Benzinga Market Primer, Monday, October 29
U.S. equity futures fell in early Monday trading as Hurricane Sandy forced the New York Stock Exchange and the NASDAQ Exchange to close due to weather for the first time in 27 years. The storm threatens the entire Eastern seaboard and will dump rain from Maine to Delaware.
In other news around the markets:
- Spanish retail sales fell 10.9 percent in September on an annualized basis, below last month's reading of a drop of 2.1 percent. The government blames the increase in the VAT for the large drop.
- The Bank of Spain is set to announce its bad bank program at 11:00 am eastern, similar to the type of program Ireland launched to save its banks. However, in the end, the program bankrupted Ireland.
- ECB Governor Ewald Nowotny spoke, stating that the ECB would not participate in any haircut of Greek debt, an idea which many think could help relieve the nation's debt burden.
- S&P 500 futures fell 7.6 points.
- The EUR/USD was lower at 1.2907.
- Spanish 10-year government bond yields rose to 5.638 percent.
- Italian 10-year government bond yields rose to 4.96 percent.
- Gold rose 0.03 percent to $1,712.40.
Asian shares were mostly lower in overnight trading as investors await the decision of the Bank of Japan on new easing measures. The Japanese Nikkei Index fell 0.04 percent and the Chinese Shanghai Composite Index fell 0.35 percent as the Hang Seng Index dropped 0.16 percent in Hong Kong. Also, the Korean Kospi closed flat and Australian shares rose 0.1 percent.
European shares were lower in early Monday trading as economic weakness in Spain and worries over Italy's debt frightened investors and sent shares lower across the continent. Spain's Ibex Index fell 0.46 percent and the Italian MIB Index fell 1.53 percent in Milan trading. The German DAX dropped 0.62 percent and the French CAC followed lower, losing 0.88 percent while U.K. shares lost 0.5 percent.
Commodities were mixed with a slight downward bias in overnight trading. WTI Crude futures fell 0.81 percent to $85.58 per barrel and Brent Crude futures fell 0.4 percent to $109.11, with the spread between them continuing to widen. Copper futures dropped 0.79 percent to $352.20 per pound. Gold was higher and silver futures fell 0.27 percent to $31.95 per ounce.
Currency markets had no real direction overnight as volumes were weak ahead of the landfall of Hurricane Sandy. The EUR/USD was lower and the dollar fell against the yen in a risk-off manner. However, the Aussie dollar also gained against many other currencies, but yen strength was the dominant trend in markets overnight in clear risk-off fashion. The USD/JPY slipped to 79.61 and the EUR/JPY fell to 102.79, approaching the crisis levels seen over the summer when the European debt crisis flared up.
There are several notable companies reporting earnings Monday, including:
- Baidu (NASDAQ: BIDU) is expected to report third quarter EPS of $1.29 vs. $0.84 a year ago.
- Flowserve (NYSE: FLS) is expected to report third quarter EPS of $2.05 vs. $1.92 a year ago.
- RealD (NYSE: RLD) is expected to report a third quarter loss of $0.07 per share vs. a profit of $0.33 a year ago.
- Red Robin Gourmet Bugers (NASDAQ: RRGB) is expected to report third quarter EPS of $0.16 vs. $0.24 a year ago.
On the economic calendar Monday, personal income and outlays data is due out as well as the Dallas Fed Manufacturing Index. However, all eyes will be on Friday's employment situation report, the last such report ahead of the elections. Also, the Treasury is set to auction 3- and 6-month bills and France is set to issue bills of the same maturity as well. Overnight Monday into Tuesday, investors should watch the Bank of Japan's interest rate decision and press conference, as economists and investors are looking for an increase in the Bank's easing policies. Also, Spanish GDP data is due out and ECB President Mario Draghi is set to speak.
Good luck and good trading.
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