Benzinga Market Primer, Thursday June 13

Futures Drop As Nikkei Tumbles Into Bear Market Territory

U.S. equity futures tumbled in early pre-market trade after the Japanese Nikkei Index fell 6.35 percent into bear market territory. The USD/JPY, meanwhile, plunged below 95 and traded near 94.30.

Top News

In other news around the markets:

• The World Bank cut its global growth forecast for 2013 from 2.4 percent to 2.2 percent in January and cut its 2014 growth forecast from 3.1 percent to 3.0 percent. They also cut the 2013 growth forecast for China from 8.4 percent to 7.7 percent and the Eurozone from a contraction of 0.1 percent to a contraction of 0.6 percent while boosting Japan from 0.8 percent growth to 1.4 percent. They noted that the global economy remains "hesitant and uneven."


• Australia's employment change for May was better than expected as the economy added 1.1 thousand jobs vs. the expected decline of 10 thousand. The unemployment rate also fell from 5.6 percent to 5.5 percent.


• Japanese citizens continued to park money on shore in the past week, despite the multi-months decline in the yen. Japan foreign buying of stocks and bonds both fell for the third consecutive week, which added more fuel to the already in place sell-off in the Nikkei and the yen.


• S&P 500 futures fell 7.3 points to 1,602.60.


• The EUR/USD was slightly lower at 1.3328.


• Spanish 10-year government bond yields rose 6 basis points to 4.69 percent.


• Italian 10-year government bond yields rose 6 basis points to 4.44 percent.


• Gold fell 0.44 percent to $1,385.90.

Asian Markets

Asian shares were mostly lower overnight, pulled down by the Nikkei, as Chinese shares re-opened and played catch-up. The Japanese Nikkei 225 Index declined 6.35 percent and the Topix Index fell 4.78 percent. In China, the Shanghai Composite Index dropped 3.39 percent while in Hong Kong, the Hang Seng Index fell 2.19 percent. Also, the Korean Kospi Index declined 1.42 percent and Australian shares shed 0.61 percent.

European Markets

European shares tumbled as the Asian weakness spilled over. The Spanish Ibex Index fell 1.53 percent and the Italian FTSE MIB Index declined 0.65 percent. Meanwhile, the German DAX fell 1.92 percent and the French CAC 40 Index declined 1.17 percent while U.K. shares dropped 1.28 percent.

Commodities

Commodities were weak overnight as global growth fears remained strong following the cut in growth forecasts by the World Bank. WTI Crude futures fell 0.52 percent to $95.38 per barrel and Brent Crude futures declined 0.49 percent to $102.98 per barrel. Copper futures fell 1.1 percent to $319.00 per pound, just 4.5 percent above the May low. Gold was lower and silver futures declined 0.35 percent to $21.72 per ounce.

Currencies

Currency markets were on the move again as yen strength continued to be a catalyst for dollar weakness. The EUR/USD was slightly lower at 133.28 and the dollar fell 1.78 percent against the yen 94.30. Overall, the Dollar Index fell 0.21 percent on weakness against the yen and the Canadian dollar. Notably, the AUD/JPY fell below the key 90 level and the EUR/JPY looks set to test the 125 level for the first time since the beginning of April.

Earnings Reported Yesterday

Key companies that reported earnings Wednesday include:

• PVH Corp. PVH reported first quarter EPS of $1.91 vs. $1.35 a year ago on revenue of $1.91 billion, in line. The company also guided higher than expected for the second quarter and reaffirmed full year guidance.


• H&R Block HRB reported fourth quarter EPS of $2.54 vs. $2.61 a year ago on revenue of $2.2 billion vs. $2.28 billion.


• Five Below FIVE reported first quarter EPS of $0.05 vs. $0.04 on revenue of $95.6 million vs. $94.23 million expected. The company also revised its second quarter guidance.

Pre-Market Movers

Stocks moving in the pre-market included:

• Safeway SWY shares rose 23.32 percent pre-market, off of the overnight highs though, as the company announced that it will sell its Canadian operations for about $4 billion after taxes ad will use the proceeds to pay down debt and buy back stock.


• PVH Corp. PVH shares rose 8.11 percent pre-market after reporting earnings and guidance.


• J.C. Penney JCP shares declined 1.24 percent pre-market as investors have been taking increasingly bearish bets on the stock in the options markets.


• Five Below FIVE shares rose nearly 4 percent pre-market after the company boosted guidance.

Earnings

Notable companies expected to report earnings Thursday include:

• Restoration Hardware RH is expected to report first quarter EPS of $0.04 on revenue of $299.13 million.

Economics

On the economics calendar Thursday, retail sales and the weekly jobless claims report are due out followed by business inventories and a 3-year bond auction. Overnight, the Eurozone employment report is due out.

Good luck and good trading.

Tune into Benzinga's PreMarket Info show with Dennis Dick and Joel Elconin here.

For a recap of yesterday's market action, read Benzinga's daily market wrap here.