Benzinga Market Primer: Wednesday, February 6
Futures Rise on Global Strength
U.S. equity futures rose in early trade as Asian shares rallied and European shares traded mixed. Eyes are on earnings globally as the economic calendar was rather light overnight.
In other news around the markets:
- China's Ministry of Commerce issued a statement overnight saying that China's 2013 economic situation is still very severe and that the Ministry fears a rise in global trade protectionism.
- Economists at HSBC believe that the RBA easing cycle is over and that the bank could begin raising rates by the end of the year, bullish for the Aussie dollar, Australian stocks, and global mining broadly.
- The CBO sees the federal deficit falling 27 percent in 2013 to $616 billion from $845 billion in 2012. The CBO sees the debt-to-GDP ratio falling to 77 percent by 2023.
- S&P 500 futures rose 1.5 points to 1,507.40.
- The EUR/USD was lower at 1.3535.
- Spanish 10-year government bond yields fell to 5.36 percent.
- Italian 10-year government bond yields rose to 4.47 percent.
- Gold fell 0.17 percent to $1,670.60 per ounce.
Asian shares were higher as the Nikkei Index had its best day since 2008. The Japanese Nikkei Index rose 3.77 percent and the Shanghai Composite Index rose 0.06 percent while the Hang Seng Index rose 0.47 percent. Also, the Korean Kospi fell 0.1 percent and Australian shares rose 0.78 percent.
European shares were mixed as peripheral shares traded lower in early trade. The Spanish Ibex Index fell 0.47 percent, led lower by financials, and the Italian FTSE MIB Index declined 0.92 percent, led lower by financials as well. Meanwhile, the German DAX fell 0.21 percent, the French CAC fell 0.43 percent, and U.K. shares rose 0.39 percent. It is important to note that European shares just took a leg down in the last 15 to 20 minutes.
Commodities were were mostly lower overnight on global growth fears following comments from the Chinese Ministry of Commerce. WTI Crude futures fell 0.61 percent to $96.05 per barrel and Brent Crude futures fell 0.19 percent to $116.32 per barrel and Natural Gas futures rose 1.35 percent to $3.45 per million BTU. Copper futures fell 0.65 percent to $374.55 per pound. Gold was lower and silver futures fell 0.63 percent to $31.68 per ounce.
Currency markets were in a clear risk-off mode as the euro weakened and the dollar gained overnight. The EUR/USD was lower at 1.3535 and the dollar gained slightly against the yen to 93.67. Overall, the rose 0.3 percent on strength against the euro, the Swiss franc, and the Canadian dollar. In addition, the AUD/USD fell sharply overnight by 0.84 percent to 1.0303 and the Aussie was broadly weak, falling sharply against the yen and the euro as well.
Stocks moving in the pre-market included:
- Royal Bank of Scotland (NYSE: RBS) shares traded 1.1 percent higher in London trading and New York listed shares look set to follow as the company reached a settlement with regulators over the Libor scandal.
- Hewlett-Packard (NYSE: HPQ) shares rose 2.95 percent pre-market as the company's board is debating breaking up the company to extract value for shareholders.
- Chevron (NYSE: CVX) shares fell 0.7 percent pre-market as the company had to pay a $1 million fine for a refinery fire.
- BlackBerry (NASDAQ: BBRY) shares fell 3.31 percent pre-market after rising 6.93 percent Tuesday as the company gets set for the global launch of its new phones.
Notable companies expected to report earnings Wednesday include:
- CVS Caremark (NYSE: CVS) is expected to report fourth quarter EPS of $1.10 vs. $0.89 a year ago.
- Green Mountain Coffee Roasters (NASDAQ: GMCR) is expected to report first quarter EPS of $0.65 vs. $0.60 a year ago.
- Marathon Oil (NYSE: MRO) is expected to report fourth quarter EPS of $0.67 vs. $0.78 a year ago.
- Time Warner (NYSE: TWX) is expected to report fourth quarter EPS of $1.10 vs. $0.94 a year ago.
- Visa (NYSE: V) is expected to report first quarter EPS of $1.79 vs. $1.49 a year ago.
On the economics calendar Wednesday, MBA Purchase Applications and the EIA Petroleum Status Report are due out. Also, the Treasury is set to auction STRIPS and give its quarterly refunding announcement. Overnight, there is lots of data that can move markets, with Australian employment data, the Bank of England and the European Central Bank rate decisions, and British industrial production all expected.
Good luck and good trading.
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