Market Overview

Benzinga Market Primer: Friday, September 6: Companies And Investors Are Back Into Borrowing

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After excessive debt caused the collapse of Lehman Brothers at the start of the US financial crisis, US companies shied away from taking new loans and focused on lowering their debt.

However, five years later, it seems more and more companies are using corporate bonds to grow. The Federal Reserve reported that corporate bond debt has risen 59 percent since 2007, and companies from Apple to Verizon are funding growth spurts and acquisitions by issuing record high numbers of corporate bonds.

Top News

In other news around the markets:

  • Moody’s Investors Service has changed their outlook for the German banking system from “negative” to “stable”.  The German banking system had been rated “negative” since April 2008.
  • As the US decided whether or not to launch a military attack in Syria, Iran prepared for retaliation at the US Embassy and other American interests in Baghdad. The Wall Street Journal reported that US intelligence intercepted communication from Iran to Shiite military groups in Iraq calling for the attacks in the event of a military strike in Syria.
  • The Bank for International Settlements most recent report on foreign exchange trade showed that the Chinese yuan jumped to ninth and joined the top ten most traded international currencies for the first time. As the Chinese government loosens banking regulations, most are expecting to see the yuan’s popularity increase.
  • Federal Reserve Chairman Ben Bernanke’s term expires at the end of January, but discussions about his replacement are likely to be put off until the situation in Syria is resolved. US President Barack Obama will likely wait to announce his candidate until a decision has been made about military action in Syria.

Asian Markets

Asian markets mostly ended the week on a positive note, the Shanghai composite was up 0.83 percent, the KOSPI gained 0.19 percent and the Hang Seng index was up 0.10 percent. However the Shenzhen composite fell 0.31 percent and the Japanese NIKKEI lost 1.45 percent.

European Markets

European markets were lower on Friday following the European Central Bank’s policy meeting on Thursday. The eurozone’s STOXX 600 was down 0.12 percent, the German Dax fell 0.16 percent, France’s CAC 40 fell 0.14 percent and the UK’s FTSE was mostly flat with only a 0.06 percent loss.

Commodities

With military action in Syria still possible, energy futures were set to end the week on a high note. Brent futures were up 0.12 percent and WTI futures were up 0.28 percent. Gold lost 0.32 percent and Silver was down 0.17 percent. Industrial metals were up, copper gained 0.86 percent and aluminum was up 0.47 percent.

Currencies

After briefly surpassing the 100 yen to 1 dollar ratio, the yen gained some ground against the dollar and strengthened 0.48 percent against the greenback. The euro continued to slide against the dollar trading at $1.313. The pound lost 0.06 percent against the dollar and the Indian rupee continued to strengthen, gaining 1 percent against the dollar.

Earnings Reported Yesterday

Notable companies that reported earnings on Thursday included:

  • Finisar Corporation (NASDAQ: FNSR) reported first quarter EPS of $0.31 on revenue of $266.10 million, in line with expectations.
  • Verifone Systems, Inc. (NYSE: PAY) reported third quarter EPS of $0.24 on revenue of $416.00 million, compared to expected EPS of $0.25 on revenue of $400.83 million.
  • Smith & Wesson Holding Corporation (NASDAQ: SWHC) reported first quarter EPS of $0.40 on revenue of $171.02 million, compared to expected EPS of $0.36 on revenue of $165.02 million.

Pre-Market Movers

Stocks moving in the pre-market included:

  • J.C. Penney Company Inc. (NYSE: JCP) continued its climb and gained 1.85 percent in pre-market trade.
  • Fastenal Co. (NASDAQ: FAST) gained 2.6 percent in pre-market trade after reports that the company’s sales grew 7.2 percent in August.
  • Pepco Holdings Inc. (NYSE: POM) was up 1.42 percent in pre-market trade as investors prepared for the company to trade ex-dividend at market opening.
  • SAIC Inc (NYSE: SAI) was down 2.08 percent in pre-market trade after the company announced that budget cuts caused a steep drop in second quarter profits.
  • Viacom, Inc. (NYSE: VIA) was down 1.69 percent in pre-market trade following as the company worked out a deal with Sony to stream show channels on a pay-TV service.

Earnings

Notable companies expected to report earnings on Friday include:

  • UTi Worldwide Inc. (NASDAQ: UTIW) is expected to release second quarter EPS of $0.14 on revenue of $1.15 billion, compared to last year’s EPS of $0.20 on revenue of $1.16 billion.

Economics

On Friday’s economic calendar, the US will release nonfarm payrolls data, and the unemployment rate. Data from Europe will include German industrial production and British manufacturing production, industrial production and trade balance data.

Good luck with your trades and have a great weekend!

For a recap of Thursday’s market action, click here.

Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.

Posted-In: Earnings News Eurozone Futures Commodities Global Econ #s Economics Best of Benzinga

 

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