Benzinga Market Primer: Wednesday, January 16
Futures Lower Ahead of Earnings
U.S. equity futures slipped ahead of key earnings reports as earnings season looks set to enter its busy stage over the next few weeks. Eleven S&P 500 components are set to report earnings Wednesday.
In other news around the markets:
- The Italian global trade balance shrunk in November but less than expected, declining to 2.36 billion euros from a downward-revised 2.42 billion but much better than economist estimates of a 1.91 billion euro balance.
- Germany auctioned benchmark 10-year bunds to yield 1.56 percent, higher than the 1.4 percent seen at the previous auction.
- New car registrations in the European Union dropped a massive 16.3 percent in December and fell 8.2 percent in all of 2012 to 12.05 million vehicles.
- S&P 500 futures fell 3.7 points to 1,461.50.
- The EUR/USD was was slightly lower at 1.3303.
- Spanish 10-year government bond yields rose to 5.036 percent.
- Italian 10-year government bond yields rose to 4.232 percent.
- Gold futures fell 0.27 percent to $1,679.40 per ounce.
Asian shares were mostly lower overnight on yen strength and on weak Chinese Foreign Direct Investment data. The Japanese Nikkei Index fell 2.56 percent and the Shanghai Composite Index fell 0.72 percent while the Hang Seng Index fell 0.1 percent. Also, the Korean Kospi fell 0.32 percent and Australian shares rose 0.46 percent.
European shares were lower overnight led lower by Italian shares following the trade data. The Spanish Ibex Index declined 0.78 percent and the Italian MIB Index fell 1.31 percent in early trade. Meanwhile, the German DAX fell 0.24 percent while the French CAC declined 0.35 percent and U.K. shares fell 0.5 percent.
Commodities were mixed overnight with oil futures rising modestly and metal futures lagging. WTI Crude futures rose 0.14 percent to $93.41 per barrel and Brent Crude futures rose 0.17 percent to $110.49 per barrel. Copper futures declined 0.37 percent to $362.35 per pound as Chinese weakness weighed on the market. Gold was lower and silver futures fell 0.77 percent to $31.29 per ounce.
Currency markets continued to reverse recent moves as the yen gained and the Aussie dollar declined. The EUR/USD was lower at 1.3303 and the dollar fell 0.78 percent against the yen to 88.10. Overall, the Dollar Index fell 0.13 percent with the yen Swiss franc weakness being offset by strength against the Canadian dollar, the pound, and the Swedish krone. Also, the Australian dollar declined 0.14 percent against the greenback and the yen strength was seen most in the EUR/JPY cross, declining 0.7 percent, and the AUD/JPY cross, declining 0.83 percent.
Stocks moving in the pre-market included:
- Carnival Corporation (NYSE: CCL) shares rose 1.59 percent as the company moved to dismiss U.S. lawsuits relating to the Costa Concordia case.
- Boeing (NYSE: BA) shares fell 5.3 percent pre-market as another 787 jet, this one owned by ANA Airlines, caught on fire and the airline grounded all 787's.
- Dell (NASDAQ: DELL) shares fell 2.43 percent after gaining more than 7 percent Tuesday following reports that the company could be a private equity target.
- eBay (NASDAQ: EBAY) shares fell 0.68 percent ahead of its earnings report.
Notable companies expected to report earnings Wednesday include:
- eBay (NASDAQ: EBAY) is expected to report fourth quarter EPS of $0.69 vs. $0.60 a year ago.
- Goldman Sachs (NYSE: GS) is expected to report fourth quarter EPS of $3.66 vs. $1.84 a year ago.
- J.P. Morgan Chase (NYSE: JPM) is expected to report fourth quarter EPS of $1.19 vs. $0.90 a year ago.
- M&T Bancorp (NYSE: MTB) is expected to report fourth quarter EPS of $2.18 vs. $1.04 a year ago.
- The Bank of New York Mellon (NYSE: BK) is expected to report fourth quarter EPS of $0.54 vs. $0.42 a year ago.
On the economics calendar Wednesday, MBA Purchase Applications and the Consumer Price Index are expected to be released, followed by TIC flows and Industrial Production Data. After, the NAHB Housing Market Index is due to be released and the EIA Petroleum Report is due out followed by the Beige Book. In addition, Naryana Kocherlakota is set to speak twice Wednesday and Richard Fisher of the Dallas Fed is set to speak. Overnight, Spanish and French bond auctions, Australian employment data, and the ECB's monthly report should set the market's tone.
Good luck and good trading.
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