Benzinga Market Primer: Wednesday, July 10: FOMC Minutes In Focus
Futures Lower On Weak China Trade Data, Eyeing FOMC Minutes
U.S. equity futures dropped slightly in early pre-market trade following some weak trade data from China for June. The world's second largest economy reported slower than expected growth in both exports and imports but a wider than forecast trade surplus, indicating that the export engine of the country cooled in June.
In other news around the markets:
- China reported that its exports declined 3.1 percent in June from a year ago vs. an expected gain of 4 percent while imports dropped 0.7 percent vs. an expected 8.0 percent gain. The trade surplus widened to $27.1 billion vs. the forecast $27.0 billion and showed improvement from May.
- Eurozone leaders reached an agreement on winding down failing banks despite German reticence. Leaders agreed that the EU can wind down failing banks, not individual countries, a key point that Germany would not endorse.
- European Central Bank Board Member and Banque de France chief Christian Noyer spoke overnight saying that monetary policy will remain accommodative for as long as necessary, reflecting comments of ECB President Mario Draghi last week. He noted that price and financial stability will be key in the ECB's decision to eventually raise rates.
- S&P 500 futures fell 2 points to 1,643.60.
- The EUR/USD was higher at 1.2817.
- Spanish 10-year government bond yields rose 5 basis points to 4.79 percent.
- Italian 10-year government bond yields rose 7 basis points to 4.48 percent.
- Gold rose 0.47 percent to $1,251.70.
Asian shares were mixed overnight as Japanese shares declined while Chinese equities rallied on hopes of new stimulus following weaker export and import data. The Japanese Nikkei 225 Index declined 0.39 percent and the Topix Index fell 0.14 percent. In Hong Kong, the Hang Seng Index rose 1.07 percent while the Shanghai Composite Index gained 2.17 percent in China. Also, the Korean Kospi fell 0.34 percent and Australian shares rose 0.4 percent.
European shares were lower in early trade following the new bank rules. The Spanish Ibex Index declined 1.02 percent and the Italian FTSE MIB Index lost 1.04 percent. Meanwhile, the German DAX declined 0.34 percent and the French CAC 40 Index fell 0.29 percent while U.K. shares lost 0.2 percent.
Commodities were stronger overnight as the dollar weakened. WTI Crude futures rose 1.23 percent to $104.80 per barrel and Brent Crude futures gained 0.43 percent to $108.27 per barrel. Copper futures rose 0.13 percent to $306.85 per pound. Gold was higher and silver futures rose 0.3 percent to $19.30 per ounce.
Currency markets were on the move overnight as the dollar weakened across the board. The EUR/USD was higher at 1.2817 and the dollar fell against the yen to 100.12. Overall, the Dollar Index fell 0.31 percent on weakness against the yen, the Swiss franc, the euro, and the pound.
Key companies that reported earnings Tuesday include:
- Wolverine World Wide (NYSE: WWW) reported second quarter EPS of $0.46 vs. $0.34 expected on revenue of $587.8 million vs. $591.03 million expected. The company also raised full year earnings guidance.
Stocks moving in the pre-market included:
- Hewlett-Packard (NYSE; HPQ) shares gained 1.92 percent pre-market after Brean Capital raised the stock to buy from hold and announced a $32 price target.
- Cummins Inc. (NYSE: CMI) shares gained 0.56 percent pre-market after the company raised its quarterly dividend to $0.625 per share from $0.50 per share.
- Fastenal (NASDAQ: FAST) shares gained 0.74 percent pre-market as the company raised its quarterly dividend to $0.25 per share from $0.20.
- Nu Skin Enterprises (NYSE: NUS) shares spiked 13.87 percent pre-market after the company raised EPS guidance well above the street's estimates.
Notable companies expected to report earnings Wednesday include:
- Yum! Brands (NYSE: YUM) is expected to report second quarter EPS of $0.54 vs. $0.67 prior on revenue of $2.93 billion vs. $3.17 bill prior.
- Family Dollar (NYSE: FDO) is expected to report third quarter EPS of $1.03 vs. $1.06 on revenue of $2.57 billion vs. $2.36 billion expected.
- Fastenal Company (NASDAQ: FAST) is expected to report second quarter EPS of $0.41 vs. $0.38 prior on revenue of $857.13 million vs. $804.89 million.
- PriceSmart (NASDAQ: PSMT) is expected to report third quarter EPS of $0.64 vs. $0.52 on revenue of $568.33 million vs. $506.77 million a year ago.
- Ruby Tuesday (NYSE: RT) is expected to report fourth quarter EPS of $0.18 vs. $0.26 on revenue of $326.06 million vs. $363.21 million a year ago.
On the economics calendar Wednesday, MBA Purchase Applications are due out followed by wholesale trade data. However, all eyes will be on the release of the FOMC minutes for June and the speech from Chairman Ben Bernanke as to when tapering might start. Overnight, the Australian employment report, the Bank of Japan decision and press conference, and the ECB monthly report are all expected.
Good luck and good trading.
Tune into Benzinga's PreMarket Info show with Dennis Dick and Joel Elconin here.
For a recap of Monday's market action, read Benzinga's daily market wrap here.
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