Benzinga Market Primer: Wednesday, February 27
Futures Flat Ahead of Bernanke
U.S. equity futures were flat in pre-market trading ahead of Federal Reserve Chairman Ben Bernanke's second day of testimony in Washington. Tuesday, Bernanke hinted that the Fed is not concerned with its exit strategy, noting that the Fed could exit stimulus by doing nothing.
In other news around the markets:
- European business and consumer confidence remained strong in the latest Business and Consumer Confidence Survey despite headwinds such as the Italian elections. The index rose to 91.1 in February from 89.5 in January and beating expectations of a reading of 89.9.
- Italy sold 5- and 10-year bonds this morning with yields rising from the previous auction post-elections but in line with the market's expectations.
- The latest update to British GDP was released, with the fourth quarter GDP figure being reiterated at a contraction of 0.3 percent. However, the index of services component was revised lower to -0.1 percent from 0.6 percent. Business Investment was lower than expected at -1.2 percent quarter-over-quarter and the previous quarter's figure was revised sharply lower to 0.5 percent growth from a previous reading of 3.8 percent growth.
- S&P 500 futures were flat at 1,492.20.
- The EUR/USD was higher at 1.3098.
- Spanish 10-year government bond yields fell to 5.35 percent.
- Italian 10-year government bond yields fell to 4.88 percent after the auction at 4.83 percent.
- Gold fell 0.45 percent to $1,608.20 per ounce.
Asian shares were mixed overnight with Japanese stocks falling as the yen strengthened. The Japanese Nikkei Index fell 1.27 percent and the Shanghai Composite Index fell rose 0.87 percent while the Hang Seng Index rose 0.25 percent. Also, the Korean Kospi rose 0.2 percent and Australian shares rose 0.66 percent.
European shares were slightly higher in early trade boosted by the confidence numbers despite the weak GDP report in the U.K. The Spanish Ibex Index rose 0.31 percent and the Italian FTSE MIB Index rose 0.29 percent despite weakness in banks. Meanwhile, the German DAX rose 0.16 percent and the French CAC rose 0.33 percent while U.K. shares rose 0.14 percent.
Commodities were mixed overnight as energy futures rose and metals lagged. WTI Crude futures rose 0.28 percent to $92.88 per barrel and Brent Crude futures rose 0.4 percent to $113.16 per barrel. Copper futures fell 0.29 percent to $357.05 per pound after a Chinese research institute said that China needs tighter monetary policy. Gold was lower and silver futures fell 0.41 percent to $29.21 per ounce.
Currency markets were rather quiet after days of volatility overnight. The EUR/USD was higher at 1.3098 and the dollar fell against the yen to 91.66 and the pound rose against the dollar to 1.5130. Overall, the Dollar Index fell 0.24 percent on weakness against the euro, the pound, the yen, and the Swiss franc. Notably, the Australian dollar was rather weak, falling 0.42 percent against the U.S. dollar and 0.77 percent against the yen.
Stocks moving in the pre-market included:
- First Solar (NASDAQ: FSLR) shares fell 11.35 percent pre-market after the company reported weaker than expected earnings and lowered guidance.
- Priceline.com (NASDAQ: PCLN) shares rose 3.76 percent after the company reported earnings that beat estimates.
- Edison International (NYSE: EIX) shares rose 4.08 percent pre-market after a strong earnings report, beating estimates by 70 percent.
- Lockheed Martin (NYSE: LMT) shares fell 1.26 percent pre-market despite a Pentagon spokesman restating that the Pentagon is committed to the F-35 program even with the Sequester set to hit.
Notable companies expected to report earnings Wednesday include:
- A. B. InBev (NYSE: BUD) is expected to report fourth quarter EPS of $1.18 vs. $1.21 a year ago.
- Chicago Bridge and Iron (NYSE: CBI) is expected to report fourth quarter EPS of $0.83 vs. $0.70 a year ago.
- Fortress Investment Group (NYSE: FIG) is expected to report fourth quarter EPS of $0.14 vs. $0.09 a year ago.
- Groupon (NASDAQ: GRPN) is expected to report fourth quarter EPS of $0.03 vs. a loss of $0.02 per share a year ago.
- J.C. Penney (NYSE: JCP) is expected to report a fourth quarter loss of $0.14 per share vs. EPS of $0.74 a year ago.
- Target (NYSE: TGT) is expected to report fourth quarter EPS of $1.48 vs. $1.43 a year ago.
- TJX Companies (NYSE: TJX) is expected to report fourth quarter EPS of $0.81 vs. $0.62 a year ago.
On the economics calendar Wednesday, Durable Goods Orders and Pending Home Sales are due out. Also, the Treasury is set to auction 7-year notes and the Fed's Richard Fisher is set to speak. Overnight, Spanish GDP and German unemployment data should move markets.
Good luck and good trading.
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Tags: Ben Bernanke, British GDP, Durable Goods Orders, European Business and Consumer Confidence, Federal Reserve, German Unemployment, Italian Debt, Italian Elections, Pending Home Sales, Richard Fisher, Spanish GDP