#PreMarket Primer: Thursday, June 5: ECB Meeting To Be The Main Event
Since last month’s European Central Bank policy meeting, investors have been on high alert as ECB President Mario Draghi all but promised that the bank would ease at June’s meeting.
The bank is widely expected to cut its main interest rate to 0.10 percent and take its deposit rate below zero; with some foreseeing quantitative easing in the mix as well. However, with investors speculating about the bank’s policy moves for a month, the announcement of a policy change could be underwhelming.
Instead, markets will likely focus on the tone of Draghi’s conference following the meeting to get an idea of whether this will be the beginning of something larger.
In other news around the markets:
- Sprint Corp is working out an agreement to acquire T-Mobile at around $40 per share. The merger could move forward as soon as this summer, but both companies are still working out the details of a formal contract. However, if it is followed through, it would join the US’ third and fourth largest wireless operators, putting the new company among the ranks of Verizon Communications and AT&T.
- With US authorities pushing for a $10 billion fine in their investigation into whether or not BNP Paribas violated US sanctions, tension within the French bank is rising. Now, the already strained relationship between the company’s cautious retail division and aggressive investment banking sector is heating up as calls are being made for some of the bank’s top executives to resign.
- On Thursday, Henkel AG announced that it had inked a deal to acquire Spotless Group SAS for $1.27 billion in cash. Buying the French household care company is expected to help Henkel strengthen its presence in Western Europe. The deal must be approved by antitrust authorities, but it is expected to be completed no later than the first quarter of 2015.
- The Wall Street Journal reported that people familiar with the probe into General Motors’ lack of urgency in recalling cars with faulty ignition switches is expected to show that the company did not make a concerted effort to cover the issue up. The investigation will likely show that GM CEO Marry Barra and the executives who worked directly with her had no knowledge of the problem before December 2013. Still, the company will probably announce the dismissal of several employees from the legal department as well as the engineer who designed the switch.
Asian markets were mixed; the Japanese NIKKEI gained 0.08 percent, the Shanghai composite was up 0.79 percent and the Shenzhen composite rose 1.08 percent. However the KOSPI was down 0.65 percent and the Hang Seng index lost 0.18 percent.
European markets started the day on a modest high with the exception of the FTSE, which lost 0.15 percent. The eurozone’s STOXX 600 gained 0.08 percent, the CAC 40 rose 0.14 percent, Italy’s MIB was up 0.27 percent and the Spanish IBEX rose 0.04 percent.
Energy futures lost ground as investors focused on rising global supplies. Brent futures were down 0.30 percent and WTI futures lost 0.40 percent. Gold was down 0.03 percent, but silver gained 0.02 percent and industrial metals were mostly lower. Aluminum lost 0.60 percent, zinc fell 0.43 percent and tin lost 0.36 percent.
Currency markets were quiet on Tuesday; the euro hung in the balance ahead of the ECB meeting at $1.36 and lost 0.12 percent against the yen. The dollar also fell against the yen, down 0.18 percent. The dollar also lost 0.13 percent against the pound and 0.16 percent against the franc.
Notable earnings released on Wednesday included:
- Leidos Holdings (NYSE: LDOS) reported first quarter EPS of $0.59 on revenue of $1.32 billion, compared to last year’s EPS of $0.54 on revenue of $2.71 billion.
- PVH Corp. (NYSE: PVH) reported first quarter EPS of $1.47 on revenue of $1.96 billion, compared to last year’s EPS of $1.91 on revenue of $1.94 billion.
- Brown Forman (NYSE: BFB) reported fourth quarter EPS of $0.62 on revenue of $893.00 million, compared to last year’s EPS of $0.45 on revenue of $866.00 million.
Stocks moving in the Premarket included:
- Microsoft (NASDAQ: MSFT) was up 0.32 percent in premarket trade after falling 1.23 percent on Tuesday.
- Verizon Communications (NYSE: VZ) lost 0.31 percent in premarket trade after falling 1.15 percent over the past five days.
- Facebook (NASDAQ: FB) fell 0.16 percent in premarket trade after gaining 0.75 percent on Wednesday.
Notable earnings releases expected on Thursday include:
- Joy Global (NYSE: JOY) is expected to report second quarter EPS of $0.71 on revenue of $933.02 million, compared to last year’s EPS of $1.73 on revenue of $1.36 billion.
- JM Smucker Company (NYSE: SJM) is expected report fourth quarter EPS of $1.16 on revenue of $1.25 billion, compared to last year’s EPS of $1.29 on revenue of $1.34 billion.
- UTi Worldwide (NASDAQ: UTIW) is expected report a first quarter loss of $0.04 on revenue of $l.10 billion, compared to last year’s loss of $0.02 on revenue of $1.08 billion.
- Thor Industries (NYSE: THO) is expected report third quarter EPS of $1.08 on revenue of $1.05 billion, compared to last year’s EPS of $0.92 on revenue of $1.05 billion.
The European Central Bank’s policy meeting will be the star of Thursday’s economic calendar with most expecting that the bank will make a bold policy move in order to help kick start the region’s stalling recovery. Other notable releases include the Bank of England’s interest rate decision, German factory orders and France’s unemployment rate.
For a recap of Wednesday’s market action, click here.
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