Benzinga Market Primer: Wednesday, May 1
Futures Higher Ahead of Key Economic Data, Earnings
U.S. equity futures rose in early pre-market trade ahead of key earnings and economic data. The FOMC rate decision and policy statement is due out later today as well as the ISM Manufacturing Index and earnings from many key companies.
In other news around the markets:
- The Chinese manufacturing sector expanded slower than expected in April as the official manufacturing PMI slipped to 50.6 in April from 50.9 in March and missed forecasts of a reading of 51.0. However, the U.K. manufacturing sector contracted slower than expected in April, as its manufacturing PMI rose to 49.8 from 48.6 on expectations of a reading of 48.5.
- Japanese labor cash earnings fell less than expected from a year ago, showing potential signs of life in the economy following the recent stimulus efforts. Cash earnings fell 0.6 percent in April from the same period a year ago, a slower decline than the 1.2 percent expected drop.
- Japanese investors bought 1.55 billion euros of ESM and EFSF debt in April, showing the beginning of the outflow of money. Outflows of domestic money are a good indicator that Japan's stimulus efforts to inflate itself out of recession through a weaker currency are working.
- S&P 500 futures rose 1.6 points to 1,593.80.
- The EUR/USD was higher at 1.3192.
- Gold rose 0.14 percent to $1,469.40 per ounce.
Asian shares were once again quiet as Chinese shares remained closed for a week-long holiday and Korean and Hong Kong shares were closed for the May Day holiday. The Japanese Nikkei Index fell 0.44 percent following the weaker than expected Chinese manufacturing PMI. Australian shares also fell 0.48 percent overnight on China fears.
European markets were also mostly closed for the May Day holiday, with all major markets save for the U.K. closed. The FTSE 100 Index rose 0.44 percent following the better than expected manufacturing PMI in the U.K. Materials stocks, specifically gold miners and copper miners, were notably strong overnight.
Commodities were mostly lower overnight following the weaker than expected Chinese manufacturing PMI, however precious metals did rise in increased central bank easing hopes. WTI Crude futures fell 0.79 percent to $92.72 per barrel and Brent Crude futures fell 0.67 percent to $101.68 per barrel. Copper futures declined 1.11 percent to $315.20, Gold was higher, and silver futures rose 0.47 percent to $24.28 per ounce.
Currency markets were quiet overnight despite all of the economic data as many foreign markets were closed. The EUR/USD was higher at 1.3192 and the dollar rose against the yen to 97.60. Overall, the Dollar Index fell 0.18 percent on weakness against the pound, the euro, the Canadian dollar and the Swiss franc.
Earnings Reported Yesterday
Key companies that reported earnings Tuesday include:
- Cummins (NYSE: CMI) reported first quarter EPS of $1.44 vs. $1.86 on revenue of $3.92 billion vs. $3.97 billion.
- McGraw-Hill (NYSE: MHP) reported first quarter EPS of $0.80 vs. $0.73 on revenue of $1.18 billion vs. $1.17 billion.
- Marathon Petroleum Corp. (NYSE: MPC) reported first quarter EPS of $2.17 vs. $2.16 on revenue of $23.3 billion vs. $19.8 billion.
- Valero (NYSE: VLO) reported first quarter EPS of $1.18 vs. $0.98 on revenue of $33.47 billion vs. $30.41 billion expected.
- Vertex Pharmaceuticals (NASDAQ: VRTX) reported first quarter EPS of $0.03 vs. an expected loss of $0.19 per share on revenue of $328.4 million vs. $308.02 million.
Stocks moving in the pre-market included:
- Knight Capital Group (NYSE: KCG) shares fell 0.56 percent ahead of its earnings release.
- Vertex Pharmaceuticals (NASDAQ: VRTX) shares rose 0.36 percent pre-market as the company unexpectedly reported a quarterly profit per share.
- Apple (NASDAQ: AAPL) shares rose 0.12 percent pre-market after the company sold $17 billion in bonds of multiple maturities with 10-year yields pricing at 2.415 percent.
Notable companies expected to report earnings Wednesday include:
- CBS (NYSE: CBS) is expected to report first quarter EPS of $0.68 vs. $0.54 a year ago.
- Chesapeake Energy (NYSE: CHK) is expected to report first quarter EPS of $0.25 vs. $0.18 a year ago.
- CVS (NYSE: CVS) is expected to report first quarter EPS of $0.79 vs. $0.65 a year ago.
- Facebook (NASDAQ: FB) is expected to report first quarter EPS of $0.13.
- Humana (NYSE: HUM)is expected to report first quarter EPS of $1.81 vs. $1.49 a year ago.
- MasterCard (NYSE: MA) is expected to report first quarter EPS of $6.17 vs. $5.36 a year ago.
- Time Warner (NYSE: TWX) is expected to report first quarter EPS of $0.74 vs. $0.67 a year ago.
- Visa (NYSE: V) is expected to report second quarter EPS of $1.81 vs. $1.60 a year ago.
On the economics calendar Wednesday, MBA Purchase Applications, the ADP Employment Report, and the U.S. Manufacturing PMI kick off the data docket followed by the ISM Manufacturing Index and Construction Spending data. Later this afternoon, the FOMC rate decision and policy statement is set to be released. Overnight, Bank of Canada Governor Mark Carney is expected to speak and Japanese monetary base data is due out. Also, the BoJ minutes, the HSBC China Manufacturing PMI, and the Eurozone Manufacturing PMI are all due out ahead of the ECB rate decision.
Good luck and good trading.
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