Benzinga Market Primer, Friday, December 14
Futures Rise on Chinese Manufacturing Data
U.S. equity futures rose in pre-market trade following strong manufacturing data out of China overnight. The preliminary HSBC China Manufacturing PMI for December rose to 50.9 from the final November reading of 50.5, showing a continued improvement in China's largest economic sector. The Shanghai Composite Index rose the most in three years on the news and took out its 100-day moving average to the upside. Bloomberg TV reported early Friday that technicians are becoming very bullish on Chinese stocks now.
In other news around the markets:
- The Eurozone economy continued to contract in the first half of December, according to the Markit Eurozone Manufacturing and Service PMI's. The Manufacturing PMI missed economist estimates while the Service PMI beat estimates, but weakness in Germany's manufacturing sector spooked investors.
- Eurozone core CPI fell to a 1.6 percent annualized rate in November, beating economist expectations by 0.1 percent but still showing that inflation is slowing, giving the ECB more room to cut rates should it want to.
- Spanish Prime Minister Mariano Rajoy spoke overnight saying that Spain does not need ECB bond support today, that Spain's main problem is credit, and that Spain's banks will have to pay back the bank bailout loans themselves.
- S&P 500 futures rose 3.75 points to 1,419.45.
- The EUR/USD was slightly higher at 1.3079.
- Spanish 10-year government bond yields fell to 5.375 percent.
- Italian 10-year government bond yields fell to 4.585 percent.
- Gold rose 0.11 percent to $1,698.70.
Asian shares were mixed overnight despite the stronger than expected Chinese data. The Shanghai Composite Index rose a remarkable 4.32 percent while the Japanese Nikkei Index fell 0.05 percent on a weaker than expected business survey and the the Hang Seng Index rose 0.71 percent. Also, the Korean Kospi dropped 0.39 percent and Australian shares were flat.
European shares were mixed in early trade following the mixed economic data despite the strong sentiment from China. The Spanish Ibex Index rose 0.24 percent while the Italian MIB Index was flat. Meanwhile, the German DAX rose 0.23 percent while the French CAC lost 0.08 percent and U.K. shares fell 0.11 percent.
Commodities were mostly higher overnight led by energy futures following the strong Chinese data. WTI Crude futures rose 0.98 percent to $86.73 per barrel and Brent Crude futures rose 0.82 percent to $108.80 per barrel. Copper futures gained 0.68 percent overnight following the strong Chinese data and now trade at $368.50 per pound. Gold was slightly higher and silver futures jumped 0.85 percent to $32.63 per ounce.
Currency markets saw significant volatility overnight, as the euro initially traded higher but sold off on the weak eurozone manufacturing data. The EUR/USD was slightly higher at 1.3079 and the dollar rose against the yen to 83.67. Overall, the Dollar Index was flat overnight with strength against the yen, the Swiss franc, and the Swedish krone weighed down by weakness against euro and the pound. The Aussie dollar was also higher relative to the greenback.
Stocks moving in the pre-market included:
- Alcatel Lucent (NYSE: ALU) shares rose 10.91 percent pre-market as the company secured a new round of financing worth $2.1 billion.
- Google (NASDAQ: GOOG) shares fell 0.05 percent but remained above the $700 level after breaking back through that level during Thursday's trading session.
- Zynga (NASDAQ: ZNGA) shares rose 0.76 percent pre-market as investors placed bullish bets that the company's new foray into gambling could help spur growth at the company.
- BP (NYSE: BP) shares fell 0.51 percent pre-market as the government is still investigating whether or not the seal on the Macondo well is leaking.
On the economics calendar Friday, CPI Inflation and the Preliminary Markit U.S. PMI are due out as well as industrial production.
Good luck and good trading.
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