Benzinga Market Primer, Monday October 8
U.S. equity futures fell in early Monday trading as the World Bank slashed growth forecasts for Asian nations including China. The World Bank cut its estimates for Chinese growth in 2012 to 7.7 percent annualized GDP growth from 8.2 percent previously and cut its 2013 GDP growth estimate to 8.1 percent from 8.6 percent previously. Also, the World Bank said that downside risks to Chinese growth are more pronounced than investors currently believe.
In other news around the markets:
- Eurozone finance ministers meet once again in order to find solution for the fiscal situations in both Spain and Greece. Spanish Prime Minister Mariano Rajoy is set to join them Wednesday and some leaders are pushing Spain to submit for a bailout as soon as possible and not risk drawing the process out even further.
- A new survey from Spanish newspaper El Pais points to increased support for protesters in the nation, as 77 percent of respondents now support the protests.
- The IMF is set to release its revised global growth estimates Tuesday, with economists expecting downward revisions to growth from the fund. The move is expected to reflect that of the World Bank.
- S&P 500 futures fell five points to 1,450.50.
- The EUR/USD was was lower at 1.2966.
- Spanish 10-year government bond yields fell to 5.641 percent.
- Italian 10-year government bond yields fell to 5.049 percent.
- Gold fell 0.47 percent to $1,772.40 per ounce.
Asian shares fell overnight following the cut in growth forecasts except for the Japanese Nikkei, which bucked the proverbial trend and rose. The benchmark Japanese index rose 0.44 percent while the Hang Seng Index fell 0.89 percent in Hong Kong. China's Shanghai Composite Index fell 0.56 percent and the Korean Kospi fell 0.67 percent while Australian shares fell 0.28 percent. European shares also fell on global growth fears, led lower by Italian and German shares. Italy's MIB Index fell 1.58 percent and Spain's Ibex fell 0.89 percent. Also, the German DAX fell 1.32 percent despite Germany reporting better than expected trade data overnight and France's CAC 40 fell 1.2 percent.
Commodities were weaker in early Monday trade, sliding on growth fears along with other risk assets. WTI Crude futures slipped 1.13 percent to $88.86 per barrel and Brent Crude futures fell 0.55 percent to $111.40 per barrel. Copper futures fell 1.43 percent to $372.40 per pound as slower growth leads to less demand for industrial metals. Gold was lower and silver futures slid 1.74 percent to $33.97 per ounce..
Currency markets were in risk-off mode overnight as investors bought the yen and the dollar and sold riskier currencies. The EUR/USD was lower overnight and the dollar fell against the yen in a clear risk-off environment. The Dollar Index rose 0.29 percent overall, helped by strength against the euro, the pound, and the Swedish krona and hurt by the yen. Of note for traders was the Aussie dollar, which has had a notable bid across all major pairs over the past few hours. The AUD/USD cross has risen from lows near 1.0150 to the current 1.0175 and the EUR/AUD fell to 1.2740 after touching 1.28.
Stocks moving in the pre-market included United Parcel Services (NYSE: UPS) rose 0.9 percent in the pre-market. Elsewhere, Sprint (NYSE: S) shares fell 1.56 percent pre-market as investors speculate that the company is set to enter into a bidding war for MetroPCS (NYSE: PCS) with T-Mobile, owned by Deutsche Telekom. Lastly, Peabody Energy (NYSE: BTU) slipped 0.63 percent in the pre-market.
Notable companies reporting earnings Monday include:
- Healthcare Services Group (NASDAQ: HCSG) is expected to report quarterly EPS of $0.17 vs. $0.15 per share a year ago.
On the economic calendar, it's Columbus Day in the U.S. so all economic data releases scheduled for Monday are delayed at least one day. Bond markets and banks are closed while stock markets remain open. There is a French auction of bills due out at 9:00 am EST during trading, with France looking to sell 3-, 6-, and 12-month bills at auction.
Good luck and good trading.
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