#PreMarket Primer: Tuesday, April 1: Yellen Calms Rising Rate Fears
At a conference on Monday, Federal Reserve Chair Janet Yellen reassured investors that the Fed was planning to keep interest rates low in order to support the US economy and job market.
Yellen’s comments spurred a selloff in markets as it reversed investors’ interpretation of her comments following March’s policy meeting.
Yellen surprised investors two weeks ago at the bank’s policy meeting when she mentioned that rate increases could begin just six months after the bank finishes tapering its asset buying program.
In other news around the markets:
- Eurozone inflation data confirmed that the bloc was still in what the European Central Bank has called the “danger zone” with March inflation figures having dropped to 0.5 percent. Eurozone inflation has been below one percent for six consecutive months and is now at its lowest level since November 2009. Most believe that in light of the poor numbers, the ECB will ease further at Thursday’s meeting.
- China’s official Purchasing Managers’ Index rose to 50.3 in March from 50.2 in February, a welcome change from the region’s recent spate of disappointing economic indicators. While the PMI figure on its own showed only a slight improvement and is unlikely to change investors’ perception of a slowdown in China, most are expecting that the nation’s policymakers will enact a stimulus program in order to help kick start the country’s stalling economy.
- General Motors will be thrown into the spotlight this week as public hearings get under way on Tuesday. The US Congress will attempt to clarify who is responsible for the 13 deaths related to the company’s defective cars and why GM was so slow to respond to the problem.
- The Wall Street Journal reported that Yahoo is in acquisition talks with News Distribution Network, an online video service. The deal could cost Yahoo nearly $300 million, but could help Yahoo compete with Google’s YouTube service. The deal is still in the preliminary stages and an agreement may not be reached for several weeks, if at all.
Asian markets ticked higher on positive Chinese data. The Shanghai composite gained 0.70 percent, the Shenzhen composite was up 1.41 percent and the South Korean KOSPI rose 0.32 percent. However, the Japanese NIKKEI lost 0.24 percent and New Zealand’s NZ 50 was down 0.34 percent.
European markets began the day on a high; the UK’s FTSE was up 0.41 percent, the eurozone’s STOXX 600 was up 0.36 percent, the German DAX gained 0.44 percent, France’s CAC 40 was up 0.62 percent and the Spanish IBEX rose 0.61 percent.
Energy futures were lower; Brent futures lost 0.16 percent and WTI futures were down 0.26 percent. Gold and silver gained 0.36 percent and 0.25 percent respectively, but industrial metals were mixed. Aluminum gained 1.54 percent but copper was down 0.05 percent and tin lost 0.33 percent.
The euro gained 0.15 percent against the dollar and 0.21 percent against the pound. The dollar was up 0.15 percent against the yen and gained 0.09 percent against the pound, but lost 0.18 percent against the Swiss franc.
Notable earnings released on Monday included:
- Global Partners LP (NYSE: GLP) reported fourth quarter EPS of $1.20 on revenue of $4.80 billion, compared to last year’s EPS of $0.81 on revenue of $5.12 billion.
- UTi Worldwide Inc. (NASDAQ: UTIW) reported a fourth quarter loss of $0.15 on revenue of $1.08 billion, compared to last year’s loss of $0.13 on revenue of $1.08 billion.
- InterOil Corporation (NYSE: IOC) reported a fourth quarter loss of $0.51 on revenue of $398.90 million, compared to last year’s EPS of $0.38 on revenue of $356.44 million.
Stocks moving in the Premarket included:
- Newmont Mining Corp (NYSE: NEM) gained 1.11 percent in premarket trade after falling 2.01 percent on Monday.
- Bank of America Corp (NYSE: BAC) rose 0.58 percent in premarket trade after gaining 1.30 percent on Monday.
- Caterpillar Inc. (NYSE: CAT) was down 0.78 percent in premarket trade after gaining 0.79 percent over the past week.
- Carnival Corp (NYSE: CCL) fell 0.69 percent in premarket trade after rising 1.66 percent on Monday.
Notable earnings releases expected on Tuesday include:
- Apollo Group, Inc. (NASDAQ: APOL) is expected to report second quarter EPS of $0.18 on revenue of $689.04 million, compared to last year’s EPS of $0.34 on revenue of $834.37 million.
The star of Tuesday’s economic calendar will be manufacturing PMI, due out from both the US and Canada. The US will also release the redbook and construction spending data.
For a recap of Monday’s market action, click here.
Tune into Benzinga’s #PreMarket Prep show with Dennis Dick and Joel Elconin here.
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