Benzinga Market Primer: Tuesday, March 19
Futures Flat, Awaiting Cyprus Decision
U.S. equity futures were flat in early pre-market trade as markets awaited a vote in the Cypriot parliament to decide if the recently discussed bailout passes. The President of Cyprus Monday cancelled a vote as the bailout legislation did not have enough political support to pass.
In other news around the markets:
- Cyprus is working on a deal to prevent savers with deposits under 20,000 euros from being taxed. Many leaders have discussed the prospect of protecting all those with less than 100,000 euros in deposits but it is up to Cyprus to decide to meet the target amount of funds raised.
- Chinese FDI rose 6.3 percent in February as compared to the same period last year, the first monthly increase in nine months. The increase in FDI further raises fears of a property bubble.
- The so-called mastermind of QE in Japan, Masayoshi Amamiya, was reappointed to the Bank of Japan board, increasing hopes that the BoJ can successfully reflate its economy.
- S&P 500 futures were flat at 1,545.60.
- The EUR/USD was lower at 1.2923.
- Spanish 10-year government bond yields rose to 4.98 percent from 4.95 percent.
- Italian 10-year government bond yields rose to 4.66 percent from 4.63 percent.
- Gold fell 0.19 percent to $1,601.60 per ounce.
Asian shares were mixed overnight as Japanese shares led on hopes of renewed stimulus from the BoJ. The Japanese Nikkei Index rose 2.03 percent and the Shanghai Composite Index rose 0.78 percent while the Hang Seng Index fell 0.19 percent. Also, the Korean Kospi rose 0.53 percent and Australian shares declined 0.56 percent.
European shares were lower for the second consecutive day as leaders struggle to reach an agreement on the Cyprus bailout. The Spanish Ibex Index fell 0.63 percent and the Italian FTSE MIB Index declined 0.35 percent. Meanwhile, the German DAX slipped 0.62 percent and the French CAC declined 0.62 percent as well as U.K. shares fell 0.33 percent.
Commodities were weaker overnight as markets sold off on global growth fears sparked by the Cyprus bailout negotiations and continued fears of a new monetary tightening cycle in China. WTI Crude futures fell fell 0.06 percent to $93.73 per barrel and Brent Crude futures fell 0.66 percent to $108.84 per barrel. Copper futures declined 0.67 percent on Chinese tightening fears. Gold was lower and silver futures declined 0.27 percent to $28.81 per ounce.
Currency markets were rather quiet overnight with aslight risk-off bias as the euro and the yen weakened. The EUR/USD was lower at 1.2923 and the dollar gained against the yen to 95.42. Overall, the Dollar Index rose 0.14 percent on strength against the euro, the yen, and the Swiss franc.
Stocks moving in the pre-market included:
- Coca-Cola (NYSE: KO) shares declined 4.54 percent pre-market as some of the company's employees in China are being investigated for misuse of GPS devices.
- Peabody Energy (NYSE: BTU) shares rose 1.76 percent pre-market on unconfirmed rumors of Icahn taking a stake in the company.
- Boeing (NYSE: BA) shares rose 0.96 percent pre-market after announcing a new deal with Ryanair (NASDAQ: RYAAY) worth over $15 billion.
- Arm Holdings (NASDAQ: ARMH) shares declined 2.29 percent pre-market after the CEO announced his intention to retire in July.
Notable companies expected to report earnings Tuesday include:
- Adobe Systems Inc (NASDAQ: ADBE) is expected to report first quarter EPS of $0.31 vs. $0.57 a year ago.
- Rockwell Collins (NYSE: COL) is expected to report second quarter EPS of $1.18 vs. $1.09 a year ago.
- DSW (NYSE: DSW) is expected to report fourth quarter EPS of $0.72 vs. $0.51 a year ago.
- FactSet Research Systems (NYSE: FDS) is expected to report second quarter EPS of $1.11 vs. $1.02 a year ago.
- Francesca's Holdings (NASDAQ: FRAN) is expected to report fourth quarter EPS of $0.30 vs. $0.20 a year ago.
- Williams-Sonoma (NYSE: WSM) is expected to report fourth quarter EPS of $1.29 vs. $1.17 a year ago.
On the economics calendar Tuesday, building permits and housing starts are expected as well as the Redbook. Also, the Treasury is set to auction 4-week bills. Overnight, German inflation and British employment data could move markets.
Good luck and good trading.
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