Benzinga Market Primer, Friday October 19
U.S. equity futures fell in early Friday trading as investors mark the 25th anniversary of Black Monday, when the Dow Jones Industrial Average lost 23 percent in one day. Also, European leaders continued their summit in Brussels and seem close to disbursing the next bailout tranche for Greece as well as making headway on the details of a banking union, despite the legal uncertainty surrounding it.
In other news around the markets:
- Chinese Foreign Direct Investment, a measure of foreign confidence in the Chinese economy, fell 6.8 percent as compared to a year ago. Economists were expecting a decline 3.5 percent following the previous 1.4 percent drop.
- Moody's kept the German banking sector on negative watch and could downgrade German banks if leaders do not act quickly enough to support the eurozone.
- Google (NASDAQ: GOOG) shares fell over nine percent in midday trading Thursday as the company's auditor released its earnings results early, showing that the company missed both analyst expectations of earnings and revenue.
- S&P 500 futures fell 1.7 points to 1,449.80.
- The EUR/USD was lower at 1.3054.
- Spanish 10-year government bond yields fell to 5.317 percent.
- Italian 10-year government bond yields fell to 4.741 percent.
- Gold 0.6 percent to $1,734.30 per ounce.
Asian shares were mostly lower following a slew of weak earnings from tech companies including Google, Microsoft (NASDAQ: MSFT), and Advanced Micro Devices (NYSE: AMD). The Japanese Nikkei Index did gain 0.22 percent while the Shanghai Composite Index fell 0.16 percent and the Hang Seng Index rose 0.15 percent. The Korean Kospi fell 0.78 percent and Australian shares rose 0.26 percent while shares in Thailand fell 0.24 percent.
European shares also showed weakness in early trade as leaders failed to come to concrete agreements surrounding a banking union, Greece, and Spain. The Spanish Ibex Index fell 1.08 percent and the Italian MIB Index fell 0.63 percent, showing weakness in the periphery. The German DAX also fell, dropping 0.3 percent, and the French CAC fell 0.17 percent while the U.K. FTSE 100 rose 0.02 percent.
Commodities were mixed early Friday as metal futures slumped. WTI Crude futures fell 0.04 percent to $92.06 per barrel and Brent Crude futures rose 0.38 percent to $112.85 per barrel. Copper futures slipped 1 percent to $370.55 on the weak Chinese investment data. Gold was lower and silver futures fell 1.41 percent to $32.405 per ounce.
Currency markets showed broad euro weakness in overnight trading, reversing the trend of the previous four trading sessions. The EUR/USD was lower and the dollar rose against the yen to 79.27. Overall, the Dollar Index rose 0.08 percent on strength against the euro and the yen, the two biggest components of the index. The dollar was weaker against the pound, the Canadian dollar, and the Swiss franc. The Aussie dollar was rather weak, highlighting the broad risk-off tone of markets, however it was stronger against the euro.
Stocks moving in the pre-market included:
- Chesapeake Energy (NYSE: CHK) rose 1.85 percent in the pre-market as natural gas prices rally and reports indicate there might be a shortage of natural gas rigs.
- Google (NASDAQ: GOOG) shares rallied 1.33 percent pre-market after dropping Thursday on weak earnings.
- Microsoft (NASDAQ: MSFT) fell 1.78 percent in the pre-market after the company reported weaker than expected earnings.
- Caterpillar (NYSE: CAT) fell 0.61 percent pre-market as Barclays (NYSE: BCS) cuts its price target on the stock to $114 from $116.
There are several notable companies reporting earnings Thursday, including:
- Air Products and Chemicals (NYSE: APD) is expected to report fourth quarter EPS of $1.43 vs. $1.51 a year ago.
- Edwards Lifesciences (NYSE: EW) is expected to report third quarter EPS of $0.57 vs. $0.38 a year ago.
- General Electric (NYSE: GE) is expected to report third quarter EPS of $0.36 vs. $0.31 a year ago.
- Honeywell (NYSE: HON) is expected to report third quarter EPS of $1.14 vs. $1.10 a year ago.
- McDonald's (NYSE: MCD) is expected to report third quarter EPS of $1.48 vs. $1.45 a year ago.
- Schlumberger (NYSE: SLB) is expected to report third quarter EPS of $1.07 vs. $0.98 a year ago.
On the economic calendar Friday, existing home sales are the only relevant data release in the U.S. Canadian CPI data is also due out, which can affect U.S. markets if the number is significantly different than expectations.
Good luck and good trading.
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