Benzinga Market Primer: Wednesday, June 12
Futures Rally as Risk Appetite Returns
U.S. equity futures rose in early pre-market as better than expected economic data from the eurozone sparked a risk rally.The yen weakened, the Australian dollar bounced back, and equity futures rose in what appears to be a return to risk.
In other news around the markets:
- The number of people claiming unemployment in England fell more than expected in May. The U.K. claimant count change was reported as -8.6 thousand vs. -5 thousand expected and the prior figure was revised to a better -11.8 thousand vs. -7.3 thousand reported before. The unemployment rate was steady at 7.8 percent.
- Industrial production in the eurozone rose faster than expected in April. Industrial production rose 0.4 percent in April vs. an expected drop of 0.2 percent however March's figure was revised slightly lower to +0.9 percent from +1.0 percent. On an annualized basis, industrial production fell 0.6 percent vs. a 1.2 percent expected drop.
- The Bank of Japan bought $8.4 billion of bonds last night as part of its stimulus measures. Yields on Japanese Government Bonds were higher on the session across the curve.
- S&P 500 futures rose 8.2 points to 1,635.30, a session high.
- The EUR/USD was lower at 1.3278.
- Spanish 10-year government bond yields rose 3 basis points to 4.69 percent.
- Italian 10-year government bond yields rose 3 basis points to 4.4 percent.
- Gold rose 0.05 percent to $1,377.70.
Asian shares were mostly lower overnight although most major indices closed off of their lows. The Japanese Nikkei 225 Index fell 0.21 percent after declining over 2 percent at the open and the Topix Index fell 0.42 percent. Also, the Korean Kospi fell 0.56 percent and Australian shares shed 0.69 percent.
European shares were mostly higher on the back of some better than expected economic data. The Spanish Ibex Index gained 1.22 percent and the Italian FTSE MIB Index rose 0.22 percent. Meanwhile, the German DAX gained 0.09 percent and the French CAC 40 rose 0.39 percent while U.K. shares added 0.05 percent.
Commodities were slightly higher overnight as global growth fears ebbed. WTI Crude futures rose 0.06 percent to $95.44 per barrel and Brent Crude futures rose 0.34 percent to $103.31 per barrel. Copper futures added 1.0 percent to $322.70 per pound. Gold was higher and silver futures rose 0.5 percent to $21.76 per ounce.
Currency markets were in retracement mode overnight as the dollar gained back some ground against the yen while risk currencies such as the Aussie dollar bounced back. The EUR/USD was lower at 1.3278 and the dollar gained against the yen to 96.57. Overall, the Dollar Index rose 0.15 percent.
Earnings Reported Yesterday
Key companies that reported earnings Tuesday include:
- LDK Solar (NYSE: LDK) reported a first quarter loss of $1.21 per share vs. an expected loss of $0.96 per share on revenue of $104.3 million vs. $97.2 million expected.
- Oxford Industries (NYSE: OXM) reported first quarter EPS of $0.82 vs. $0.78 expected on revenue of $234.2 million vs. $236.9 million expected. The company also reported mixed guidance for the second quarter and reaffirmed its full year guidance.
- Ulta Salon (NASDAQ: ULTA) reported first quarter EPS of $0.65 vs. $0.62 expected on revenue of $582.7 million vs. $576.3 million expected. However, guidance for the second quarter was slightly below forecasts.
Stocks moving in the pre-market included:
- Ulta Salon (NASDAQ: ULTA) rose 9.59 percent pre-market on the earnings beat
- First Solar (NASDAQ: FSLR) shares fell 6.29 percent as the company priced a secondary offering of 8.5 million shares, or just under 10 percent of shares outstanding.
- Newcastle Investment Corp. (NYSE: NCT) shares fell 1.17 percent pre-market after the company sold 30 million shares.
- Rambus (NASDAQ: RMBS) shares climbed 10.46 percent pre-market after the company entered a new patent licensing agreement.
Notable companies expected to report earnings Wednesday include:
- Men's Warehouse (NYSE: MW) is expected to report first quarter EPS of $0.55 vs. $0.52.
- PVH Corp. (NYSE: PVH) is expected to report first quarter EPS of $1.35 vs. $1.30 a year ago.
On the economics calendar Wednesday, MBA Purchase Applications and a 10-year Treasury auction are expected, followed by the Treasury budget statement. Overnight, the Australian Employment Change report and the ECB Monthly Report are both expected.
Good luck and good trading.
For a recap of yesterday's market action, read Benzinga's daily market wrap here.
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