Benzinga Market Primer, Tuesday September 11
U.S. equity futures rose in early Tuesday trading as hopes of further stimulus from the Federal Reserve on Thursday boosted risk appetite. Investors also await the ruling of the German Constitutional Court tomorrow on the legality of the European Stability Mechanism and the Fiscal Pact. Should the court approve both plans as expected, it could pave the way for ECB President Mario Draghi's plan to take shape. All eyes should truly focus on Spanish Prime Minister Mariano Rajoy to see if he inches closer to a program, allowing for debt support from the ECB.
In other news around the markets:
- Nearly half of the proposed spending cuts by Greece to the Troika have been rejected and now Greek leaders must go back to the proverbial drawing board to craft a new set of measures to receive bailout payments and avoid default.
- Chinese Premier Wen Jiabao promised to due whatever was necessary to stabilize growth in China but warned economists not to underestimate the downside to current economic forecasts due to exogenous shocks.
- Deutsche Bank (NYSE: DB) announced a new round of cost cutting as the bank strives to remain profitable in a lower margin investment banking world.
- Green Mountain Coffee Roasters (NASDAQ: GMCR) traded higher by over 1 percent in German trading as the Italian roaster Luigi Lavazza increased its stake in the company.
- S&P 500 futures rose 3.7 points to 1,430.1.
- EUR/USD was flat at 1.2786 ahead of the German court and the Fed.
- Spanish 10-year government bond yields rose to 5.726 percent.
- Italian government bond yields fell to 5.133 percent.
- Gold rose 0.09 percent to $1,733.40 per ounce.
Asian shares were mostly weak overnight as global growth fears dominated trading. The Japanese Nikkei slipped 0.7 percent and Chinese Shanghai Composite Index fell 0.67 percent despite commitments by the government in China to stabilize growth. Australian shares fell a modest 0.18 percent and Singapore shares rose 0.26 percent. In Europe, shares were lower led by the Spanish Ibex which fell 1.05 percent. The Italian MIB Index fell in tandem by 0.87 percent and the German DAX slipped a mere 0.08 percent. The French CAC slid 0.43 percent and the U.K. FTSE 100 fell 0.39 percent.
Commodities were mixed in early Tuesday trade as energy futures gained. WTI Crude futures rose 0.02 percent to $96.56 per barrel and Brent Crude futures rose 0.17 percent to $115.00 per barrel. Natural Gas futures also gained 0.18 percent to $2.817 per million BTU. Copper futures slipped from multi-month highs in early trade by 0.05 percent to $368.65 per pound. Gold rose slightly and silver slipped 0.14 percent to $33.585.
Currencies showed significant dollar strength despite a flat euro ahead of the Federal Reserve as investors sell dollars in fear of further balance sheet expansion by the bank. The Dollar Index fell 0.24 percent on weakness against the yen, the pound, and the Canadian dollar. The USD/CAD is at levels not seen since one year ago trading at 0.9728. Do note that the EUR/CHF has been trading modestly stronger for about one week on continued rumors that the Swiss National Bank is set to hike the peg of the franc against the euro to 1.30 from 1.20. The pair trades at 1.2068 currently.
Earnings seasons is effectively over as of late and most companies have reported earnings already. Tuesday, United Natural Foods (NASDAQ: UNFI) is expected to report EPS of $0.51 vs. $0.43 previous.
In economics, the NFIB small business sentiment index rose to 92.9 this morning beating expectations of 91.4 handedly. Of note was small businesses continuing to be concerned about the rising costs of healthcare. Same store sales data is also due out later this morning, followed by trade data and the Rebook.
Good luck and good trading.
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