Benzinga Market Primer for Wednesday, November 21
Futures Slip on Greek Woes
U.S. equity futures slipped in early Wednesday trade as the Troika of Greek lenders could not agree on a deal to cut Greek debt further. Specifically, the IMF refused to concede any further debt relief to Greece and conservative leaders such as German ministers were unwilling to front any more funds. The reports follow last week, where it appeared that leaders were close to a deal.
In other news around the markets:
- The minutes of the recent Bank of England's Monetary Policy Committee were released showing that the Bank is no where near expanding its asset purchase program nor cutting rates despite economic headwinds.
- Bank of Spain Governor Linde warned overnight that growth is key to meeting Spain's deficit targets. Linde warns that missing growth targets will lead to missed deficits and an increase in the fiscal crisis.
- Germany auctioned 10-year bonds at a low yield of 1.4 percent, below the 1.56 percent yield of the previous auction. The drop in yields follows France losing its Aaa rating with Moody's.
- S&P 500 futures fell 2.6 points to 1,383.70.
- The EUR/USD was lower at 1.2780.
- Spanish 10-year government bond yields fell to 5.872 percent.
- Italian 10-year government bond yields rose to 4.868 percent.
- Gold rose 0.16 percent to $1,726.40.
Asian shares were mixed overnight in what appeared to be a reversal of Tuesday's trading. The Japanese Nikkei Index rose 0.87 percent and the Shanghai Composite Index rose 1.07 percent while the Hang Seng Index rose 1.39 percent in Hong Kong trading. Also, the Korean Kospi fell 0.32 percent and Australian shares dropped 0.37 percent.
European shares were lower in early Wednesday trade as leaders failed to reach an agreement on Greece. The Spanish Ibex Index fell 0.35 percent and the Italian MIB Index fell 0.12 percent while Greek shares fell 0.07 percent. Meanwhile, the German DAX fell 0.01 percent and the French CAC fell 0.09 percent while U.K. shares dropped 0.11 percent.
Commodities were mixed overnight as positive growth signs in Asia were weighed on by fears over Greece's finances. WTI Crude futures rose 0.81 percent to $87.45 per barrel and Brent Crude futures rose 1.02 percent to $110.95 per barrel. Copper futures slipped 0.58 percent to $350.60 per pound, Gold was higher, and silver futures rose 0.39 percent to $33.06 per ounce.
The U.S. dollar reigned overnight in currency markets, as investors sold riskier currencies in exchange for the greenback, signaling a clear risk-off tone. The EUR/USD was lower at 1.2780 and the dollar gained against the yen to 82.28, a 0.76 percent gain. Overall, the Dollar Index rose 0.2 percent to 81.11 on strength against the yen, the euro, the Swiss franc and the pound. In addition, the Aussie dollar fell against the greenback but did rise against the euro and the yen.
Stocks moving in the pre-market included:
- Hewlett-Packard (NYSE: HPQ) shares rose 0.51 percent after dropping 11.95 percent Tuesday as the company reported earnings, lowered guidance, and wrote down nearly the entire purchase of software company Autonomy, claiming the company was fraudulently misrepresenting its financial statements prior to the purchase.
- News Corp (NASDAQ: NWSA) shares rose 0.46 percent in pre-market trading as the company agreed to purchase 49 percent of the YES Network, which carries Yankees games and other sports content.
- Nike (NYSE: NKE) shares fell 0.59 percent pre-market after dropping 0.74 percent as the company announced that it is selling its Cole Haan brand to Apax.
- Kripsy Kreme Doughnuts (NYSE: KKD) shares fell 0.54 percent after rising 23.47 percent Tuesday on strong earnings and guidance.
The earnings calendar is rather light Wednesday. Notable companies expected to report earnings Wednesday include:
- Deere and Company (NYSE: DE) is expected to report fourth quarter EPS of $1.88 vs. $1.62 a year ago.
On the economics calendar Wednesday, the data docket is rather full as some data normally released on Thursdays has been moved up due to the Thanksgiving holiday. MBA Purchase Applications and Initial Jobless Claims kick off the data, followed by the Markit Initial U.S. PMI and consumer sentiment. Also, the Conference Board's Leading Indicators are due out and the EIA Petroleum Status Report is expected. The Treasury is also set to issue benchmark 10-year TIPS.
Good luck and good trading.
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