Benzinga Market Primer, Wednesday, October 24
U.S. equity futures rose in early Wednesday trading following a strong sell-off on Wall Street Tuesday, as a result from German business confidence that missed expectations and new data on the Chinese economy seemed to confirm that China has bottomed. The HSBC China Flash Manufacturing PMI beat expectations but the IFO German Business Confidence survey, highly correlated with GDP growth, fell in the prior month.
In other news around the markets:
- Comments from Bank of England Governor Mervyn King both Tuesday and overnight indicate that the BoE stands ready to ease policy further should the economy not pick up soon. Although the U.K. economy technically emerged from recession last quarter, the boost from the Olympics skewed the data and underlying growth may not be as strong as headline data showed.
- Greek debt rose to 150.5 percent of GDP in the second quarter, up from 136.9 percent in the first quarter and well above the Troika target of 120 percent of GDP.
- Manufacturing PMI's released in both France and Germany showed a faster rate of contraction of the countries' manufacturing sectors in September.
- S&P 500 futures rose 3.1 points to 1,409.90.
- The EUR/USD was lower at 1.2932.
- Spanish 10-year government bond yields rose to 5.666 percent.
- Italian 10-year government bond yields rose to 4.896 percent.
- Gold bounced 0.05 percent to $1,710.20 per ounce.
Asian shares were mixed overnight with the better-than-expected PMI data in China boosting Chinese shares. The Shanghai Composite Index rose 0.07 percent and the off-shore stocks traded in Hong Kong, as tracked by the Hang Seng Index, rose 0.31 percent. Meanwhile, the Japanese Nikkei slipped 0.67 percent and the Korean Kospi also slipped 0.67 percent while Australian shares fell 0.82 percent as inflation data decreased hopes of further rate cuts from the RBA.
European shares were mostly higher in choppy trading as shares opened higher, fell, and then rebounded later in the session. The Spanish Ibex Index rose 0.12 percent despite the Italian MIB Index fell 0.04 percent. Core stocks rose as the German DAX rose 0.02 percent and the French CAC rose 0.26 percent despite Peugeot trading at all-time lows following its agreement to take a loan from the French government.
Commodities were stronger in early Wednesday trading following weakness Tuesday. WTI Crude futures rose 0.22 percent to $86.86 per barrel and Brent Crude futures rose 0.55 percent to $108.85 per barrel. Copper futures were stronger in early trade on the China data, rising 0.17 percent to $357.55 per pound. Gold was higher and silver futures rose 0.45 percent to $31.935 per ounce.
Currency markets continued to show dollar strength in overnight trade as the euro slumped and the yen could not rally. The EUR/USD was significantly lower and the dollar rose against the yen in overnight trade. Overall, the Dollar Index rose 0.13 percent on strength against the euro, the Swedish krona, and the Swiss franc. The Aussie dollar was notably strong overnight as inflation in the country rose faster than expected and Chinese data was stronger than expected.
Stocks moving in the pre-market included:
- Dow Chemical (NYSE: DOW) rose 0.88 percent pre-market as as the company announced new cost-cutting measures including job cuts and plant closures.
- Norfolk Southern (NYSE: NSC) shares fell 2.32 percent pre-market following weak earnings as shipments of coal plummeted in the prior quarter.
- Apple (NASDAQ: AAPL) shares rose 0.61 percent pre-market following the announcement of the iPad 4 and iPad Mini.
- Microsoft (NASDAQ: MSFT) shares rose 0.08 percent pre-market as the company was charged by the EU with not complying with a 2009 settlement.
There are several notable companies reporting earnings Wednesday, including:
- AT&T (NYSE: T) is expected to report third quarter EPS of $0.60 vs. $0.61 a year ago.
- Boeing (NYSE: BA) is expected to report third quarter EPS of $1.12 vs. $1.46 a year ago.
- Lockheed Martin (NYSE: LMT) is expected to report third quarter EPS of $1.85 vs. $1.99 a year ago.
- O'Reily Automotive (NASDAQ: ORLY) is expected to report third quarter EPS of $1.27 vs. $1.10 a year ago.
- Southern Copper (NYSE: SCCO) is expected to report third quarter EPS of $0.59 vs. $0.78 a year ago.
- Wynn Resorts (NASDAQ: WYNN) is expected to report third quarter EPS of $1.34 vs. $1.05 a year ago.
On the economic calendar Wednesday, the FOMC interest rate decision is due out, although economists expect no change in the Fed's policy from the last meeting. Also, MBA Purchase Applications and New Home Sales will give new data on the state of the housing market in the U.S. In addition, the U.S. PMI is due out and the EIA Petroleum Status Report is set to be released.
Good luck and good trading.
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