Benzinga Market Primer, Thursday, January 3
Futures Slip as Markets Retrace Gains
U.S. equity futures fell slightly in overnight trade following large gains on Wall Street Wednesday as Washington was able to agree a deal to avert the Fiscal Cliff in the short term. U.S. stock markets had, by some accounts, the best first trading day of the year ever, signaling that markets expected gridlock in Washington to carry on much longer.
In other news around the markets:
- Ekathimerini is reporting that Greek tourist bookings for 2013 are expected to increase handedly, with Russian tourist bookings doubling and German tourist bookings rising 20 percent for the year.
- President Obama officially signed the American Taxpayer Relief Act of 2012, officially putting pen to paper on the bill to avert the majority of tax hikes that would have occurred under the full Fiscal Cliff.
- The Chinese service sector, much smaller than the manufacturing sector, continued to expand in December and at a faster rate, as the official Non-Manufacturing PMI rose to 56.1 in December from 55.6 in November. Yesterday, economists at Nomura published a report highlighting that they expect growth to accelerate to an 8.2 percent annualized rate of GDP growth in the first half of 2013 only for it to slow to 7.2 percent in the second half.
- S&P 500 futures fell 3.4 points to 1,453.70.
- The EUR/USD was lower at 1.3102.
- Spanish 10-year government bond yields rose to 5.037 percent.
- Italian 10-year government bond yields rose to 4.286 percent.
- Gold fell 0.27 percent to $1,684.20 per ounce.
Asian shares were relatively muted overnight as markets in China and Japan remained on holiday breaks. The Hang Seng Index rose 0.37 percent overnight and the TSE Index in Taiwan rose 0.74 percent. The Korean Kospi was weaker overnight, falling 0.58 percent and Australian shares rose 0.74 percent on the stronger Chinese data.
European shares were mostly lower in early trading as markets retraced gains following the Fiscal Cliff deal and some became skeptical that the simply just pushes the cliff back two months. The Spanish Ibex Index fell 1.15 percent and the Italian MIB Index fell 0.47 percent. Meanwhile, the German DAX fell 0.29 percent and the French CAC slipped 0.51 percent while U.K. shares fell 0.15 percent.
Commodities were weaker overnight following gains the day before. WTI Crude futures fell 0.61 percent to $92.52 per barrel and Brent Crude futures fell 0.63 percent to $11.73. Copper futures did rise 0.19 percent on the stronger Chinese data this past week, rising to $374.35 per pound. Gold was lower and silver futures fell 0.05 percent to $30.98 per ounce.
Currency markets were in a clear risk-off mode overnight as the dollar rose against most pairs save the yen and investors flocked to the safety of these currencies. The EUR/USD was lower at 1.3102 and the dollar fell against the yen to 87.00. Overall, the Dollar Index rose 0.36 percent with strength against the euro, the pound and Swiss franc, driving the dollar higher. Notably, the euro was broadly weak, falling 0.64 percent against the Australian dollar, 0.64 percent against the greenback, and over 1 percent against the yen. Also, the EUR/USD just broke major neckline resistance at 1.3150 and if it falls below 1.3050, the chart gets much uglier.
Stocks moving in the pre-market included:
- J.P. Morgan Chase (NYSE: JPM) shares fell 3.25 percent pre-market as regulators cut its Community Lending Grade, a measure of how much the bank lends in low- and medium-income neighborhoods.
- McDonald's (NYSE: MCD) shares rose 0.34 percent pre-market as data out of China showed better economic performance in December.
- Marathon Oil (NYSE: MRO) fell 3.0 percent pre-market as the company awaits a decision on FEMA aid for Sandy relief following the super storm's massive destruction more than a month ago.
- Carnival Corporation (NYSE: CCL) shares fell 1.87 percent pre-market as the company announced the departure of a key executive, Pamela Conover.
No notable companies are expected to report earnings Thursday.
On the economics calendar Thursday, motor vehicle sales and chain store sales are expected to be released. Also, it is Thursday, which means initial jobless claims data will be released as well as Challenger job cuts and the ADP employment report. Later on, the FOMC minutes for the December meeting are to be released. Overnight, European service PMIs are set to be released ahead of the much anticipated Non-Farm Payrolls report Friday morning.
Good luck and good trading.
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