Benzinga Market Primer,Wednesday November 28

Futures Drop on Fiscal Cliff Fears

U.S. equity futures fell in pre-market trading as traders renewed fears over the fiscal cliff saw stocks skid Tuesday and futures continue to move lower overnight. Comments from Senate Majority Leader Harry Reid Tuesday that Congressional leaders were not close to a deal spooked investors and brought back fears that had receded over the past 7 trading days.

Top News

In other news around the markets:

• Spanish banking group Bankia had its shares halted in Madrid overnight as the company is set to receive approximately 40 billion euros in additional financing from the government, which had previously been announced earlier this week.


• ArcelorMittal MT shares fell 2.32 percent in New York Tuesday as French President Francois Hollande threatened to nationalize the company.


• It appears likely that newly nominated Bank of England Governor Mark Carney will be much more inventive in monetary policy than his predecessor Mervyn King according to new reports, as internal Fed communications showed that Chairman Ben Bernanke took some policy ideas from the former Bank of Canada chief.


• S&P 500 futures 2.1 points to 1,395.3.


• The EUR/USD was was lower at 1.2927.


• Spanish 10-year government bond yields fell to 5.443 percent.


• Italian 10-year government bond yields fell to. 4.661 percent.


• Gold fell 0.06 percent to $1,743.70 per ounce.

Asian Markets

Asian shares were lower overnight as fears of U.S. leaders not being near a deal over the fiscal cliff created a risk-off tone broadly. The Japanese Nikkei Index fell 1.22 percent and the Shanghai Composite Index fell 0.89 percent while the Hang Seng Index fell 0.62 percent. The Shanghai Composite Index is now near the 2009 lows. In addition, the Korean Kospi dropped 0.65 percent and Australian shares fell 0.21 percent.

European Markets

European shares were also lower on fiscal cliff fears and also on doubts over the newly reached Greek aid deal. The Spanish Ibex Index fell 0.83 percent and the Italian MIB Index fell 0.15 percent in early trading. Meanwhile, the German DAX fell 0.09 percent and the French CAC 40 fell 0.28 percent while U.K. stocks dropped 0.23 percent.

Commodities

Commodities were lower overnight for similar reasons as other risk assets. WTI Crude futures fell 0.3 percent to $86.92 per barrel and Brent Crude futures dropped 0.24 percent to $109.61 per barrel. Copper futures slipped 0.18 percent to $354.45 per pound on global growth fears. Gold was lower and silver futures dropped 0.06 percent to $34.06 per ounce.

Currencies

Currency markets saw growth currencies actually outperform overnight, bucking the risk-off trend seen in other markets, as developed currencies fell. The EUR/USD was lower at 1.2927 and the dollar fell against the yen to 81.86. Overall, the Dollar Index was flat at 80.39 on strength against the euro, the pound, and the Swiss franc and weakness against the yen. In addition, the Aussie dollar gained against the greenback, the euro, and the yen.

Pre-Market Movers

Stocks moving in the pre-market included:

• Freeport McMoRan Copper and Gold FCX shares rose 1.84 percent on renewed optimism that the company could beat already low earnings estimates in the current quarter.


• Time Warner Inc TWX shares fell 0.97 percent as the stock goes ex-dividend today.


• Caterpillar CAT shares fell 0.49 percent pre-market as investors feared that the global growth slowdown is starting to impact the company.


• Yum! Brands YUM shares fell 0.42 percent pre-market as the weakness in Chinese markets weighed on the company.

Earnings

The earnings calendar is rather light Wednesday. Notable companies expected to report earnings Wednesday include:

• Aeropostale ARO is expected to report third quarter EPS of $0.29 vs. $0.30 a year ago.


• American Eagle Outfitters AEO is expected to report third quarter EPS of $0.39 vs. $0.27 a year ago.


• Express EXPR is expected to report third quarter EPS of $0.17 vs. $0.37 a year ago.


• The Fresh Market TFM is expected to report third quarter EPS of $0.26 vs $0.19 a year ago.

Economics

On the economics calendar Wednesday, MBA Purchase Applications and New Home Sales are due out followed by EIA Petroleum Report and the Beige Book. In addition, the Sandra Pinalto of the Cleveland Fed is set to speak and the Treasury is expected to auction 5-year notes.

Good luck and good trading.