Benzinga Market Primer, Monday, December 17
Futures Flat on Fiscal Cliff Deal Hopes
U.S. equity futures were flat in early pre-market trading as politicians continue to work towards a deal in resolving the Fiscal Cliff. Over the weekend, House Majority Leader Boehner reportedly proposed a bill that included tax hikes for the rich. However, it is likely that the democratic leaders will reject the proposal and that no deal will be reached before the Christmas break.
In other news around the markets:
- The Liberal Democratic Party (LDP) in Japan won the elections for Japan's Parliament, paving the way for expected Prime Minister-to-be Shinzo Abe to rewrite the Bank of Japan's mandate, pushing for stronger monetary easing and more fiscal stimulus.
- Xinhua news reported overnight that the People's Bank of China will be open to further monetary stimulus in the new year. Over the weekend, China increased the amount that sovereign wealth funds and large investors could invest directly in the nation, a move to further open financial markets.
- The Eurozone trade balance was reported as a surplus of 7.9 billion euros in September, missing estimates of a surplus of 10.8 billion and below August's reading of 11.0 billion euros.
- S&P 500 futures rose 1.25 points to 1,413.58.
- The EUR/USD was lower at 1.3151.
- Spanish 10-year government bond yields rose to 5.418 percent.
- Italian 10-year government bond yields fell to 4.558 percent.
- Gold fell 0.32 percent to $1,691.50 per ounce.
Asian shares were mixed overnight with the Nikkei leading following the election results in Japan. The Japanese Nikkei Index rose 0.94 percent while the Shanghai Composite Index fell 0.31 percent and the Hang Seng Index fell 0.41 percent. Also, the Korean Kospi slipped 0.6 percent and Australian shares fell 0.21 percent.
European shares were lower overnight on global growth fears. The Spanish Ibex Index fell 0.12 percent and the Italian MIB Index fell 0.42 percent. Meanwhile, the German DAX fell 0.26 percent and the French CAC fell 0.74 percent while U.K. shares dropped 0.59 percent.
Commodities were lower in overnight trade on global growth fears despite the positive news from Japan. WTI Crude futures fell 0.14 percent to $86.61 per barrel and Brent Crude futures fell 0.24 percent to $107.93 per barrel. Copper futures fell 0.41 percent to $366.80 in tandem with the weakness in China. Gold was lower and silver futures dropped 0.17 percent to $32.25 per ounce.
Currency markets were in flux overnight as the yen gapped higher at the open by nearly 100 pips but has since sold off and now remains near unchanged. The EUR/USD was lower at 1.3151 and the dollar was higher against the yen at 83.71. Overall, the Dollar Index rose 0.04 percent on strength against the yen, the euro, and the Swedish krone.
Stocks moving in the pre-market included:
- Apple (NASDAQ: AAPL) shares fell nearly 2 percent and below $500 for the first time since February as Citigroup downgraded the shares to neutral over the weekend. The stock fell with suppliers in Asian trade.
- Berkshire Hathaway (NYSE: BRK-B) shares rose 1.18 percent in the pre-market as investors became bullish over the increased share buyback program. Last week, the company announced it has bought back nearly $1.2 billion in A shares and increased the premium for buybacks to 120 percent of book value per share.
- AIG (NYSE: AIG) shares rose 1.8 percent pre-market following the exit of the government from its stake in the insurer last week.
- Intel (NASDAQ: INTC) shares rose 0.06 percent pre-market as the company forecasted a strong computer market in 2013.
On the economics calendar Monday, the Empire Manufacturing Index and TIC flows are due out and the Fed's Lacker is set to speak on the state of the economy and ECB President Draghi is also set to speak. In addition, the Treasury is expected to auction 4-week, 3-month, 6-month, and 2-year bills and notes.
Good luck and good trading.
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