#PreMarket Primer: Thursday, April 17: Violence In Ukraine Could Deter Thursday's Negotiations
Despite diplomatic talks scheduled in Geneva later on Thursday, the crisis in Ukraine is looking more and more likely to escalate after a clash between Ukrainian forces and protesters resulted in the death of three pro-Russian separatists on Wednesday night.
Russian President Vladimir Putin has condemned Kiev, saying the Ukrainian government has committed a serious crime by taking military action.
The incident took place at a national guard base where armed protesters attempted to storm the gates and open fired on the guards when they refused to join the movement. The Ukrainian government has accused Putin of sending in special agents to stir up the pro-Russian movement, but so far Moscow has denied any involvement.
In other news around the markets:
- Wall Street’s tech sell off continued with IBM and Google on Wednesday after the two companies, considered barometers of their industries, reported worse than expected first quarter results. With businesses spending less on hardware and advertising becoming more and more complicated amid the switch to mobile devices, the two companies’ lackluster earnings were indicative of the challenges that the tech sector is up against this year.
- Federal Reserve Chair Janet Yellen calmed markets on Wednesday after an address in which she confirmed that the bank was planning to remain accommodative for quite some time. After the bank’s last policy meeting, at which Yellen indicated that interest rates could rise as soon as six months after the bank finished tapering, investors had become nervous that the bank was moving towards a rate hike faster than expected.
- General Motors suffered yet another blow on Wednesday after US safety regulators released new documents showing that test drivers complained about ignition switch problems back in 2006. The problem was identified before the release of a new Cadillac, and more robust switches were ordered to alleviate the problem. GM declined to comment on the new information, and it remains unclear as to whether or not the company’s engineers knew about the Cadillac problem when developing the cars in question now.
- On Thursday, a Reuters survey showed that in April, Japanese manufacturers were more confident about the nation’s business conditions and that the recent tax hike may not be as detrimental as originally perceived. The positivity added to growing speculation that the Bank of Japan will keep from further easing in order to get a clear picture of the tax hike’s effect on domestic consumption.
Asian markets were mixed; the Shanghai composite was down 0.30 percent, the Shenzhen composite lost 0.08 percent and the Japanese NIKKEI was flat. However, the Hang Seng index rose 0.28 percent, Australia’s ASX 200 was up 0.63 percent and the NZ 50 was up 0.25 percent.
European markets were down across the board; the UK’s FTSE lost 0.24 percent and the eurozone’s STOXX 600 was down 0.26 percent. The German DAX was down 0.17 percent, Italy’s MIB lost 0.51 percent and the Spanish IBEX was down 0.58 percent.
Brent futures were down 0.25 percent to $109.33 per barrel on Thursday, while WTI futures were flat at $103.75 per barrel. Precious metals were mixed with gold down 0.44 percent, but silver up 0.13 percent. Industrial metals were up across the board with copper up 1.59 percent, aluminum up 1. 24 percent and zinc up 1.08 percent.
The euro was strong at $1.3859 despite disappointing inflation data, but lost 0.12 percent against the pound. The dollar was under pressure following Yellen’s comments on Wednesday and lost 0.20 percent against the yen, 0.41 percent against the franc and 0.18 percent against the pound.
Notable earnings released on Wednesday included:
- Google Inc. (NASDAQ: GOOG) reported first quarter EPS of $10.00, compared to last year’s EPS of $0.23 on revenue of $503.85 million.
- International Business Machines (NYSE: IBM) reported first quarter EPS of $3.00, compared to last year’s EPS of $3.00 on revenue of $23.41 billion.
- Bank Of America Corporation (NYSE: BAC) reported a first quarter loss of $0.05, compared to last year’s EPS of $0.10 on revenue of $23.50 billion.
- American Express Company (NYSE: AXP) reported first quarter EPS of $1.15, compared to last year’s EPS of $1.15 on revenue of $7.88 billion.
Stocks moving in the Premarket included:
- International Business Machines (NYSE: IBM) was down 4.09 percent in premarket trade after releasing worse than expected earnings on Wednesday.
- Alcoa Inc. (NYSE: AA) lost 0.60 percent in premarket trade after rising 2.84 percent on Wednesday.
- Carnival Corp (NYSE: CCL) was up 0.44 percent in premarket trade after falling 4.04 percent over the past five days
- Johnson & Johnson (NYSE: JNJ) gained 0.35 percent in premarket trade after losing 0.20 percent in choppy trading over the past week.
Notable earnings releases expected on Thursday include:
- General Electric Company (NYSE: GE) is expected to report first quarter EPS of $0.32 on revenue of $34.55 billion, compared to last year’s EPS of $0.39 on revenue of $35.01 billion.
- Goldman Sachs Group, Inc. (NYSE: GS) is expected to report first quarter EPS of $3.60 on revenue of $8.83 billion, compared to last year’s EPS of $4.29 on revenue of $10.09 billion.
- Morgan Stanley (NYSE: MS) is expected to report first quarter EPS of $0.62 on revenue of $8.69 billion, compared to last year’s EPS of $0.61 on revenue of $8.48 billion.
- Pepsico, Inc. (NYSE: PEP) is expected to report first quarter EPS of $0.75 on revenue of $12.43 billion, compared to last year’s EPS of $0.77 on revenue of $12.58 billion.
Thursday’s economic calendar will be relatively thin, with releases including German PPI, Canadian CPI and Chinese house price data.
For a recap of Wednesday’s market action, click here.
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