Benzinga Market Primer: Wednesday, August 28: Possibility Of Military Action In Syria Puts A Damper On Markets

Markets have been taking a beating as investors keep tabs on tension between the US and Syria over the Syrian government’s alleged use of chemical weapons against its civilians. The US government has taken a firm stance, saying Syrian President Bashar al-Assad’s involvement in a chemical strike is undeniable and that a military response could come as early as Thursday.

Top News

In other news around the markets:

• Governor of the Bank of England Mark Carney is set to speak today at 12:45 GMT from the heart of the UK’s manufacturing region, Nottingham. His speech is expected to center around the defense of his low interest rates plan.
• The Bank of Japan pledged to continue with quantitative easing until the region’s inflation drops to 2 percent.
• The German GfK consumer confidence survey showed that the region’s upward climb since February was put on pause. The survey’s sentiment indicator fell from 7.0 in November to 6.9 in September.
• New Zealand’s Ministry for Primary Industries reported that products from the dairy company Fonterra did not contain botulism as was originally feared. Earlier this month, a botulism scare caused a ban on Fonterra products and dragged the New Zealand dollar down.
• Japanese officials officially raised the warning for Fukushima’s leak to a level 3

Asian Markets

Asian markets were down across the board on Wednesday. A strong yen helped pull the Japanese NIKKEI index down 1.51 percent, but Hong Kong’s Hang Seng Index had the largest drop with a 1.60 percent loss. Australia’s ASX 300 was down 1.50 percent and China’s Shenzhen index lost 1.14 percent.

European Markets

Worries that the US will lead a military strike in Syria kept European stocks low for the third consecutive day. The UK’s FTSE index was down 0.33 percent and the eurozone’s STOXX 600 index fell 0.22 percent. The German DAX shed 0.41 percent but Italy’s FTSE MIB gained 0.80 percent.

Commodities

Commodities surged in Asian trading this morning, Brent and WTI futures were up 1.43 percent and 1.20 percent respectively. Gold rose 0.39 percent and Silver jumped 0.99 percent. In contrast, industrial metals were mostly down; copper lost 0.51 percent and aluminum was down 0.34 percent.

Currencies

The dollar climbed again on Wednesday as investors were drawn to its safety. The greenback gained 0.16 percent against the euro and 0.27 percent against the pound. The Indian rupee continued its slide and lost 2.68 percent. The yen was also a winner in currency markets as investors also considered the Japanese currency to be a safe haven. The yen climbed 0.23 percent against the dollar.

Earnings Reported Yesterday

Notable companies that reported earnings on Tuesday included:

• TiVo Inc. TIVO reported a second quarter loss of $0.09 per share on revenue of $100.10 million. The company’s earnings report was mostly in line with expectations.
• Brown Shoe Company BWS reported second quarter EPS of $0.33 on revenue of $621.70 million, above expectations of $0.22 EPS on revenue of $596.73 million.
• Tiffany & Co TIF reported second quarter EPS of $0.83 on revenue of $926.00 million, above expectations of $0.74 EPS on revenue of $941.21 million.
• Bank of Montreal BMO reported third quarter EPS of $1.68 on revenue of $4.05 billion, compared to last year’s EPS of $1.49 on revenue of $3.88 billion.
• Regis Corporation RGS reported fourth quarter EPS of $0.06 on revenue of $502.30 million, below expectations of $0.12 EPS on $513.19 million worth of revenue.

Pre-Market Movers

Stocks moving in the pre-market included:

• Carnival Corp CCL was down 0.82 percent in pre-market trade after two of the company’s ships lost power in vital functions.
• Newmont Mining Corp NEM gained 3.52 percent in pre-market trade as gold prices shot up amid worries about stability in the Middle East.
• Walt Disney Co. DIS was up 1.33 percent before market opening after the company got the green light for a new studio to be build near Santa Clarita, CA.
• Ford Motor Co. F gained 0.76 percent in pre-market trade as the company found momentum in Europe’s recovery

Earnings

Notable companies expected to report earnings on Wednesday include:

• Joy Global Inc JOY is expected to report third quarter EPS of $1.36 on revenue of $1.18 billion, compared to last year’s EPS of $1.82 on revenue of $1.39 billion.
• Seadrill Limited SDRL is expected to report second quarter EPS of $0.61 on revenue of $1.15 billion, compared to last year’s EPS of $0.73 on revenue of $1.12 billion.
• Zale Corporation ZLC is expected to report a fourth quarter loss of $0.33 per share on revenue of $409.04 million, compared to last year’s loss of $0.61 per share on revenue of $406.96 million.

Economics

On Wednesday economic releases from the US include crude oil inventories, weekly distillates stocks, gasoline inventories and pending home sales. From Europe we will see Italian retail sales, German consumer confidence data and eurozone private loans data. Also notable will be South Korea’s current account data and New Zealand’s business confidence.

Good luck with your midweek trades!

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.