Benzinga Market Primer, Wednesday, December 5
Futures Rise on Chinese Investment Plan
U.S. equity futures rose in early Wednesday trading as China opened up financial markets to further investment from insurers and increased urbanization plans. The moves serve as ways to support the banking sector in the country, as insurers can now use bank securities to manage risks.
In other news around the markets:
- Spain sold 4.251 billion euros of a targeted 4.5 billion euros of 3-, 7-, and 10-year notes with yields mixed and demand fairly flat from the previous auction. Bond yields rose in the secondary market after the auction, as investors did not like to see Spain unable to fulfill its full target.
- The Eurozone Services PMI rose to 46.7 in November from 46.0 in October, stronger than economist expectations of a 45.7 reading.
- European finance ministers have yet to finalize the Banking Union that is much sought after. Plans are to have a bill completed by next week for the system.
- S&P 500 futures rose 4 points to 1,409.5.
- The EUR/USD was was slightly lower at 1.3082.
- Spanish 10-year government bond yields rose to 5.348 percent.
- Italian 10-year government bond yields rose to 4.462 percent.
- Gold rose 0.5 percent to $1,704.30 per ounce.
Asian shares were stronger overnight led by Chinese stocks following the government shift on insurance investments and increased investment in urbanization. The Japanese Nikkei rose 0.39 percent while the Shanghai Composite Index rose 2.87 percent and the Hang Seng Index rose 2.16 percent in Hong Kong trading. Also, the Korean Kospi gained 0.61 percent and Australian shares rose 0.37 percent.
European shares rose in early trade as the service sector contracted less than expected in November. The Spanish Ibex Index rose 0.18 percent and the Italian MIB Index rose 0.6 percent despite the uptick in bond yields. Meanwhile, the German DAX rose 0.25 percent and the French CAC gained 0.38 percent while U.K. shares rose 0.28 percent.
Commodities were higher in overnight trade following the strength in China and the rebound in European data. WTI Crude futures rose 0.31 percent to $88.77 per barrel and Brent Crude futures rose 0.31 percent to $110.18 per barrel. Copper futures jumped 0.23 percent to $366.40 per pound following the strength in Chinese markets. Gold was higher and silver futures rose 0.92 percent to $33.11 per ounce..
Currency markets showed a short yen bias in overnight trade as the Japanese currency weakened against most major currencies. The EUR/USD was slightly lower at 1.3082 and the dollar rose against the yen to 82.20. Overall, the Dollar Index rose 0.15 percent to 79.76 on strength against the yen, the Swiss franc, and the Swedish krone. In addition, the Aussie dollar was moderately stronger in overnight trade, especially against the greenback and the yen.
Stocks moving in the pre-market included:
- Pandora Media (NYSE: P) shares fell 18 percent pre-market as the company reported earnings that beat expectations but guidance fell short of expectations.
- Wells Fargo (NYSE: WFC) shares rose 0.79 percent pre-market as financials rallied on broad market strength.
- CBRE Group (NYSE: CBG) shares fell 3.61 percent pre-market as the company named a new CEO.
- Carnival Corporation (NYSE: CCL) shares fell 1.03 percent pre-market as the exchange rate on its dividend is not as favorable as investors had been hoping.
Notable companies expected to report earnings Wednesday include:
- Francesca Holdings (NASDAQ: FRAN) is expected to report third quarter EPS of $0.22 vs. $0.14 a year ago.
- Saic (NYSE: SAI) is expected to report third quarter EPS of $0.34 vs. a loss of $0.27 per share a year ago.
On the economics calendar Wednesday, MBA Purchase Applications, the ADP Employment Report and Productivity and Costs are due out. After markets open, the ISM Non-Manufacturing Index is expected followed by the EIA Petroleum Status Report.
Good luck and good trading.
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