expected to report a quarterly loss of $0.47 per share vs. $0.80 profit per share a year ago.
On the economic calendar, durable goods, U.S. GDP, and jobless claims are all due out at 8:30 am EST. Pending home sales data is set to be released at 10:00 am and the Richmond Fed Index is due out later. At 3:00 pm, the Department of Agriculture will release its crop report for the month, which will update investors on the status of crops and could affect commodity prices.
Good luck and good trading.
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