#PreMarket Primer: Monday, February 3: Market Sentiment Slumps
The turmoil in emerging markets showed no signs of letting up on Monday morning as investors braced for another week of uncertainty.
Downbeat reports from China which showed that the nation’s official Purchasing Managers’ Index had fallen to 50.5 in January weighed on sentiment. Analysts cautioned that the weak data could be partially attributed to the Lunar New Year holiday which started at the end of January.
In other news around the markets:
- On Monday the European Central Bank is expected to release further details about its plans for banking health checks, set to roll out later this year. The ECB will be conducting an asset quality review which will include an evaluation of banks’ balance sheets as well as stress tests to see how well banks respond to pressure.
- Antigovernment protestors in Thailand continued their efforts on Monday after a chaotic election took place over the weekend. Demonstrations kept 69 of the nation’s 375 constituencies from voting as the main opposition party condemned the election.
- Sysco Corp is planning to acquire US Foods, the US’ second largest food distribution business. If the deal goes ahead, Sysco would take over 25 percent of the market and bring in approximately $65 billion in revenue. The company’s chief executive has said the acquisition could potentially cut costs by $600 million per year in three to four years.
- Samsung has hit a stumbling block in its effort to roll out a new smartphone operating system in order to compete with Google and Apple. Samsung’s Tizen system has struggled to attract application developers, a large part of the user experience. Additionally, several large wireless carriers like Sprint and Telefonica, which originally supported the new system, have begun to pull their support for phones set up to use the Tizen platform.
Asian markets slid on Monday as emerging market turmoil coupled with weak Chinese data pressured the region’s stocks. The Japanese NIKKEI lost 1.98 percent, China’s Shanghai composite was down 0.82 percent and the Shenzhen composite was down 0.88 percent. The South Korean KOSPI was down 1.09 percent and Hong Kong’s Hang Seng index lost 0.48 percent.
European markets started the month on shaky ground as well; the UK’s FTSE was down 0.43 percent and the eurozone’s STOXX 600 lost 0.44 percent. France’s CAC 40 fell 0.34 percent and the German DAX was down 0.71 percent.
Energy futures for March delivery were lower; Brent futures were down 0.02 percent and WTI futures lost 0.38 percent. Gold rose 0.46 percent and silver gained 0.21 percent. However industrial metals didn’t fare as well with aluminum down 1.33 percent and zinc down 0.55 percent.
The euro lost ground against the dollar and slipped to $1.3483 and the pound fell 0.24 percent against the strengthening dollar. The dollar gained 0.09 percent against the yen and lost 0.03 percent against the Australian dollar.
Notable earnings released on Friday included:
- Chevron (NYSE: CVX) reported EPS of $2.57 on revenue of $54 billion, compared to last year’s EPS of $2.98 on revenue of $60.55 billion.
- Mastercard (NYSE: MA) reported EPS of $0.57 on revenue of $2.10 billion, compared to last year’s EPS of $0.49 on revenue of $1.90 billion.
- Mattel (NYSE: MAT) reported EPS of $1.07 on revenue of $2.11 billion, compared to last year’s EPS of $1.12 on revenue of $2.26.
- Tyson Foods (NYSE: TSN) reported EPS of $0.72 on revenue of $8.76 billion, compared to last year’s EPS of $0.48 on revenue of $8.40 billion.
Stocks moving in the Premarket included:
- Cabot Oil & Gas Corp (NYSE: COG) gained 1.05 percent in premarket trade after rising 0.65 percent on Friday.
- ONEOK Inc. (NYSE: OKE) was down 6.92 percent in premarket trade after gaining 14.23 percent on Friday.
- Procter & Gamble Co (NYSE: PG) fell 0.82 percent in premarket trade after losing 3.23 percent last week.
- International Business Machines Corp (NYSE: IBM) was down 0.54 percent in premarket trade after falling 1.65 percent last week.
Notable earnings releases expected on Monday include:
- UGI Corporation (NYSE: UGI) is expected to report EPS of $1.08, compared to last year’s EPS of $0.90.
- Yum! Brands, Inc. (NYSE: YUM) is expected to report EPS of $0.80, compared to last year’s EPS of $0.83.
- First Bancorp. (NYSE: FBP) is expected to report EPS of $0.11, compared to last year’s EPS of $0.07.
PMI data will dominate Monday’s economic calendar with manufacturing PMI figures expected from the US, the UK, the eurozone, Germany, France, Italy, Spain, Canada and India. Other notable releases include the Brazilian trade balance and South Korean CPI.
For a recap of Friday’s market action, click here.
Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.
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