#PreMarket Primer: Tuesday, April 22: Japan Refocuses Massive Pension Fund
Japanese Prime Minister Shinzo Abe took a step closer to his goal of a more aggressive investment strategy on Tuesday when the nation began to overhaul its public pension fund.
The $1.26 trillion Government Pension Investment Fund, the largest of its kind, is expected to rely less on government bonds and instead make riskier investments.
The GPIF’s committee was also reshuffled, with only two members retaining their positions and one former member being reinstated.
Following the shake up, Japanese Health Minister Norihisa Tamura said the new committee is expected to help raise the fund’s investment returns and that despite the changes, the pension beneficiaries will remain the focal point of the fund’s management.
In other news around the markets:
- On Tuesday, Novartis AG announced that it was planning to completely reshuffle its product portfolio in a series of transactions totaling more than $25 billion. First up, the company is planning to acquire GlaxoSmithKline’s oncology unit for $14.5 billion. Additionally, Novartis plans to sell its vaccines unit to the British pharmaceutical company for $5.25 billion. The deals are expected to improve Novartis’ core operating income as well as expected sales.
- Activist investor William Ackman and Valeant Pharmaceuticals International are teaming up to acquire Allergan, the maker of Botox. The unorthodox partnership is likely to be quite hostile in their attempt to acquire Allergan; but if successful, the deal would create one of the largest eye and skin care companies in the world. Each of the two companies has more than $40 billion of stock market capitalization.
- The longest war in US history could be nearing an end as the Obama administration has said that the number of US troops stationed in Afghanistan could fall below 10,000. If US officials do agree to reduce the number of soldiers in the Middle Eastern nation, it will reflect their confidence in the Afghan security forces’ ability to contain the Taliban-led insurgency.
- General Motors is attempting to bar plaintiffs from suing the “New GM” for economic damages related to the company’s faulty ignition switches. After filing for bankruptcy, GM emerged as a different legal entity leaving behind its liability for issues that took place before the bankruptcy protection.
Asian markets were mixed; the Japanese NIKKEI was down 0.85 percent, the Shenzhen composite lost 0.37 percent and Indonesia’s JSX composite was down 0.28 percent. However the Shanghai composite was up 0.34 percent, the KOSPI rose 0.25 percent and the Hang Seng index was up 0.06 percent.
Europe’s markets were higher with the exception of Italy’s MIB, which lost 0.15 percent. The UK’s FTSE was up 0.88 percent, the eurozone’s STOXX 600 gained 0.89 percent, the German DAX rose 1.09 percent and France’s CAC 40 was up 0.69 percent.
Energy futures were moderately lower; Brent futures lost 0.02 percent and WTI futures were down 0.03 percent. Gold lost 0.23 percent and silver was down 1.08 percent. Industrial metals were also lower with copper down 0.64 percent and aluminum down 0.53 percent.
Currency markets were quiet on Tuesday; the euro lost some of its shine and dropped to $1.3797 and lost 0.04 percent against the yen. The dollar lost 0.08 percent against the pound and 0.14 percent against the yen and the Australian dollar gained 0.38 percent against the greenback and 0.27 percent against the yen.
Notable earnings released on Monday included:
- Netflix, Inc. (NASDAQ: NFLX) reported first quarter EPS of $0.86 on revenue of $1.27 billion, compared to last year’s EPS of $0.05 on revenue of $1.02 billion.
- Hasbro, Inc. (NASDAQ: HAS) reported first quarter EPS of $0.14 on revenue of $679.50 million, compared to last year’s EPS of $0.05 on revenue of $663.69 million.
- Kimberly-Clark Corporation (NYSE: KMB) reported first quarter EPS of $1.48 on revenue of $5.28 billion, compared to last year’s EPS of $1.48 on revenue of $5.32 billion.
- United Health Group Incorporated (NYSE: UNH) reported first quarter EPS of $1.10 on revenue of $31.70 billion, compared to last year’s EPS of $1.16 on revenue of $30.34 billion.
Stocks moving in the Premarket included:
- Home Depot Inc. (NYSE: HD) gained 0.44 percent in premarket trade after rising 1.13 percent on Monday.
- Exxon Mobil Corp (NYSE: XOM) was up 0.07 percent in premarket trade after rising 3.14 percent over the past week.
- Verizon Communications Inc (NYSE: VZ) was up 0.04 percent in premarket trade after gaining 0.80 percent on Monday.
- Valero Energy Corp (NYSE: VLO) was down 0.04 percent in premarket trade after rising 8.01 percent over the past five days
Notable earnings releases expected on Tuesday include:
- McDonald’s Corporation (NYSE: MCD) is expected to report first quarter EPS of $1.24 on revenue of $6.74 billion, compared to last year’s EPS of $1.26 on revenue of $6.61 billion.
- AT&T Inc. (NYSE: T) is expected to report first quarter EPS of $0.68 on revenue of $32.27 billion, compared to last year’s EPS of $0.64 on revenue of $31.36 billion.
- The Travelers Companies, Inc. (NYSE: TRV) is expected to report first quarter EPS of $2.17 on revenue of $5.92 billion, compared to last year’s EPS of $2.31 on revenue of $5.60 billion.
Tuesday’s economic calendar will be dominated by US releases including CPI, existing home sales and the house price index. Other notable releases include Australian CPI, Hong Kong’s unemployment rate, and Chinese manufacturing PMI.
For a recap of Monday’s market action, click here.
Tune into Benzinga’s #PreMarket Prep show with Dennis Dick and Joel Elconin here.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.