Benzinga Market Primer: Friday, May 3: Non-Farm Payrolls Edition
Futures Lower Ahead of Non-Farm Payrolls, Lower EU Outlook
U.S. equity futures traded lower in early pre-market trade ahead of the Non-Farm Payrolls report for April and following the EU Commission cutting its growth forecasts. Looking at Non-Farm Payrolls, economists surveyed by Bloomberg are expecting the economy to have added 153 thousand jobs, with the range of estimates wide between 100 and 200 thousand jobs. The private sector is expected to have added 175 thousand jobs and the unemployment rate is expected to remain flat at 7.6 percent.
In other news around the markets:
- The European Commission has released its revised growth forecasts for 2013 and 2014 and now expects the eurozone to contract 0.4 percent this year before expanding 1.2 percent next year. Notably, France, Italy, and Spain are all expected to contract this year before returning to growth in 2014. France and Spain will also miss deficit targets this year.
- European Central Bank President Mario Draghi announced new easing measures Thursday, including a 25 basis point cut to the main refi rate to 0.5 percent as well as a 50 basis point cut to the Marginal Lending Rate to 1.00 percent. Also, Draghi announced that the bank will extend its overnight lending program to banks by a full year through 2014 and would consider negative deposit rates should the economy worsen.
- China's official services PMI dropped to 54.5 in April from 55.6 in March. However, the British services PMI rose unexpectedly to 52.9 from 52.4 in March on expectations of a flat reading.
- The Bank of Canada announced that Stephen Poloz has been named the new central bank chief. He is currently the head of a government finance agency responsible for export controls and has usurped the likely favorite and out-going Governor Mark Carney's right-hand man Tim Macklem for the post.
- S&P 500 futures fell 2.1 points to 1,590.20.
- The EUR/USD was higher at 1.3121 after plummeting post-Draghi Thursday.
- Spanish 10-year government bond yields fell 5 basis points to 4.01 percent.
- Italian 10-year government bond yields fell 3 basis points to 3.73 percent.
- Gold rose 0.57 percent to $1,476.00 per ounce.
Asian shares were mostly higher overnight as Chinese shares rallied following the ECB easing efforts, as the eurozone is China's largest trade partner, and Japanese markets were closed for a holiday. The Shanghai Composite Index rose 1.45 percent and the CSI 300 Index rose 1.77 percent while the Hang Seng Index gained 0.1 percent. Also, the Korean Kospi rose 0.43 percent and Australian shares were flat.
European shares were mixed following the revised EC growth forecasts. The Spanish Ibex Index rose 0.29 percent and the FTSE MIB Index fell 0.31 percent. Meanwhile, the German DAX gained 0.07 percent and the French CAC 40 fell 0.17 percent while U.K. shares rose 0.08 percent.
Commodities were mixed as energy futures lagged and metals rose. WTI Crude futures fell 0.28 percent to $93.73 per barrel and Brent Crude futures fell 0.31 percent to $102.53 per barrel. Copper futures rallied sharply by 2.72 percent to $318.90 per pound on easing efforts globally. Gold was higher and silver futures rose 0.94 percent to $24.06.
Currency markets were on the move overnight ahead of the Non-Farm Payrolls report with the euro bouncing post-Draghi and the yen sliding despite Japanese markets being closed overnight. The EUR/USD was higher at 1.3121 and the dollar rose against the yen to 98.17. Overall, the Dollar Index fell 0.26 percent on weakness against the euro, the yen, and the Swiss franc.
Earnings Reported Yesterday
Key companies that reported earnings Thursday include:
- American International Group(NYSE: AIG) reported first quarter EPS of $1.34 vs. $0.87 expected.
- Fortress Investment Group (NYSE: FIG) reported first quarter EPS of $0.05 vs. $0.15 on revenue of $244.0 million vs. $218.79 million expected.
- General Motors (NYSE: GM) reported first quarter EPS of $0.67 vs. $0.54 on revenue of $36.9 billion vs. $36.0 billion expected.
- Kraft Foods (NASDAQ: KRFT) reported first quarter EPS of $0.76 vs. $0.64 on revenue of 4.5 billion vs. $4.49 billion expected.
- LinkedIn (NYSE: LNKD) reported first quarter EPS of $0.45 vs. $0.31 on revenue of $324.7 million vs. $317.08 million and lowered guidance.
- Teva Pharmaceuticals (NYSE: TEVA) reported first quarter EPS of $1.11 vs. $1.10 on revenue of $4.9 billion vs. $4.85 billion expected.
Stocks moving in the pre-market included:
- American International Group (NYSE: AIG) shares rose 2.78 percent pre-market following its stronger than expected earnings report.
- Freeport-McMoRan Copper and Gold (NYSE: FCX) shares rallied 0.69 percent pre-market on stronger copper prices.
- LinkedIn (NYSE: LNKD) shares declined 9.98 percent pre-market following the company's lowered guidance.
- Kraft (NASDAQ: KRFT) shares rose 1.98 percent pre-market following the stronger than expected earnings report.
Notable companies expected to report earnings Friday include:
- CBOE Holdings (NASDAQ: CBOE) is expected to report first quarter EPS of $0.44 vs. $0.37 a year ago.
- Duke Energy (NYSE: DUK) is expected to report first quarter EPS of $1.04 vs. $1.14 a year ago.
- Moody's Corporation (NYSE: MCO) is expected to report first quarter EPS of $0.85 vs. $0.76 a year ago.
- Madison Square Garden (NYSE: MSG) is expected to report third quarter EPS of $0.33 vs. $0.40 a year ago.
On the economics calendar Friday, aside from the Employment Situation Report, factory orders and the ISM Non-Manufacturing Index are set to be released as well as the ECRI Weekly Index. Also, the Fed's Daniel Tarullo and Jeffery Lacker are set to speak.
Good luck and good trading.
Click here to view the market wrap for Thursday, May 2.
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