Benzinga Market Primer: Friday, August 23: Central Banks Playing A Huge Role In Financial Markets
With the Fed taper heavy on investors’ minds, central banks in emerging economies are struggling to fund growth and pay off debts. As their currencies tumble central banks in Brazil, Turkey and Indonesia are working to stabilize their economies using fiscal policy.
In other news around the markets:
- A technical glitch shut down trading in the Nasdaq Stock Market for three hours on Thursday. The market reopened at 3:35 EST, but the incident underscored problems with automated trading systems.
- Moody’s Investors Services is planning to review US bank holding companies like Goldman Sachs and JP Morgan and has put their ratings on watch for potential downgrade citing the possible withdrawal of government support.
- The Banco Central do Brasil has announced that it will launch a currency intervention program, in which it will add at least $60 billion to the market by the end of the year in order to boost the Brazilian real. The program starts today and is expected to continue until December.
- ECB Governing Council Member Ewald Nowotny said that eurozone’s central bank isn’t going to tighten rates on positive economic indicators. Speaking at the Jackson Hole summit, Nowotny stressed that the bank is cautiously optimistic about the region’s recovery.
- In an attempt to promote economic reforms, China is setting up an experimental free trade zone in Shanghai where Premier Li Keqiang’s central government is expected to launch financial reforms that will help cut the nation’s reliance on exports and strengthen the services industry.
- German revised second quarter GDP data grew 0.7 percent, which analysts say was due to a rebound in investment and higher consumption.
Asian markets were mixed on Friday, the Japanese NIKKEI Index ended on a high at 13660.55, a 2.21 percent gain. The South Korean KOSPI gained 1.14 percent and the Australian ASX200 was up 0.94 percent. The Hang Seng Index was mostly flat with only a 0.08 percent gain, but the Shanghai Composite and the Shenzhen composite both lost nearly half a percentage point.
European markets were quiet this morning without any major moves. As of 7:17 GMT, the German DAX was unchanged and the eurozone’s STOXX600 was flat with only a 0.1 percent gain. The Spanish IBEX 35 was up 0.17 percent, but France’s CAC 40 was down 0.12 percent. The UK’s FTSE was down 0.09 percent.
Commodity prices were mostly up this morning with metals strong across the board. Gold was up 0.34 percent to $1,375.40 per ounce and silver had a modest 0.09 percent gain. Copper also gained 0.15 percent. Brent futures found support in recent global economic data and climbed 0.18 percent but WTI futures were down 0.10 percent.
Currency markets were quiet this morning; the pound strengthened just 0.06 percent against the dollar while the euro lost 0.14 percent against the greenback. The Yen fell 0.21 percent against the dollar and traded at ¥98.91.
Earnings Reported Yesterday
Notable companies that reported earnings on Thursday included:
- Aeropostale (NYSE: ARO) reported second quarter revenue of $454.00 million with a loss of $0.34, compared to an expected loss of $0.16
- Abercrombie & Fitch Corporation (NYSE: ANF) reported second quarter EPS of $0.16 compared to estimated EPS of $0.31. The company’s revenue fell short of expectations with $945.70 million.
- Dollar Tree, Inc. (NASDAQ: DLTR) reported second quarter EPS of $0.56 and revenue of $1.85 billion, which fell near the expected EPS of $0.57 and revenue of $1.85 billion.
- Hormel Foods Corporation (NYSE: HRL) reported third quarter EPS of $0.45 vs. last year’s $0.41 on better than expected revenue of 2.20
- Sears Holdings Corporation (NASDAQ: SHLD) reported a second quarter loss of $1.46 on revenue of $8.87 billion, both of which fell below expectations
- Ross Stores, Inc. (NASDAQ: ROST) reported second quarter EPS of $0.98 on revenue of $2.55 billion, compared to last year’s EPS of $0.81 on revenue of $2.34 billion
Stocks moving in the pre-market included:
- Abercrombie & Fitch Corporation (NYSE: ANF) lost 20.94 percent in pre-market trade as investors punished the company for poor earnings in the second quarter
- GameStop Corp (NYSE: GME) gained an impressive 13.44 percent in pre-market trade despite lower profit and sales figures in its second quarter earnings report
- Yahoo! Inc (NASDAQ: YHOO) was on the rise in pre-market trade after reports showed that the site surpassed Google (NASDAQ: GOOG) in website traffic for the first time since 2011. Yahoo! Inc was up 2.37 percent this morning in pre-market trade
- Hewlett-Packard (NYSE: HPQ) lost 8.55 percent in pre-market trade this morning as investors doubted the company’s turnaround potential after poor third quarter earnings.
Notable companies expected to report earnings on Friday include:
- ANN INC. (NYSE: ANN) is expected to report second quarter EPS of $0.76 on revenue of $4.41 billion compared to last year’s EPS of $0.66 on $3.93 billion
Friday is another busy day for economic releases. The US is releasing housing data including housing starts, and new home sales. In Europe, the eurozone is set to announce consumer confidence data and German GDP while the UK will release GDP, business investment data and an index of services. Also notable will be Canadian CPI data and Brazilian consumer confidence reports.
Good Luck with your Friday trades and have a great weekend!
For a recap of Tuesday’s market action, click here.
Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.
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