Benzinga Market Primer: Tuesday, March 12
Futures Slide on Asian Weakness
U.S. equity futures slid in early pre-market trade after Asian shares reversed early gains to close lower. The Japanese Nikkei Index broke an eight-day winning streak to close lower after opening higher and raising hopes of a record nine-day winning streak.
In other news around the markets:
- Greece will need to lay out a plan to cut another 150,000 jobs by 2015 to receive its next bailout payment due next week of about 3.5 billion euros.
- U.K. January industrial production fell 1.2 percent, well worse than forecasts of a 0.1 percent gain and also much worse than December's 1.1 percent gain. Manufacturing output also fell 1.5 percent in January on expectations of a flat reading.
- Goldman Sachs Asset Management outgoing Chairman Jim O'Neill says U.S. equities look expensive on a cyclically adjusted price-to-earnings ratio and that he fears the dreaded May top in equities.
- S&P 500 futures fell 1 point to 1,549.50.
- The EUR/USD was lower at 1.3012.
- Spanish 10-year government bond yields fell to 4.71 percent from 4.75 percent.
- Italian 10-year government bond yields fell to 4.6 percent from 4.65 percent.
- Gold rose 0.21 percent to $1,581.30 per ounce.
Asian shares were lower overnight on weak economic data despite comments from incoming Bank of Japan Deputy Governor Kikuo Iwata that more easing is to come in the near future. The Japanese Nikkei Index fell 0.28 percent and the Shanghai Composite Index fell 1.04 percent while the Hang Seng Index fell 0.87 percent. Also, the Korean Kospi fell 0.5 percent and Australian shares declined 0.56 percent.
European shares were modestly higher in early trade despite some weak economic data from the U.K. as inflation in Germany and other core European nations remained low in February, signaling more room for the ECB to ease policy further. The Spanish Ibex Index rose 0.5 percent and the Italian FTSE MIB Index rose 0.63 percent. Meanwhile, the German DAX rose 0.1 percent and the French CAC rose 0.01 percent while U.K. shares rose 0.03 percent.
Commodities were mixed overnight as energy futures fell and precious metals futures rose. WTI Crude futures fell 0.21 percent to $91.87 per barrel and Brent Crude futures fell 0.23 percent to $109.97 per barrel. Copper futures fell 0.2 percent to $351.00 per pound on the Asian weakness and weak U.K. data. Gold was higher and silver futures rose 0.21 percent to $28.92 per ounce.
Currency markets were in clear risk off mode as the dollar and the yen reigned and the euro and the pound slid. The EUR/USD was lower at 1.3012 and the dollar fell against the yen to 95.95. Overall, the Dollar Index rose 0.16 percent on strength against the euro, the pound, and the Canadian dollar. The GBP/USD fell 0.5 percent following the weak data to 1.4842, breaking through the 1.49 level, as the pound weakened broadly. Also, the yen was stronger against both the euro and the Aussie dollar.
Stocks moving in the pre-market included:
- Yum! Brands (NYSE: YUM) shares rose 5.4 percent pre-market after the company revised higher same store sales estimates for its Chinese operations in January and also reported data for February.
- Diamond Foods (NASDAQ: DMND) shares fell 5.85 percent pre-market after reporting worse than expected fiscal second quarter operations.
- Urban Outfitters (NASDAQ: URBN) shares fell 2.29 percent pre-market after reporting slightly worse than expected second quarter operations.
- VeriFone Systems (NYSE: PAY) shares rose 7.58 percent after announcing that its CEO was stepping down following an approximately 63 percent slide in the stock price in the last 52-weeks.
Notable companies expected to report earnings Tuesday include:
- Acadia Pharmaceuticals (NASDAQ: ACAD) is expected to report a fourth quarter loss of $0.09 per share vs. a loss of $0.10 per share a year ago.
- Costco Corp. (NASDAQ: COST) is expected to report second quarter EPS of $1.06 vs. $0.90 a year ago.
- Dole Foods (NYSE: DOLE) is expected to report a fourth quarter loss of $0.02 per share vs. a loss of $0.02 per share a year ago.
- Embraer (NYSE: ERJ) is expected to report fourth quarter EPS of $0.87 vs. a loss of $0.51 per share a year ago.
- JinkoSolar Holding Co. (NYSE: JKS) is expected to report a fourth quarter loss of $0.80 per share vs. a loss of $2.58 per share a year ago.
- XOMA Holdings (NASDAQ: XOMA) is expected to report a fourth quarter loss of $0.26 per share vs. a loss of $0.34 per share a year ago.
On the economics calendar Tuesday, the NFIB Small Business Optimism Index is set to be released alongside chain store sales and the Redbook. The Treasury is also set to auction 4-week and 3-year notes and also issue its monthly budget statement. Overnight, French payrolls and eurozone industrial production data should move markets.
Good luck and good trading.
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