Benzinga Market Primer: Thursday, August 15: Futures Lower After Cisco Earnings, Weaker Dollar

Futures Lower After Cisco Earnings, Weaker Dollar

U.S. equity futures traded slightly lower in early pre-market trade following some weak guidance from Cisco CSCO for the upcoming quarter and as the dollar traded lower. Also, some weak earnings in Europe weighed on sentiment.

Top News

In other news around the markets:

• The South China Morning Post followed up its report from Monday on the large loan from AgBank overnight, highlighting that three more loans have been made in similar fashion. The moves by the state owned lenders to lend to local governments to invest in diversifying local economies is being considered a stealth fiscal stimulus.


• Japan's chief cabinet secretary and finance minister both spoke overnight and refuted claims from earlier this week that the government was going to cut corporate taxes to offset a sales tax hike. The move was cheered by markets earlier this week when it was first rumored.


• Retail sales in the U.K. rose a whopping 1.1 percent in July vs. the consensus estimate gain of 0.6 percent, accelerating from June's 0.2 percent rise. Retail sales were up 3.1 percent from a year ago.


• S&P 500 futures fell 2 points to 1,680.00.


• The EUR/USD was higher at 1.3286.


• Spanish 10-year government bond yields were flat at 4.42 percent.


• Italian 10-year government bond yields were flat at 4.18 percent.


• Gold rose 0.52 percent to $1,340.40 per ounce.

Asian Markets

Asian shares were mostly lower overnight led down by Japanese stocks on the news that senior Japanese officials refuted the tax cut rumors. The Japanese Nikkei 225 Index fell 2.12 percent and the Topix Index dropped 1.67 percent. In Hong Kong, the Hang Seng Index was flat and the Shanghai Composite Index fell 0.87 percent in China. Also, the Korean Kospi rose 0.57 percent and Australian shares fell 0.1 percent.

European Markets

European shares were lower on weak sentiment from Asia and some poor earnings reports while Italy's market was closed. The Spanish Ibex Index fell 0.01 percent and the French CAC 40 Index declined 0.26 percent. Meanwhile, the German DAX dropped 0.44 percent and U.K. shares fell 0.44 percent.

Commodities

Commodities were mostly higher overnight with oil rising and silver once again leading gains. WTI Crude futures rose 0.59 percent to $107.48 per barrel and Brent Crude futures gained 0.93 percent to $111.23 per barrel. Copper futures dropped 0.4 percent to $332.90 per pound. Gold was higher and silver futures rose 1.3 percent to $22.07 per ounce.

Currencies

Currency markets were on the move as the dollar weakened across the board. The EUR/USD was higher at 1.3286 and the dollar fell against the yen to 97.86. Overall, the Dollar Index fell 0.23 percent on weakness against the pound, the Canadian dollar, the yen, the euro, and the Swiss franc.

Earnings Reported Yesterday

Key companies that reported earnings Wednesday include:

• Cisco CSCO reported fourth quarter EPS of $0.52 vs. $0.51 expected on revenue of $12.42 billion vs. $12.4 billion expected. However, the company announced it was cutting 4,000 jobs and will see charges from the layoffs, which led the company to guide Q1 EPS between $0.50-0.51 vs. the consensus estimate of $0.51. The company also guided revenue lower than expected and sees revenue between $12.23 billion and $12.47 billion vs. the consensus forecast of $12.46 billion.


• Deere and Co. DE reported third quarter EPS of $2.56 vs. $2.16 expected on revenue of $10.0 billion vs. $9.28 billion expected.


• Macy's M reported second quarter EPS of $0.72 vs. $0.79 expected on revenue of $6.07 billion vs. $6.28 billion expected.
• Silver Wheaton SLW reported second quarter EPS of $0.20 vs. $0.26 expected on revenue of $166.9 million vs. $194.17 million expected.
• NetApp NTAP reported first quarter EPS of $0.53 vs. $0.49 expected on revenue of $1.52 billion vs. $1.53 billion expected. The company also guided second quarter EPS between $0.60-0.65 vs. the consensus estimate of $0.63 and revenue between $1.56-1.66 billion vs. the estimate $1.63 billion.

Pre-Market Movers

Stocks moving in the pre-market included:

• Cisco CSCO shares fell 8.82 percent after its fourth quarter report but shares were off of the after-hours lows by about 2 percent.


• NetApp NTAP shares declined 3.47 percent pre-market on some weak guidance as well.


• J.C. Penney JCP shares rose 1.83 percent after rallying into the close Wednesday on reports that sales improved in July.


• Newmont Mining NEM shares rose 1.44 percent pre-market as metals prices rebounded.

Earnings

Notable companies expected to report earnings Thursday include:

• Wal-Mart WMT is expected to report second quarter EPS of $1.25 vs. $1.18 a year ago on revenue of $119.7 billion vs. $114.3 billion a year ago.


• Kohl's Corp. KSS is expected to report second quarter EPS of $1.05 vs. $1.00 a year ago on revenue of $4.3 billion vs. $4.2 billion a year ago.


• Perigo PRGO is expected to report fourth quarter EPS of $1.56 vs. $1.28 a year ago on revenue of $1.00 billion vs. $831.77 million a year ago.

Economics

On the economics calendar Thursday, Fed President Bullard is expected to speak followed by the CPI report and initial jobless claims. Later, the Empire State Manufacturing Index, TIC flows, industrial production, the NAHB Housing Market Index, and the Philly Fed Survey are due out. Overnight, the German home price index and the Eurozone CPI report are 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 Wednesday's market action, read Benzinga's daily market wrap here.