#PreMarket Primer: Friday, November 1: Fed Taper Back In Focus
The dollar gained momentum after positive US data on Thursday stoked speculation that the US Federal Reserve may consider tapering its stimulus spending sooner than expected.
Business activity in the Midwest rose more than forecast, and new jobless claims declined. Moving forward, investors will be closely watching the release of the US ISM survey of manufacturing on Friday for fresh clues about the Fed’s course of action.
In other news around the markets:
- China’s manufacturing sector picked up the pace in October, proving that the nation’s economic recovery was continuing. However, discrepancies over new export orders between the nation’s official PMI and HSBC/Markit final PMI suggested that the recovery would continue to be gradual.
- The Organization for the Prohibition of Chemical Weapons reported that Syria had met the deadline for its disarmament program by destroying all of its chemical weapons. Although the organization was unable to visit two of Syria’s chemical weapons sites due to safety concerns, the chemical weapons at those sites had been moved to different sites that inspectors did visit.
- Europe’s fragile recovery is being threatened by dangerously low inflation rates. October’s annual inflation rate slipped to 0.7 from 1.1 percent in September. The data has many speculating that the European Central Bank will ease further at its policy meeting next week.
- Tension between the US and Germany escalated after German officials deemed the US Treasury’s critique of the German economy as “incomprehensible”. The US report accused Germany of consuming too little and running significant surpluses, which the report said, weighed on the global economy.
Asian markets were mixed on Friday, the Japanese NIKKEI was down 0.88 percent but the Shanghai composite gained 0.37 percent. The Hang Seng index was up 0.19 percent and Indonesia’s JSX composite fell 1.34 percent.
European markets were also mixed on Friday morning, the UK’s FTSE was down 0.68 percent and the Eurozone’s STOXX 600 was flat. Italy’s MIB gained 0.96 percent and the German DAX was unchanged.
Energy futures were up on Friday, Brent futures gained 0.40 percent and WTI futures were up 0.10 percent. Gold was up 0.14 percent and silver gained 0.33 percent. Industrial metals were lower with aluminum posting the largest loss, down 1.80 percent.
The dollar gained on strong US data as investors speculated about a sooner than expected Fed taper. The dollar was up 0.18 percent against the euro and 0.07 percent against the pound. The yen and the Australian dollar both gained 0.32 percent against the greenback.
Notable earnings released on Thursday included:
- ConocoPhillips (NYSE: COP) reported third quarter EPS of $1.47, compared to last year’s EPS of $1.44 per share on revenue of $15.09 billion.
- Mastercard Incorporated (NYSE: MA) reported EPS of $7.27 on revenue of $2.20 billion, compared to last year’s EPS of $6.17 on revenue of $1.92 billion.
- Exxon Mobil Corporation (NYSE: XOM) reported third quarter EPS of $1.79, compared to last year’s EPS of $2.09 on revenue of $115.71 billion.
- American International Group, Inc. (NYSE: AIG) reported third quarter EPS of $0.96, compared to last year’s EPS of $1.00 on revenue of $8.75 billion.
Stocks moving in the Premarket included:
- Visa Inc. (NYSE: V) gained 0.67 percent in premarket trade after losing 3.51 percent on Thursday.
- Oracle Corp (NYSE: ORCL) gained 0.24 percent in premarket trade after rising 1.30 percent over the past five days.
- Procter & Gamble Co (NYSE: PG) lost 0.36 percent in premarket trade after losing 0.94 percent on both Wednesday and Thursday.
Earnings reports expected on Friday include:
- Chevron Corporation (NYSE: CVX) is expected to report third quarter EPS of $3.11 on revenue of $63.39 billion, compared to last year’s EPS of $2.57 per share on revenue of $58.04 billion.
- WellCare Health Plans, Inc. (NYSE: WCG) is expected to report EPS of $1.50 on revenue of $2.38 billion, compared to last year’s EPS of $1.05 on revenue of $1.82 billion.
- CBOE Holdings, Inc. (NASDAQ: CBOE) is expected to report third quarter EPS of $0.47 on revenue of $140.35 million, compared to last year’s EPS of $0.43 on revenue of $128.32 million.
Friday’s economic releases will be dominated by PMI data with Canadian, British, US, and Swiss manufacturing data all due out. Other notable releases will include US construction spending, the US ISM survey and the Brazilian trade balance.
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.
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