#PreMarket Primer: Thursday, November 21: Taper Tug-Of-War Carries On After Fed Minutes
FOMC minutes released on Wednesday showed a much more optimistic view of the US' economic progress than most had been expecting.
After incoming Fed chief Janet Yellen made a case for the bank's continued quantitative easing, many were surprised to see that several US central bankers were considering beginning the taper at one of their next couple of meetings. Minutes from the Fed's October meeting showed that Fed officials are interested in shifting more toward forward guidance as a policy tool rather than asset purchases.
The news caused some to revise their taper estimates from March 2014 to as soon as December. Also on Wednesday St. Louis Fed President James Bullard told investors that he was not ruling out the possibility of a pull back at the bank's December meeting if labor market data warranted.
In other news around the markets:
- On Thursday, the Bank of Japan decided to continue with its accomodative monetary policies as was widely expected. The bank is working to build up to 2 percent inflation over the next two years with an aggressive asset purchasing plan. The bank noted that exports from Japan have been on the mend, a sign that overseas economies are also recovering.
- Meetings between Western leaders and Iranian officials are heading into their second day on Thursday with guarded optimism. A US official commented that although he was hopeful for a breakthrough, striking a deal would be quiet difficult. Western leaders are looking for Iran to make its nuclear program more transparent in exchange for looser sanctions.
- Janet Yellen will take another step toward becoming the next leader of the US Federal Reserve on Thursday as her nomination will be put to a vote at the Senate Banking Committee. Democrats who support Obama occupy 12 out of 22 seats on the panel, which is expected to pass her confirmation without difficulty.
- China's HSBC Flash Manufacturing PMI came in below expectations at 50.4. Although still above the 50 point mark which indicates expansion, the reading showed slowing momentum from last month's PMI reading of 50.9
Asian markets were mostly lower, the South Korean KOSPI fell 1.16 percent, the Hang Seng index was down 0.51 percent and China's Shenzhen composite lost 0.41 percent. Only the Japanese NIKKEI gained, up 1.92 percent.
European markets also stumbled on Thursday, the UK's FTSE was moderately higher, up 0.10 percent, the the eurozone's STOXX 600 fell 0.17 percent. The German DAX was down 0.25 percent and France's CAC 40 lost 0.45 percent.
Energy futures fell slightly with Brent futures down 0.11 percent and WTI futures down 0.07 percent. Gold lost 0.78 percent and silver was down 0.24 percent. Industrial metals were also lower with aluminum posting the largest losses, down 0.72 perrcent.
In currency markets the euro traded steadily at $1.34 and the pound lost 0.07 percent against the dollar. The dollar gained 0.84 percent against the yen and 0.77 percent against the Australian dollar.
Notable earnings released on Wednesday included:
- J.C. Penney Company (NYSE: JCP) reported a third quarter loss of $1.81 per share on revenue of $2.78 billion, compared to last year’s loss of $0.93 per share on revenue of $2.93 billion.
- Green Mountain Coffee Roasters (NASDAQ: GMCR) reported fourth quarter EPS of $0.89 on revenue of $1.05 billion, compared to last year’s EPS of $0.64 on revenue of $946.74 million.
- Limited Brands (NYSE: LTD) reported third quarter EPS of $0.31 on revenue of $2.17 billion, compared to last year’s EPS of $0.36 on revenue of $2.05 billion.
- Lowe's Companies (NYSE: LOW) reported third quarter EPS of $0.47 on revenue of $13.00 billion, compared to last year’s EPS of $0.40 on revenue of $12.07 billion.
- Staples (NASDAQ: SPLS) reported third quarter EPS of $0.42 on revenue of $6.11 billion, compared to last year’s EPS of $0.46 on revenue of $6.35 billion.
Stocks moving in the Premarket included:
- Bank of America (NYSE: BAC) gained 0.26 percent in premarket trade after climbing 3.42 percent over the past five days.
- Verizon Communications (NYSE: VZ) gained 0.20 percent in premarket trade after sliding 0.75 percent on Wednesday.
- Abercrombie & Fitch (NYSE: ANF) lost 2.77 percent in premarket trade ahead of the company's earnings report.
- Carnival Corp (NYSE: CCL) fell 0.50 percent in premarket trade after gaining 0.39 percent on Wednesday.
Notable earnings expected on Thursday include:
- Target (NYSE: TGT) is expected to report third quarter EPS of $0.63 on revenue of $17.37billion, compared to last year’s EPS of $0.81 on revenue of $16.93 billion.
- Gamestop (NYSE: GME) is expected to report third quarter EPS of $0.57 on revenue of $1.98 billion, compared to last year’s EPS of $0.38 on revenue of $1.77 billion.
- Abercrombie & Fitch (NYSE: ANF) is expected to report third quarter EPS of $0.45 on revenue of $1.06 billion, compared to last year’s EPS of $1.02 on revenue of $1.17 billion.
- Gap Inc. (NYSE: GPS) is expected to report third quarter EPS of $0.71 on revenue of $3.98 billion, compared to last year’s EPS of $0.63 on revenue of $3.98 billion.
Notable economic releases on Thursday will include, US consumer confidence, US manufacturing PMI, US PPI, US initial and continuing jobless claims, and British mortgage approvals.
For a recap of Wednesday’s market action click here.
Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.
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