Benzinga Market Primer: Friday, January 11
Futures Slip on Chinese Inflation Data
U.S. equity futures were slightly lower in overnight trade as Chinese inflation data revealed that the PBOC may have less room to engineer a soft-landing than previously thought. Data showed that consumer inflation accelerated in the previous month, spooking investors and creating fears that China will have to go through another rate hike cycle.
In other news around the markets:
- Japanese authorities unveiled a $116 billion stimulus package as part of broader efforts to stimulate the economy and devalue the yen.
- Spanish industrial production plummeted in November, falling at a 7.2 percent annualized rate in November, well below economist expectations of a decline of 1.5 percent annualized and worse than October's upwardly revised -3.1 percent.
- Moody's downgraded Cyprus to Caa3 from B3 as the country is in bailout talks with the EU following its exposure to Greek banks. The new rating is only two notches above default.
- S&P 500 futures fell 2.4 points to 1,464.80.
- The EUR/USD was slightly lower at 1.3268.
- Spanish 10-year government bond yields fell to 4.892 percent.
- Italian 10-year government bond yields fell to 4.15 percent.
- Gold fell 0.54 percent to $1,669.00 per ounce.
Asian shares were mixed overnight as Japanese shares rallied on stimulus hopes while Chinese shares fell on inflation fears. The Japanese Nikkei Index rose 1.4 percent while the Shanghai Composite Index fell 1.78 percent and the Hong Seng Index fell 0.39 percent. Also, the Korean Kospi fell 0.5 percent and Australian shares fell 0.29 percent.
European shares were lower in early trade following weak industrial production data for various countries across the EU. The Spanish Ibex Index fell 0.4 percent and the Italian MIB Index slipped 0.52 percent in early European trade. Meanwhile, the German DAX fell 0.1 percent and the French CAC fell 0.49 percent while U.K. shares declined 0.05 percent.
Commodities were weaker overnight following the worrying Chinese inflation data. WTI Crude futures fell 0.27 percent to $93.56 per barrel and Brent Crude futures fell 0.6 percent to $111.22 per barrel. Copper futures fell 0.73 percent to $368.20 per pound as investors worried that China will not grow as fast as expected, hampered by strong inflation. Gold was lower and silver futures fell 0.69 percent to $30.71.
Currency markets were relatively tepid overnight with moves of major pairs constrained to tight ranges. The EUR/USD was slightly lower at 1.3268 and the dollar gained against the yen. Overall, the Dollar Index rose 0.08 percent on strength against the pound, the yen, and the Swiss franc.
Stocks moving in the pre-market included:
- American Express (NYSE: AXP) shares fell 0.46 percent pre-market as the company announced a new round of layoffs and other cost cutting measures Thursday.
- Ford (NYSE: F) shares rose 1.95 percent pre-market as the company increased its dividend and Standard and Poor's said that the dividend hike did not affect its credit rating.
- Yum! Brands (NYSE: YUM) shares fell 1.13 percent pre-market as the company released a formal apology for mistakes made in China and also as Chinese inflation spooked investors.
- Toyota Motor Corp. (NYSE: TM) shares fell 1.03 percent pre-market despite stimulus talks in Japan progressing.
Notable companies expected to report earnings Friday include:
- Wells Fargo (NYSE: WFC) is expected to report fourth quarter EPS of $0.90 vs. $0.73 a year ago.
On the economics calendar Friday, trade balance data and import and export prices are due out. Also, the Fed's Charles Plosser is expected to speak and the Treasury is expected to release its periodic budget statement. Early Monday, look for the French budget statement and British inflation data to move markets.
Good luck and good trading.
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