Benzinga Market Primer, Tuesday, December 4
Futures Flat Following Wall Street Sell Off
U.S. equity futures were flat in pre-market trading Tuesday following Monday's late day sell off. Stocks teetered around flat for most of the day Monday but sold off into the close on fears that a Fiscal Cliff deal is still a long ways away. Also, the weak reading of the ISM Manufacturing Index Monday spooked investors and hurt risk appetite.
In other news around the markets:
- The Reserve Bank of Australia (RBA) cut its benchmark interest rate to 3.00 percent from 3.25 percent, as expected. The Bank cited increasing downside risks to the global economy and expected increases in domestic unemployment as key reasons for the cut.
- German Finance Minister Wolfgang Schaeuble spoke overnight on the Banking Union and said that it would be difficult for the German Parliament to pass a bill allowing the ECB complete oversight over all banks. Rather, he believes that the ECB should choose select banks to oversee.
- European Finance Ministers aim to finalize the remaining details on the new Greek aid package by next week and are optimistic that the Greek debt buyback will work.
- S&P 500 futures were flat at 1,407.1.
- The EUR/USD was higher at 1.3074.
- Spanish 10-year government bond yields fell to 5.233 percent, the lowest since March.
- Italian 10-year government bond yields fell to 4.416 percent, the lowest level since lat 2010.
- Gold fell 0.79 percent to $1,707.50 per ounce.
Asian shares were mixed overnight with Chinese shares rallying and other markets seeing declines, a clear reversal of Monday's price action in Asia. The Japanese Nikkei Index fell 0.27 percent while the Shanghai Composite Index rose 0.78 percent and the Hang Seng Index rallied 0.15 percent in Hong Kong. Also, the Korean Kospi fell 0.25 percent and Australian shares fell 0.62 percent following the RBA rate cut.
European shares were mostly higher in early trade Tuesday as continued optimism over the Greek debt buyback boosted stocks for the second consecutive day. The Spanish Ibex Index rose 0.6 percent and the Italian MIB Index rose 1.03 percent as optimism also rose as bond yields fell to new lows in both countries. Meanwhile, the German DAX rose 0.2 percent and the French CAC 40 rose 0.743 percent while U.K. shares rose 0.23 percent.
Commodities were mostly lower in pre-market trade as Fiscal Cliff and global growth fears off-set optimism over the Greek buyback deal and monetary stimulus in Australia. WTI Crude futures were flat at $89.10 per barrel and Brent Crude futures fell 0.3 percent to $110.59 per barrel. Copper futures rose 0.25 percent to $366.10 per pound following the RBA rate cut and in spite of fears that Chinese growth will not be able to absorb the amount of new inventory coming online in the next few years. Gold was lower and silver futures fell 1.17 percent to $33.37 per ounce.
Currency markets were fairly quiet overnight except for the Aussie dollar which reacted to the RBA rate cut. The EUR/USD was slightly higher at 1.3074, up from the close of 1.3053, and the dollar fell against the yen to 81.97. Overall, the Dollar Index fell 0.18 percent to 79.74 on weakness against the euro, the yen, and the Swedish krone. In addition, the Aussie dollar rallied following the RBA rate cut with the AUD/USD rising 0.45 percent and the EUR/AUD falling 0.29 percent to 1.2489.
Stocks moving in the pre-market included:
- U.S. Steel (NYSE: X) shares rose 0.51 percent in the pre-market as hopes of increased steel demand in China buoyed the stock.
- Oracle (NASDAQ: ORCL) shares fell 0.68 percent as the company announced that it would be combining three quarters of dividends into one dividend to be paid this month to avoid the dividend tax hikes in the new year.
- Carnival Corporation (NYSE: CCL) shares fell 0.47 percent pre-market as the company announced that it is to go ex-dividend tomorrow, December 5.
Notable companies expected to report earnings Tuesday include:
- Autozone (NYSE: AZO) is expected to report first quarter EPS of $5.39 vs. $4.68 a year ago.
- Bank of Montreal (NYSE: BMO) is expected to report fourth quarter EPS of $1.43 vs. $1.27 a year ago.
- Big Lots (NYSE: BIG) is expected to report a third quarter loss of $0.24 vs. a profit of $0.06 a year ago.
- Pandora Media (NYSE: P) is expected to report EPS of $0.01 vs. $0.02 a year ago.
On the economics calendar Tuesday, there is not much today expected in what is to be a rather full economic week. Same store sales and the Redbook are expected to be released the Treasury is expected to sell 4-week bills. Lastly, Fed Governor Daniel Tarullo is expected to speak at the Brookings Institution on financial regulation.
Good luck and good trading.
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