Benzinga Market Primer, Wednesday, November 14
Futures rise despite fiscal cliff fears.
U.S. equity futures rose on early Wednesday trading despite renewed fears over the fiscal cliff. Investors may have become hopeful of a deal in Washington when yesterday, the White House announced that President Obama is set to speak today on the subject. The press conference is set for 1:30 pm eastern time.
In other news around the markets:
- The Economist crunched the numbers and showed that, by giving Greece another two years to reach its bailout targets, the country will need approximately another 32 billion euros. The magazine says that this itself could lead to Greece to need a third bailout.
- Spanish banks had to borrow 367 billion euros from the European Central Bank in October. The figure is less than the amount borrowed in September, some 400 billion euros, however the figure is still very high.
- The Bank of England's Inflation Report cut its growth forecast for the country from 2.0 percent to 1.9 percent in two years. Also, the Bank increased its inflation forecast for the same period to 1.8 percent from 1.7 percent.
- S&P 500 futures rose 6.7 points to 1,377.60.
- The EUR/USD was higher at 1.2747.
- Spanish 10-year government bond yields fell to 5.838 percent.
- Italian 10-year government bond yields fell to 4.954 percent.
- Gold futures fell 0.04 percent to $ 1,724.10 per ounce.
Asian shares were modestly higher overnight on hopes that the U.S. will reach a deal on the fiscal cliff. The Japanese Nikkei Index rose 0.04 percent and the Shanghai Composite Index rose 0.37 percent while the Hang Seng Index rose 1.2 percent in Hong Kong trading. Also, the Korean Kospi rose 0.23 percent and Australian shares rose 0.2 percent.
European shares were mostly lower in early trading on Greek and Spanish fears. Spain's Ibex Index did rise 0.27 percent but was well off the highs following the bank data and Italy's MIB Index fell 0.16 percent. Meanwhile, the German DAX fell 0.18 percent and the French CAC dropped 0.27 percent and U.K. shares fell 0.55 percent following the BoE's change in forecasts.
Commodities were mostly higher in overnight trade led by the energy complex as gold lagged. WTI Crude futures rose 0.43 percent to $85.75 per barrel and Brent Crude futures rose 0.5 percent to $108.80 per barrel. Copper futures rose 0.36 percent to $348.35 on hopes of a fiscal cliff deal, which would avoid a sharp contraction in the economy and maintain end demand. Gold was lower and silver futures rose 0.06 percent to $32.51 per ounce.
Currency markets were showing a dollar bearish bias in overnight trade as the greenback fell against a host of other currencies save for the yen. The EUR/USD was higher at 1.2747 and the dollar rose against the yen to 79.93. Overall, the Dollar Index fell to 80.99, down 0.12 percent overnight on weakness against the euro, the Swiss franc, and the Swedish krone. In addition, the Aussie dollar rose against the greenback and the EUR/AUD cross bounced back above 1.22.
Stocks moving in the pre-market included:
- Home Depot (NYSE: HD) shares rose 0.9 percent pre-market following a 3.63 percent gain Tuesday on stronger than expected adjusted earnings.
- Cisco (NASDAQ: CSCO) shares rose 7.89 percent pre-market as the company reported earnings that beat estimates and CEO and Chairman John Chambers looks set to stay with the company longer than expected.
- JP Morgan Chase (NYSE: JPM) shares rose 0.55 percent as relaxed fears on the fiscal cliff and optimism on the buyback plan boosted shares.
- Microsoft (NASDAQ: MSFT) shares rose 1.33 percent after falling more than 3 percent Tuesday following the departure of its head of software.
Notable companies expected to report earnings Wednesday include:
- Abercrombie & Fitch (NYSE: ANF) is expected to report third quarter EPS of $0.59 vs. $0.57 a year ago.
- Interoil Corporation (NYSE: IOC) is expected to report third quarter EPS of $0.12 vs. a loss of $0.41 a share a year ago.
- Hot Topic (NASDAQ: HOTT) is expected to report third quarter EPS of $0.09 vs. $0.07 a year ago.
- Limited Brands (NYSE: LTD) is expected to report third quarter EPS of $0.24 vs. $0.25 a year ago.
- Netapp (NASDAQ: NTAP) is expected to report second quarter EPS of $0.48 vs. $0.63 a year ago.
- Williams Sonoma (NYSE: WSM) is expected to report third quarter EPS of $0.45 vs. $0.41 a year ago.
On the economics calendar Wednesday, MBA Mortgage Applications, the Producer Price Index, and Retail Sales are due out. Later business, inventories are expected to be released and the Treasury is set to issue 4- and 52-week bills. At 2:00 pm, the FOMC minutes from the October meeting are due out.
Good luck and good trading.
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