#PreMarket Primer: Monday, October 27: ECB Stress Tests In-Line With Expectations

Over the weekend, the European Central Bank released the results of its stress tests to investors eager to see how the region’s banks would fare in times of economic and financial turbulence.

All in all, the results were largely in line with expectations, with only 12 banks failing. Those that failed will need to raise a total of 9.5 billion euros over the next nine months.

The results technically showed that a total of 25 banks failed, but the remaining 13 banks have already remedied their problems. The tests mark the final hurdle before the ECB takes the helm and begins to oversee the region’s financial system on November 4.

Top News

In news around the markets:

Pro-Europe Political Parties Prevail in Ukraine Elections 

On Sunday, pro-Europe political parties swept Ukraine’s parliamentary elections, something President Petro Poroshenko says proved that the nation is in favor of his decision to move the country further from its Soviet roots and align with the West. The nation is still torn by a pro-Russian movement in the eastern part of the country, which Poroshenko says was orchestrated by Russia.

Salesforce.com Plans To Enter Health Care Industry 

Salesforce.com, inc. CRM is planning to forge a path into the health care industry, where outdated infrastructure presents a huge business opportunity. So far, none of the company’s rivals have been able to make any real gains in the industry, but Reuters reported that the company is planning to add $1 billion in revenue through health contracts over the next few years.

Hong Kong Protesters Cancel Sunday Vote 

Protesters in Hong Kong abruptly canceled their weekend vote after some claimed the organizers did not represent their interests. Joshua Wong, the 18-year-old protest leader who organized the vote, admitted that it was rushed and asked for forgiveness from his fellow demonstrators. Hong Kong’s government has reached a stalemate with the protesters, saying that the full democracy the students are demanding is something it will not deliver. However, officials from the city have said they hope to hold further talks in the coming days in order to resolve the issue and clear the city’s streets of protests.

Goldman Sachs Adjusts Oil Forecasts 

Amid worries about market oversupply, Goldman Sachs Group Inc GS trimmed its forecasts for both Brent and U.S. crude. The firm revised its prediction for Brent prices from $100 to $85 and its forecast for WTI from $90 to $75. The analysts at Goldman also said they see the global supply glut continuing to rise until it reaches its peak in the second quarter of 2015, something that may push Brent prices down to $80 and WTI down to $70.

Asian Markets

Asian markets were mostly higher, with the exception of the Shanghai composite and the Hang Seng index, which lost 0.52 percent and 0.68 percent, respectively. The NIKKEI was up 0.63 percent, the KOSPI gained 0.33 percent and the Shenzhen composite rose 0.23 percent.

European Markets

European markets got a boost following the release of the ECB’s stress test results. The FTSE rose 0.50 percent, the STOXX 600 was up 0.56 percent, the CAC 40 rose 0.54 percent and the MIB was up 0.59 percent.

Commodities

Brent futures were flat, while WTI futures gained 0.22 percent. Gold and silver lost 0.25 percent and 0.22 percent, respectively, while industrial metals were mixed. Copper and aluminum fell 0.35 percent and 1.01 percent, respectively, but tin gained 0.26 percent and zinc was flat.

Currencies

The euro made some gains over the weekend, trading at $1.2689 and gaining 0.08 percent against the pound. The dollar moved in the opposite direction, losing 0.04 percent against the pound, 0.16 percent against the yen and 0.12 percent against the franc.

Earnings

Notable reports released on Friday included:

• Ford Motor Company F reported third quarter EPS of $0.24 on revenue of $32.80 billion, compared to last year’s EPS of $0.45 on revenue of $33.86 billion.
• Procter & Gamble Co PG reported first quarter EPS of $1.07 on revenue of $20.79 billion, compared to last year’s EPS of $1.04 on revenue of $21.20 billion.
• Colgate-Palmolive Company CL reported third quarter EPS of $0.76 on revenue of $4.38 billion, compared to last year’s EPS of $0.73 on revenue of $4.40 billion.
• Bristol-Myers Squibb Co BMY reported third quarter EPS of $0.45 on revenue of $3.92 billion, compared to last year’s EPS of $0.46 on revenue of $4.06 billion.

#PreMarket Movers

Stocks moving in the #PreMarket included:

• Gilead Sciences, Inc. GILD was up 0.62 percent in premarket trade after gaining 9.98 percent over the past week.
• Facebook Inc FB was up 0.41 percent in premarket trade after rising 0.79 percent on Friday.
• Apple Inc. AAPL rose 0.35 percent in premarket trade after gaining 7.73 percent over the past week.
• Microsoft Corporation MSFT gained 0.26 percent in premarket trade after rising 5.73 percent last week.

Earnings

Notable releases expected on Monday include:

• Merck & Co., Inc. MRK is expected to report third quarter EPS of $0.88 on revenue of $10.68 billion, compared to last year’s EPS of $0.92 on revenue of $11.03 billion.
• Seagate Technology PLC STX is expected to report first quarter EPS of $1.25 on revenue of $3.63 billion, compared to last year’s EPS of $1.29 on revenue of $3.49 billion.
• Twitter Inc TWTR is expected to report third quarter EPS of $0.01 on revenue of $351.35 million.
• Amgen, Inc. AMGN is expected to report third quarter EPS of $2.11 on revenue of $4.96 billion, compared to last year’s EPS of $1.94 on revenue of $4.75 billion.

Economics

Monday will be a busy day for economic data with releases including Germany’s current assessment, Hong Kong’s trade balance, Germany’s Ifo business climate index, U.S. services PMI, U.S. pending home sales and new home sales, the U.S. trade balance, Spanish PPI, Italian retail sales and British GDP.

For a recap of Friday’s market action, click here.

Tune in to Benzinga’s #PreMarket info show with Ezra Rapoport, Frank Lortscher & Karl Setzer here.