On Wednesday morning, the People’s Bank of China announced that it was planning to keep monetary policy steady throughout 2014, despite conflicting reports from the nation’s finance ministry.
The ministry reported that, total fiscal spending in May increased to 1.3 trillion yuan, almost a 25 percent rise. The ministry’s mini-stimulus measures have helped China’s stalling growth, but stands in sharp contrast to what the central bank has called “prudent” monetary policy.
Beijing has been working to strengthen the nation’s wobbly economy through smaller stimulus measures and isn’t expected to roll out any large scale stimulus spending any time soon.
In other news around the markets:
- Toyota Motor Corp has issued a recall for around 650,000 vehicles in Japan due to the potential for defective airbags. The recall is linked to another which was announced in 2013 and involved 2.14 million cars. Toyota blamed Takata Corp, the supplier, for dragging out the process by providing an incomplete list of serial numbers for the defective parts.
- Russia and Ukraine continued with negotiations over the price of natural gas supplies on Wednesday after Gazprom moved the deadline for Ukraine’s pre-payment for the supplies to next Monday. The two sides have been at odds as Kiev has been unable to pay its debts which prompted Moscow to threaten to cut off energy supplies to Ukraine.
- A group linked to Al-Qaeda took control of Iraq’s second-largest city Mosul on Tuesday, causing the Iraqi government to declare a state of emergency. The incident marks a major turning point for the rebel group, called the Islamic State of Iraq and al-Sham, as Mosul is a major oil center and industrial city.
- American International Group Inc. named Peter Hancock to take over from Robert Benmosche as CEO of the company on September first. The move surprised investors as Benmosche, who is 70 years old, recently said he was interested in staying on board until 2015.
Asian markets were higher with the exception of the Hang Seng index, which fell 0.25 percent. The NIKKEI was up 0.50 percent, the Shanghai composite gained 0.12 percent, the Shenzhen composite was up 0.33 percent and the KOSPI gained 0.14 percent.
European Markets
Europe’s markets were down across the board; the FTSE lost 0.47 percent, the STOXX 600 fell 0.42 percent, the DAX was down 0.77 percent, the MIB fell 0.98 percent and the CAC 40 lost 0.67 percent.
Energy futures were higher; Brent futures gained 0.45 percent and WTI futures were up 0.29 percent. Gold and silver were moderately higher, up 0.10 percent and 0.19 percent respectively, while industrial metals were mostly lower. Copper fell 0.11 percent, aluminum was down 0.55 percent and tin lost 1.85 percent, but zinc gained 0.55 percent.
The euro continued to slide on Wednesday, losing 0.11 percent to the dollar, 0.30 percent to the pound and 0.40 percent to the yen. The dollar lost ground against the pound as well, down 0.22 percent, and fell 0.30 percent against the yen.
Earnings
Notable earnings released on Tuesday included:
- United Natural Foods UNFI reported third quarter EPS of $0.73 on revenue of $1.78 billion, compared to last year’s EPS of $0.64 on revenue of $1.57 billion.
- Ulta Salon, Cosmetics & Fragrance ULTA reported first quarter EPS of $0.77 on revenue of $713.80 million, compared to last year’s EPS of $0.65 on revenue of $582.71 million.
- Radioshack Corporation RSH reported a first quarter loss of $0.98 on revenue of $736.70 million, compared to last year’s loss of $0.35 on revenue of $849.00 million.
Stocks moving in the Premarket included:
- Boston Scientific BSX was up 1.25 percent in premarket trade after gaining one percent over the past five days.
- Reynolds American RAI gained 0.57 percent in premarket trade after falling 0.29 percent on Tuesday.
- Delta Airlines DAL was down 0.95 percent in premarket trade after rising 1.87 percent over the past week.
- Verizon Communications VZ fell 0.44 percent in premarket trade after choppy trading took the stock up 0.47 percent over the past five days.
Notable earnings expected on Wednesday include:
- H&R Block, Inc. HRB is expected to report fourth quarter EPS of $3.23 on revenue of $2.49 billion, compared to last year’s EPS of $2.54.
- Men’s Wearhouse, Inc. MW is expected to report first quarter EPS of $0.67 on revenue of $629.66 million, compared to last year’s EPS of $0.65 on revenue of $616.54 million.
Economics
US oil inventory data will be closely watched on Wednesday as investors look for confirmation of Tuesday’s API report. Other notable economic releases include the British unemployment rate, the Reserve Bank of New Zealand’s interest rate decision and Australia’s unemployment rate.
For a recap of Tuesday’s market action, click here.
Tune into Benzinga’s #PreMarket Prep today to hear Rachel Shasha, Harlan Pyan and Sheldon McIntyre by clicking here!
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