Benzinga Market Primer, Thursday, December 6
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Futures Rise on Budget Deal Hopes
U.S. equity futures rose in early Thursday trading on hopes that a budget deal can be reached in Washington. Now that both parties have submitted proposals, investors know that any deal will come in-between the two proposals.
In other news around the markets:
- S&P cut Greece to Selective Default from CCC after the close Wednesday, meaning Greece is now officially in default. The move is in response to the debt buyback deal.
- The preliminary Q3 GDP estimate for the Eurozone was released at -0.1 percent quarter-ogre-quarter, the same rate as the second quarter and in line with economist estimates.
- The U.K.'s AAA rating has come under fire over the last 24 hours, as English Chancellor of the Exchequer George Osborne made his annual autumn statement in which he outlined budget proposals that put off a bulk of austerity into later years. Fitch said that it will review the U.K.'s rating in 2013 and could downgrade it.
- S&P 500 futures rose 0.3 points to 1,408.60.
- The EUR/USD was slightly higher at 1.3072.
- Spanish 10-year government bond yields rose to 5.437 percent.
- Italian 10-year government bond yields rose to 4.493 percent.
- Gold fell 0.04 percent to $1,693.10 per ounce.
Asian shares were mixed overnight as Chinese stocks slipped while other regional indices rose. The Japanese Nikkei Index rose 0.81 percent while the Shanghai Composite Index fell 0.13 percent and the Hang Seng Index fell 0.09 percent. In addition, the Korean Kospi rose 0.13 percent and Australian shares fell 0.24 percent.
European shares were higher in early Thursday trade as hopes of a U.S. budget deal boosted stocks despite reports that the Eurozone is in a recession officially. The Spanish Ibex Index rose 0.41 percent and the Italian MIB Index rose 0.39 percent in early trade. Meanwhile, the German DAX climbed 0.95 percent and the French CAC rose 0.49 percent and U.K. shares gained 0.16 percent.
Commodities were mixed overnight with energy futures rising and metals falling. WTI Crude futures rose 0.25 percent to $88.10 per barrel and Brent Crude futures rose 0.17 percent to $109.00 per barrel. Copper futures fell 0.34 percent to $367.40 overnight as investors feared that Freeport McMoRan's (NYSE: FCX) two acquisitions in the energy exploration business are further signals of the peak of the mining boom. Gold was lower and silver futures fell 0.28 percent to $32.87 per ounce.
Currency markets were fairly quiet overnight as investors await the decisions from both the Bank of England and the European Central Bank Thursday morning. The EUR/USD was slightly higher at 1.3072 and the dollar fell against the yen. Overall, the Dollar Index rose 0.03 percent to 79.801 on strength against the Swiss franc and the Canadian dollar. Also, the Aussie dollar was rather strong overnight with the AUD/USD approaching the 1.05 level and the fell to 1.2469.
Stocks moving in the pre-market included:
- 3M Co. (NYSE: MMM) shares rallied 1.56 percent pre-market after rising 0.71 percent Wednesday. The stock is up 11 percent year to date.
- Microsoft (NASDAQ: MSFT) shares rose 0.41 percent pre-market as the company won a lawsuit against Motorola, now owned by Google (NASDAQ: GOOG).
- Pandora Media (NYSE: P) shares continued to slide following a guidance cut pre-market, falling an addition 4.74 percent Thursday morning.
- Zynga (NASDAQ: ZNGA) shares rose 0.43 percent pre-market as the company is seeking a gambling license in Nevada.
Notable companies expected to report earnings Thursday include:
- H&R Block (NYSE: HRB) is expected to report a second quarter loss of $0.40 per share vs. a loss of $0.38 a year ago.
- Lululemon Athletica (NASDAQ: LULU) is expected to report third quarter EPS of $0.37 vs. $0.27 a year ago.
- Smith and Wesson (NASDAQ: SWHC) is expected to report second quarter EPS of $0.24 vs. $0.10 a year ago.
On the economics calendar Thursday, it's Thursday and that means jobless claims are due out. In addition, Challenger Job Cuts are due out and the Quarterly Services Survey will add further clarity on the state of the service sector. In addition, the Bank of England and the European Central Bank rate decisions are due out at 7:00 and 7:45 am eastern respectively followed by ECB President Mario Draghi's press conference at 8:30 am.
Good luck and good trading.
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