Benzinga Market Primer, Tuesday July 24

U.S. equity futures were flat Tuesday after the wild ride seen in financial markets Monday. U.S. stocks opened sharply lower on weak earnings and Spanish fears but rallied to narrow losses after the European close. It was the eighth straight Monday that U.S. stocks traded lower. Fears in Spain continue to swirl as Spain's 10-year bond yield reached another euro-era record high of 7.59 percent and investors fear that Spain may need a full sovereign bailout, not just a bank bailout. At one point, Spain's 5-year yield actually rose above its 10-year yield. The bailout of the regional governments and the banks is putting pressure on the sovereign finances, as many have feared for some time now.

In other news around the markets:

• Moody's places Germany, Luxembourg, and the Netherlands on negative outlook, signaling that it may downgrade them in the the coming months.


• Greek PM Samaras sees the recession in 2012 being greater than 7 percent but recovery in 2014.


• HSBC China Flash PMI 49.5 vs. 48.2 previous, the second consecutive monthly increase.


• French Preliminary Manufacturing PMI for July 43.6 vs. 45.5 estimate and 45.2 previous.


• German Preliminary Manufacturing PMI 43.3 vs. 45.3 estimate and 45.0 previous.


• Spanish PPI 2.5 percent vs. 3.2 percent estimate and 3.2 percent previous.


• Eurozone Preliminary Manufacturing PMI 44.1 vs. 45.3 estimate and 45.1 previous.


• Spanish yields rose at auction of 3- and 6-month bills.


• S&P 500 futures -2.3 to 1341.40.


• EUR/USD 1.2091.


• Spanish 10-year yield 7.59 percent.


• 6.462 percent.


• Gold -3.00 to $1,574.40.

Overnight, Asian shares were mixed as Chinese shares, measured by the Shanghai Composite Index, rose following the stronger than expected PMI release. The Shanghai Composite Index rose 0.24 percent however the Japanese Nikkei fell 0.24 percent, a rather interesting parallel. In Europe, shares were mixed as Spanish and Italian shares fell. Spain's Ibex fell nearly 2 percent following Monday's whipsaw market where it fell over 5 percent before erasing losses after the short-selling ban. Italian shares also fell Tuesday nearly 1 percent.

Commodities were mixed early Tuesday as well, following Monday's broad sell-off in the commodity complex. Brent Crude futures rose 0.47 percent to $103.75 and WTI Crude futures rose 0.44 percent to $88.53. Corn futures fell 1.34 percent, the second consecutive day of declines following rain and cooler weather across large parts of the drought-stricken farm belt. Copper futures fell 0.33 percent to $336.90 and silver futures fell 0.25 percent to $26.98.

Yen and dollar strength remains the theme Tuesday as Spanish fears continue to dominate the market. The EUR/USD fell to 1.2091 and the USD/JPY fell to 78.18. At these levels in the USD/JPY, the Bank of Japan has intervened in the past to stabilize the currency and, as Tom Keene of Bloomberg points out, analysts are on intervention watch. The EUR/AUD continued its move lower after the strong data out of China and the dollar index continued to climb.

In earnings, a continuous theme this quarter has been the impact of currency effects in earnings. McDonalds MCD reported second quarter EPS that missed estimates due to these effects and so did Eaton Corp. ETN. Also, lower guidance has been a theme, as seen in Texas Instruments' TXN earnings call. In other earnings:

• DuPont DD posted Q2 EPS of $1.48 ex-items vs. $1.46 estimate, but revenue missed slightly.


• Apple AAPL is expected to report Q2 EPS of $10.35 vs. $7.79 a year ago.


• AT&T T is expected to report Q2 EPS of $0.63 vs. $0.60 a year ago.


• Biogen BIIB is expected to report Q2 EPS of $1.56 vs. $1.36 a year ago.


• Netflix NFLX is expected to report Q2 EPS of $0.05 vs. $1.26 a year ago.

Investors await same-store sales among other data points on the economic calendar Tuesday. At 7:45 am est, data on same-store sales is set to be released. At 8:45 am, Fed Chairman Bernanke delivers a speech on education in Ohio. At 8:55 the Rebook is released and at 8:58 am the Markit Flash Manufacturing PMI for the U.S. is due out. The FHFA House Price Index and the Richmond Fed Index round out the economic calendar at 10:00 am.

Good luck and good trading.

Tuesday's fact of the day: Spanish bank assets amount to approximately 354 percent of GDP.