Benzinga Market Primer, Monday, December 3
Futures Rise on Chinese Data
U.S. equity futures rose slightly in early Monday trade following a slew of Chinese data over the weekend. The Chinese Manufacturing PMI rose to 50.6 in November from 50.2 in October, showing a continued recovery in the sector. In addition, the official Services PMI rose to 55.6 in November, both data points showing a continued turnaround story in China.
In other news around the markets:
- Moody's downgraded the joint European bailout funds, the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM). Following the downgrade of France, Moody's has downgraded the ratings of these funds as the ratings are effectively a weighted average of the members' contributions and because France has a large contribution, forced the downgrade.
- Greece officially announced the debt buyback plan in which it will buy back bonds between between 30.2 and 40.1 percent of the principal amount.
- The Eurozone Manufacturing PMI rose to 46.2 in November, in line with estimates and better than October's 45.4. In fact, the reading was the strongest since March and was buoyed by strength in Spain and weighed down by weakness in Italy.
- S&P 500 futures 1.4 points to 1,415.80.
- The EUR/USD was higher at 1.3036.
- Spanish 10-year government bond yields fell to 5.223 percent.
- Italian 10-year government bond yields fell to 4.427 percent.
- Gold rose 0.43 percent to $1,720.00 per ounce.
Asian shares were mixed overnight with weakness in China overshadowed by strength in other regional bourses. The Japanese Nikkei Index rose 0.13 percent while the Shanghai Composite Index fell 1.03 percent and the Hang Seng Index fell 1.19 percent in Hong Kong trading. Also, the Korean Kospi rose 0.37 percent and Australian shares rose 0.57 percent.
European shares were higher following the release of the manufacturing PMIs, seemingly ignoring the Moody's downgrade of the bailout funds. The Spanish Ibex Index rose 0.26 percent and the Italian MIB Index rose 0.77 percent in early trade. Meanwhile, the German DAX rallied 0.43 percent while the French CAC rose 0.5 percent and the U.K. FTSE 100 jumped 0.22 percent.
Commodities were mostly higher in early trade reacting to the slew of data released over the weekend. WTI Crude futures fell slightly by 0.12 percent to $88.80 per barrel and Brent Crude futures rose 0.14 percent to $111.39 per barrel. Copper futures were slightly weaker in early trade, falling 0.04 percent to $364.85 per pound. Gold was higher in early trade and silver futures rose 1.07 percent to $33.64 per ounce.
Currency markets were fairly active overnight with the dollar weakening against a basket of currencies. The EUR/USD was higher at 1.3039, breaking out of the 1.2960-1.3030 range seen in the second half of last week, and the dollar fell against the yen as the USD/JPY fell to 82.10. In addition, the pound rose 0.34 percent against the dollar and greenback was stronger against the Canadian dollar and the Swiss franc. Lastly, the Aussie dollar was slightly weaker to start the week as investors await the RBA rate decision late Monday night. The Bank is expected to cut rates seeing as no cut would ensure that the Bank would go without a rate cut for four months (the next meeting is not until February and the Bank did not cut rates last month).
Stocks moving in the pre-market included:
- Boston Scientific (NYSE: BSX) shares rose 1.08 percent pre-market as the first patients enrolled in a new phase 2 drug trial for its Evolve program.
- General Mills (NYSE: GIS) shares rose 0.51 percent pre-market as investors clamored for yield ahead of dividend tax hikes in the new year.
Notable companies expected to report earnings Monday include:
- LDK Solar (NYSE: LDK) is expected to report a third quarter loss of $1.24 per share vs. a loss of $0.87 a year ago.
On the economics calendar Monday, the Markit U.S. PMI and the ISM Manufacturing Index are expected as well as construction spending data. In addition, James Bullard of the St. Louis Fed is set to speak and the Treasury is to auction 4-week, 3-, and 6-month bills.
Good luck and good trading.
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