Benzinga Market Primer, Monday March 11
Futures Modestly Lower on China Fears, Italy Downgrade
U.S. equity futures traded slightly lower in early pre-market trade following weaker than expected industrial production and inflation data from China.
Industrial production grew 9.9 percent in February from a year ago, less than the forecasted 10.3 percent gain, and CPI inflation grew faster than expected. Combined, the data raised new fears that the PBOC would tighten policy earlier than expected even as output indicators slow in order to cool inflation.
In other news around the markets:
- Italy's economy shrank slightly more than expected in the fourth quarter, with GDP contracting 2.8 percent from the same period a year ago, slightly worse than the forecasted rate of 2.7 percent.
- Germany's trade balance was reported as in line with forecasts overnight, however exports and imports both grew faster than expected, showing slight underlying strength of the German economy in the face of a broad European recession.
- Chinese auto sales dropped 13.6 percent in February from the same period a year ago. However, taking both the January and February data together, sales were higher by 14.7 percent, the drop in February due to the extended 2013 Lunar New Year holiday.
- S&P 500 futures fell 1.7 points to 1,549.60.
- The EUR/USD was flat at 1.3005.
- Spanish 10-year government bond yields fell to 4.73 percent from 4.77 percent.
- Italian 10-year government bond yields rose to 4.64 percent from 4.61 percent.
- Gold rose 0.11 percent to $1,578.70 per ounce.
Asian shares were mixed overnight as Chinese shares lagged on the weak economic data released over the weekend. The Japanese Nikkei Index rose 0.53 percent and the Shanghai Composite Index fell 0.34 percent while the Hang Seng Index was flat. Also, the Korean Kospi fell 0.13 percent and Australian shares rose 0.46 percent.
European shares were mostly lower following Fitch's late-day downgrade of Italy to BBB+ on Friday. The Spanish Ibex Index fell 0.75 percent and the Italian FTSE MIB Index declined 0.76 percent with banks falling over 3 percent. Meanwhile, the German DAX fell 0.21 percent and the French CAC fell 0.33 percent while U.K. shares were flat.
Commodities were lower as oil fell following the Chinese data. WTI Crude futures fell 0.39 percent to $91.59 per barrel and Brent Crude futures fell 0.72 percent to $110.04 per barrel. Copper futures fell 0.64 percent to $348.70 per pound also due to the weakness in China but also on some weak manufacturing data in Japan. Gold was higher and silver futures fell 0.06 percent to $28.93 per ounce.
Currency markets were quiet overnight as the yen weakened slightly. The EUR/USD was flat at 1.3005 and the dollar rose against the yen to 96.11. Overall, the Dollar Index rose 0.03 percent on strength against the yen, the pound, and the Swedish krone. Notably, the only real mover overnight was the yen with other major crosses trading near flat.
Stocks moving in the pre-market included:
- Genworth Financial (NYSE: GNW) shares rose 3.05 percent pre-market following a positive article in Barron's this weekend which stated that the stock could double in the next year.
- Ford (NYSE: F) shares fell 0.46 percent following the weaker than expected Chinese auto sales.
- IBM (NYSE: IBM) shares fell 0.28 percent despite the company winning a new contract to help design a smart city in Montpellier, France.
Notable companies expected to report earnings Monday include:
- Chiquita Brands (NYSE: CQB) is expected to report a fourth quarter loss of $0.34 per share vs. a loss of $0.12 per share a year ago.
- CVR Energy (NYSE: CVR) is expected to report fourth quarter EPS of $0.90 vs. $0.34 a year ago.
- Dick's Sporting Goods (NYSE: DKS) is expected to report fourth quarter EPS of $1.06 vs. $0.76 a year ago.
- Renren (NYSE: RENN) is expected to report a fourth quarter loss of $0.07 per share vs. a loss of $0.01 per share a year ago.
- Urban Outfitters (NASDAQ: URBN) is expected to report fourth quarter EPS of $0.57 vs. $0.27 a year ago.
On the economics calendar Monday, the Treasury is expected to auction 3-month and 6-month bills. Overnight, German inflation, British industrial production, and Spanish and Italian bill auctions could move markets.
Good luck and good trading.
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