Benzinga Market Primer, Tuesday August 28
U.S. equity futures were flat in early Tuesday trading as the last week of the August vacation season weighed on volumes. Oil prices were strong as Hurricane Isaac bears down on the gulf coast and has shut down 78 percent of gulf oil production. Also, Fitch Ratings' Riley stated in a Bloomberg interview that the U.S. is at risk of a downgrade in the first half of 2013 due to the threat of the fiscal cliff.
In other news around the markets:
- German Finance Minister Wolfgang Schauble and French Finance Minister Pierre Moscovici are said to be working on resolving differences between the two countries in their theories of how to fix the crisis.
- Greek socialist coalition leader Evangelos Venizelos, the former Finance Minister, has stated that talk of a Greek exit needs to stop and that Greece is committed in implementing reforms.
- Strategists at Societe Generale now expect a hard landing in China and a multi-year drawn-out period of slower growth due to bad debt in the economy.
- Spain and Italy auctioned short-term bills with yields falling across the yield curve at auction from the prior auctions of similar maturities.
- S&P 500 futures rose 0.10 points to 1,408.40.
- EUR/USD rose to 1.2542.
- Spanish 10-year bond yields rose to 6.403 percent.
- Italian 10-year bond yields rose to 5.755 percent.
- Gold fell 0.66 percent to $1,664.50 per ounce.
Overnight, Asian shares were mixed as Chinese shares rose and Japanese shares fell. China's Shanghai Composite Index rose 0.85 percent and Australia's ASX Index rose 0.36 percent in tandem with China on hopes of renewed stimulus from Chinese authorities following continuing signs of economic weakness. However, the Japanese Nikkei Index fell 0.57 percent. European indexes were all lower as shares fell across the continent. French and German shares were notably weak, with the CAC 40 Index falling 0.73 percent and the German DAX falling 0.5 percent.
Oil prices rose early Tuesday as Isaac shut down production an estimated 78 percent of gulf oil production. WTI crude futures rose 0.59 percent to $96.03 per barrel and Brent crude futures rose 0.20 percent to $112.49. Copper futures fell 0.24 percent and silver fell as metals were broadly weak on Chinese growth fears.
The Dollar Index was weak early Tuesday, falling 0.26 percent to 81.44. Once again, the Nordic currencies were strong as oil prices rose against the dollar. Also the euro was higher against the dollar giving the index further weakness. The euro spiked higher against a basket of currencies on the Fitch headlines, including the Aussie dollar, the pound and the yen.
Tiffany and Co. (NYSE: TIF) reported earnings that missed analyst estimates as the company slashed full-year guidance Monday. Notable companies reporting earnings Tuesday include:
- Bank of Nova Scotia (NYSE: BNS) is expected to report Q2 EPS of $1.20 vs. $1.14 a year ago.
- Movado Group (NYSE: MOV) is expected to report Q2 EPS of $0.18 vs. $0.16 a year ago.
The economic calendar is rather full Tuesday. Retail sales data will be released through same-store sales and the Redbook, giving investors further insight into the state of the U.S. consumer. The S&P Case-Shiller Home Price Index is also due out and consumer confidence data is set to be released. Lastly, the Richmond Fed Manufacturing Index is set to give investors a further view on the state of manufacturing in the country and potentially further insight into the chances of Fed easing next month.
Good luck and good trading.
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