Benzinga Market Primer: Tuesday, August 13: Futures Higher On Japan, Eurozone
Futures Higher On Japan, Eurozone
U.S. equity futures traded higher overnight on reports out of Japan and the eurozone. Japan may look to cut corporate taxes following the weak GDP print Monday and eurozone data showed improvement early Tuesday, both acting as factors in the early morning rally.
In other news around the markets:
- Nikkei reported that Japanese Prime Minister Shinzo Abe is considering cutting the corporate tax rate. The move would be a way to ease the economic burden of the sales tax increase and PM Abe will look for businesses to begin raising wages in response to the tax cut.
- The German ZEW Economic Sentiment Index rose to 42.0 in August from 36.3 in July on expectations of a reading of 40.0, the highest reading since March. The reading shows that Germans are becoming more confident about the economy and the survey tends to act as a leading indicator for European growth.
- British inflation data was released overnight and revealed that CPI inflation rose at a 2.8 percent annualized rate in July, slowing from the 2.9 percent rate in June. Core Producer Prices rose 1.1 percent, slower than the expected 1.2 percent.
- S&P 500 futures rose 6.1 points to 1,693.20.
- The EUR/USD was higher at 1.3309.
- Spanish 10-year government bond yields fell 1 basis point to 4.47 percent.
- Italian 10-year government bond yields fell 1 basis point to 4.16 percent.
- Gold rose 0.12 percent to $1,335.80.
Asian shares were higher overnight with Japanese stocks leading gains on the proposed tax cut plan. The Japanese Nikkei 225 Index rose 2.57 percent and the Topix Index gained 1.99 percent. In Hong Kong, the Hang Seng Index rose 1.21 percent and the Shanghai Composite Index rose 0.23 percent in China. Also, the Korean Kospi gained 1.5 percent and Australian shares rose 0.96 percent.
European shares were higher on the stronger than expected ZEW survey. The Spanish Ibex Index rose 0.62 percent and the Italian FTSE MIB Index gained 0.74 percent. Meanwhile, the German DAX rose 0.87 percent and the French CAC 40 Index gained 0.44 percent while U.K. shares rose 0.65 percent.
Commodities were were higher overnight on broad risk-on sentiment. WTI Crude futures rose 0.69 percent to $106.84 per barrel and Brent Crude futures rose 0.64 percent to $109.67 per barrel. Copper futures rose 0.85 percent. Gold was higher and silver futures rose 1.62 percent to $21.69 per ounce.
Currency markets were on the move as the dollar gained and the yen sold off sharply on the tax cut proposal. The EUR/USD was higher at 1.3309 and the dollar rose against the yen to 97.92. Overall, the Dollar Index rose 0.24 percent on strength against the yen, the Canadian dollar, and the Swiss franc.
Key companies that reported earnings Monday include:
- Sysco (NYSE: SYY) reported fourth quarter EPS of $0.50 vs. $0.55 expected on revenue of $11.6 billion vs. $11.62 billion expected.
- Buckeye Technologies (NYSE: BKI) reported fourth quarter EPS of $0.58 vs. $0.56 a year ago.
- NQ Mobile (NYSE: NQ) reported second quarter EPS of $0.26 vs. $0.20 expected on revenue of $41.4 million vs. $39.34 million expected.
- Sina (NASDAQ: SINA) reported second quarter EPS of $0.21 vs. $0.12 expected on revenue of $152.8 million vs. $145.18 million expected.
Stocks moving in the pre-market included:
- Sina (NASDAQ: SINA) shares rose 7.28 percent after the company beat earnings estimates and raised sales guidance.
- NQ Mobile (NYSE: NQ) shares rose 6.92 percent pre-market after the company also beat earnings estimates and raised sales guidance.
- J.C. Penney (NYSE: JCP) shares rose 0.99 percent pre-market after CNBC's Scott Wapner reported that Glenview Asset Management had not taken a side in the boardroom debate. Then, Reuters reported that Pershing Square's Bill Ackman was set to resume amicable talks with the board as soon as last night.
- Yum! Brands (NYSE: YUM) shares fell 3.99 percent pre-market after the company reported worse than expected China same store sales data. The company reported China SSS fell 13 percent with sales at KFC restaurants falling 16 percent and Pizza Hut sales rising 3 percent. The company also said it expects SSS to recover and turn positive in the fourth quarter in China.
Notable companies expected to report earnings Tuesday include:
- Brocade Communications (NASDAQ: BRCD) is expected to report third quarter EPS of $0.12 vs. $0.14 a year ago on revenue of $518.85 million vs. $555.33 million a year ago.
- Cree (NASDAQ: CREE) is expected to report fourth quarter EPS of $0.38 vs. $0.25 a year ago on revenue of $377.21 million vs. $306.76 million expected.
- JDS Uniphase (NASDAQ: JDSU) is expected to report fourth quarter EPS of $0.13 vs. $0.15 a year ago on revenue of $430.64 million vs. $439.3 million a year ago.
On the economics calendar Tuesday, the NFIB Small Business Optimism Index is due out followed by the retail sales report and the weekly Redbook. The Fed's Dennis Lockhart is also expected to speak and the Treasury will auction 4-week bills. Overnight, the German, French, and eurozone GDP reports are due out as well as the British employment report and Bank of England Monetary Policy Committee minutes.
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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