Benzinga Market Primer, Friday November 30
Futures Flat on Budget Negotiations
U.S. equity futures were flat in pre-market trading Friday as Congressional leaders continue to search for a resolution to the fiscal cliff. Republican leaders rejected a plan submitted by President Obama, citing it as a rehash of former plans, but Treasury Secretary Geithner is said to be discussing a deal with leaders that encapsulates both tax increases and entitlement spending cuts.
In other news around the markets:
- Eurozone unemployment rose again in October to 11.7 percent from 11.6 percent. The reading was in line with economist expectations.
- The massive drop in gold futures Wednesday morning, according to Commerzbank, is to blame on a flash crash. According to the Financial Times, over 430,000 gold futures contracts traded Wednesday, equivalent to nearly half of the world's annual production of gold.
- The German Parliament, the Bundestag, approved the revised Greek aid bill Friday morning, clearing the way for the disbursement of the next set of funds.
- S&P 500 futures were flat at 1,415.7.
- The EUR/USD was was higher at 1.3005.
- Spanish 10-year government bond yields rose to 5.401 percent.
- Italian 10-year government bond yields fell to 4.561 percent.
- Gold rose 0.03 percent to $1,730.20 per ounce.
Asian shares were mostly higher overnight on hopes of a U.S. budget deal and stronger than expected industrial production in Japan. The Japanese Nikkei Index rose 0.48 percent and the Shanghai Composite Index rose 0.85 percent while the Hang Seng Index rose 0.49 percent. According to Sarah Eisen of Bloomberg, the Shanghai Composite Index is trading at its lowest valuation ever. Also, the Korean Kospi slipped 0.1 percent and Australian shares rose 0.63 percent.
European shares were mixed with weakness in the periphery offset by strength in the core nations. The Spanish Ibex Index fell 0.29 percent and the Italian MIB Index fell 0.22 percent. Meanwhile, the German DAX rose 0.26 percent and the French CAC 40 rose 0.17 percent while U.K. shares rose 0.08 percent.
Commodities were mixed overnight with weakness seen in energy futures. WTI Crude futures fell 0.25 percent to $87.85 per barrel and Brent Crude futures fell 0.15 percent to $110.60 per barrel. Copper futures rose 0.51 percent to $362.40 per pound. Gold was higher and silver futures fell 0.39 percent to $34.31 per ounce.
Currency markets saw strong moves overnight, with the euro strengthening and the yen weakening. The EUR/USD was higher at 1.3005 and the dollar rose against the yen to 82.64, a gain of 52 pips or 0.63 percent. Overall, the Dollar Index fell 0.07 percent on weakness against the euro, the Swedish Krone, and the Swiss franc despite the strength against the yen. Overall, the euro was stronger, rising against most other currencies, and the yen was also broadly weaker. The yen weakness can partially be attributed to month-end flows being affected by M&A activity, including the Softbank deal for Sprint (NYSE: S). The yen is also weakening following the announcement of a small, $11 billion fiscal stimulus in Japan.
Stocks moving in the pre-market included:
- St. Jude Medical (NYSE: STJ) shares rose 2.34 percent overnight as the company authorized a $10 billion share buyback program.
- Zynga (NASDAQ: ZNGA) shares fell over 10 percent pre-market as Facebook (NASDAQ: FB) changed its agreement with ap developers, opening the way for more competition for Zynga.
- Groupon (NASDAQ: GRPN) shares fell 4.41 percent pre-market as investors feel that CEO Andrew Mason will not be able to deliver on promises and statements made earlier this week. Also, the Board of Directors voted to keep Mason in his position as CEO.
- Green Mountain Coffee Roasters (NASDAQ: GMCR) shares fell 0.44 percent after popping more than 25 percent Wednesday on an earnings beat.
Notable companies expected to report earnings Friday include:
- Genesco (NYSE: GCO) is expected to report third quarter EPS of $1.33 vs. $1.21 a year ago.
- Patriot Transportation (NASDAQ: PATR) is expected to report fourth quarter EPS of $0.25 vs. $0.18 a year ago.
On the economics calendar Friday, the Personal Income and Outlays report is expected to be released and the Chicago PMI is to be released. In addition, Naryana Kocherlakota of the Minneapolis Fed is set to speak.
Good luck and good trading.
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