Benzinga Market Primer: Wednesday, March 27

Futures Edge Lower Despite Asian Gains, Oil Retreats From Highs

U.S. equity futures edged slightly lower in early pre-market trade following gains from Asia as energy futures retreated from range highs touched Tuesday. Also, weak economic data from Europe as well as post-Cyprus fears weighed on sentiment.

Top News

In other news around the markets:

• British fourth quarter GDP fell 0.3 percent, in line with estimates, marking an official triple-dip recession for the U.K. France's fourth quarter GDP also fell 0.3 percent, which was also in line with estimates.


• Nikkei reported Tuesday that the Bank of Japan will step up its easing efforts in April by increasing the size of its asset purchase program. Also, overnight, Bank of Japan Governor Kuroda spoke saying that the BoJ wants to abolish the bank-note rule, which would allow the BoJ to own more bonds than the amount of bank notes in circulation (the Federal Reserve, for example, has no such rule).


• Cypriot finance minister Michael Sarris said that uninsured depositors in Popular Bank of Cyprus (also known as Laiki Bank) will not be paid out for 6 or 7 years and will likely lose around 80 percent of uninsured assets.


• S&P 500 futures were slightly lower at 1,556.00.


• The EUR/USD was lower at 1.2805.


• Spanish 10-year government bond yields rose 0.05 percent to 4.99 percent.


• Italian 10-year government bond yields 10 basis points to 4.68 percent.


• Gold fell 0.11 percent to $1,595.60.

Asian Markets

Asian shares were higher overnight following gains in the U.S. The Japanese Nikkei Index rose 0.18 percent and the Shanghai Composite Index gained 0.16 percent while the Hang Seng Index rose 0.69 percent. Also, the Korean Kospi gained 0.49 percent and Australian shares added 0.9 percent.

European Markets

European shares were mostly lower in early trade on some weak economic data. The Spanish Ibex Index fell 1.28 percent, confirming a recent technical breakdown in Spanish stocks, and the Italian FTSE MIB Index declined 0.66 percent. Meanwhile, the German DAX declined 0.24 percent and the French CAC slid 0.57 percent while U.K. shares gained slightly by 0.06 percent.

Commodities

Commodities were slightly weaker overnight as weak European economic data sent futures lower from recent highs, especially in oil. WTI Crude futures declined 0.36 percent to $95.99 per barrel and Brent Crude futures fell 0.09 percent to $109.26 per barrel. Copper futures rose 0.07 percent to $344.50 per pound despite global inventories hitting a three-year high and hedge funds becoming the most bearish ever on copper. Gold was lower and silver futures fell 1.32 percent to $28.30 per ounce.

Currencies

Currency markets saw significant euro weakness overnight following growth fears as well as continued fears following the Cyprus bailout. The EUR/USD was lower at 1.2805 and the dollar rose against the yen to 94.52. Overall, the Dollar Index rose 0.22 percent on strength against the euro, the pound, the Swiss franc, the yen, and the Canadian dollar.

Pre-Market Movers

Stocks moving in the pre-market included:

• LogMeIn LOGM shares fell 2.96 percent pre-market after winning a patent lawsuit.


• SAIC SAI shares rose 4.21 percent following stronger than expected earnings and a newly declared $1 per share dividend.


• J.C. Penney JCP shares fell 0.2 percent pre-market as the company announced that a third key marketing executive has left the company.


• Deutsche Bank DB shares declined 0.82 percent pre-market as S&P placed the bank on ratings watch negative.

Earnings

Notable companies expected to report earnings Wednesday include:

• Paychex PAYX is expected to report third quarter EPS of $0.39 vs. $0.37 a year ago.


• Progress Software PRGS is expected to report first quarter EPS of $0.24 vs. $0.28 a year ago.


• PVH Corp. PVH is expected to report fourth quarter EPS of $1.50 vs. $1.18 a year ago.


• Red Hat RHT is expected to report fourth quarter EPS of $0.30 vs. $0.29 a year ago.


• Texas Industries TXI is expected to report a third quarter loss of $0.41 per share vs. a loss of $0.87 per share a year ago.


• Verint Systems VRNT is expected to report fourth quarter EPS of $0.75 vs. $0.75 a year ago.

Economics

On the economics calendar Wednesday, MBA Mortgage Applications and Canadian CPI are due out as well as Pending Home Sales. Also, Chicago Fed President Charles Evans is set to speak and the Treasury is set to auction 5-year notes. Overnight, German retail sales and employment data as well as Eurozone retail data should move markets.

Good luck and good trading.