Benzinga Market Primer: Wednesday, August 7: Elon Musk In Focus
Futures Lower After Asia Sell-Off
U.S. equity futures were lower in early pre-market trade following a sharp sell-off overnight in Asia, which saw Japanese stocks drop 4 percent. Also, markets will have their eyes on Elon Musk as his two companies are set to report earnings today.
In other news around the markets:
- Japanese stocks led declines overnight on taper fears and also fears that Chinese trade growth might continue to slow throughout the second half of the year. The China Securities Journal wrote that a State Information Report highlighted that the government now sees more downside to trade figures.
- The Bank of England, in its Inflation Report, tied any future rate hikes to the unemployment rate for the first time. The BoE now said that it will not raise rates until the unemployment rate crosses the 7 percent threshold, which it does not see until 2016.
- BoE Governor Mark Carney, in the following press conference, said that the BoE calls the guidance "explicit rate guidance" and noted that changes in inflation or financial stability may not tempt the Bank to change its policy path.
- S&P 500 futures fell 5.4 points to 1,688.50.
- The EUR/USD was lower at 1.3268.
- Spanish 10-year government bond yields rose 2 basis points to 4.59 percent.
- Italian 10-year government bond yields rose 1 basis point to 4.26 percent.
- Gold fell 0.38 percent to $1,276.60 per ounce.
Asian shares were lower overnight with Japanese stocks leading declines. The Japanese Nikkei 225 Index fell 4.00 percent and the Topix Index dropped 3.22 percent. In Hong Kong, the Hang Seng Index fell 1.53 percent while the Shanghai Composite Index dropped 0.67 percent in China. Also, the Korean Kospi fell 1.48 percent and Australian shares declined 1.85 percent.
European shares were mixed in early trade. The Spanish Ibex Index declined 0.37 percent while the Italian FTSE MIB Index rose 0.45 percent. Meanwhile, the German DAX fell 0.47 percent and the French CAC 40 was flat while U.K. shares erased earlier losses and traded down only 0.04 percent.
Commodities were mostly lower overnight on global growth fears. WTI Crude futures did gain 0.24 percent to $105.55 per barrel but Brent Crude futures declined 0.15 percent to $108.22 per barrel. Copper futures fell 0.16 percent to $316.80 per pound. Gold was lower and silver futures fell 1.19 percent to $19.29 per ounce.
Currency markets were on the move as the pound sterling got whacked following the BoE news. The EUR/USD was lower at 1.3272 and the dollar fell against the yen to 97.06 while the pound dropped 0.9 percent against the dollar to 1.5211. Overall, the Dollar Index rose 0.22 percent on strength against the pound, the Canadian dollar, the euro, and the Swiss franc.
Key companies that reported earnings Tuesday include:
- Disney (NYSE: DIS) reported second quarter EPS of $1.03 vs. $1.01 expected on revenue of $11.58 billion vs. $11.64 billion expected. Disney also disclosed that it will take a large loss in the fiscal fourth quarter due to the Lone Ranger.
- First Solar (NASDAQ: FSLR) reported second quarter EPS of $0.39 vs. $0.53 expected on revenue of $519.8 million vs. $721.08 million expected.
- CVS (NYSE: CVS) reported second quarter EPS of $0.97 vs. $0.96 expected on revenue of $31.25 billion vs. $31.14 billion expected.
- Archer-Daniels-Midland (NYSE: ADM) reported second quarter EPS of $0.46 vs. $0.44 expected on revenue of $22.54 billion vs. $22.87 billion expected.
- 21st Century Fox (NASDAQ: FOXA) reported fourth quarter EPS of $0.42 vs. $0.34 expected on revenue of $7.21 billion vs. $7.12 billion expected.
Stocks moving in the pre-market included:
- First Solar (NASDAQ: FSLR) shares dropped 10.59 percent pre-market on the earnings miss.
- Bank of America (NYSE: BAC) shares fell 2.25 percent pre-market after the bank was sued by the Justice Department over alleged mortgage fraud in a 2008 securitization.
- Finisar (NASDAQ: FNSR) reported preliminary Q1 data that was much better than expected and shares rose 16.57 percent pre-market.
- Herbalife (NYSE: HLF) shares rose slightly in the pre-marlet by 0.12 percent as Carl Icahn reiterated that he sees the stock going a lot higher.
Notable companies expected to report earnings Wednesday include:
- Time Warner (NYSE: TWX) is expected to report second quarter EPS of $0.76 vs. $0.59 a year ago on revenue of $7.1 billion vs. $6.74 billion a year ago.
- Green Mountain Coffee Roasters (NASDAQ: GMCR) is expected to report third quarter EPS of $0.77 vs. $0.52 a year ago on revenue of $981.9 million vs. $869.19 million a year ago.
- Groupon (NASDAQ: GRPN) is expected to report second quarter EPS of $0.02 vs. $0.08 a year ago on revenue of $605.54 million vs. $568.34 million a year ago.
- Tesla Motors (NASDAQ: TSLA) is expected to report a second quarter loss of $0.17 vs. a loss of $0.89 a year ago on revenue of $393.67 million vs. $26.65 million a year ago.
- SolarCity (NASDAQ: SCTY) is expected to report a second quarter loss of $0.38 per share on revenue of $27.44 million.
On the economics calendar Wednesday, MBA Purchase Applications are due out followed by a 10-year bond auction, a speech from the Fed's Sandra Pinalto, and the consumer credit report. Overnight, the Chinese trade balance and the BoJ interest rate decision and press conference are expected.
Good luck and good trading.
Tune into Benzinga's PreMarket Info show with Dennis Dick and Joel Elconin here.
For a recap of Tuesday's market action, read Benzinga's daily market wrap here.
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