Benzinga Market Primer, Friday September 14
Global markets and U.S. equity futures rose overnight into Friday and in the premarket as the Federal Reserve launched a third round of quantitative easing. The Fed announced a a new plan to purchase $40 billion of securities per month, sending risk markets globally higher.
In other news around the markets:
- Apple's (NASDAQ: AAPL) iPhone 5 went online for preorder overnight and investors will look for a statement form the company to gauge how quickly orders flood the company in hopes of better understanding demand for the latest smart phone.
- The Guardian reports that the Troika is working on a 300 billion euro bailout for Spain, allowing the ECB to step in and purchase Spanish bonds. Also, the leaders suggested they would relax conditions on Greece.
- An IMF report yesterday suggested that Greece may need a third bailout even though leaders have denied this for some time.
- S&P 500 futures rose 7.2 points to 1,457.60.
- EUR/USD rose above 1.31 to 1.3109.
- Spanish 10-year government bond yields rose to 5.653 percent.
- Italian 10-year government bond yields fell to 4.963 percent.
- Gold rose 0.28 percent to $,1777.10.
Overnight, Asian shares rose on the news of the launch of QE3. The Japanese Nikkei rose 1.83 percent and the Hang Seng Index rose 2.9 percent, as the Korean Kospi rose 2.92 percent, the Shanghai Composite Index rose 0.64 percent, and Australian stocks rose 1.16 percent. In Europe, shares reflected Asian strength as the Spanish Ibex rose 2.89 percent and the Italian MIB Inde rose 2.4 percent. The German DAX rose 1.54 percent and the French CAC 40 rose 2.15 percent.
Commodities were stronger on the news of more easing, which is dollar negative and thus commodity positive. Energy futures were also boosted by unrest in the Middle East, as WTI Crude futures rose to $100.00 per barrel, or 1.72 percent, while Brent Crude futures rose 1.49 percent to $117.61. Copper continued its massive run higher, as futures rose another 3.09 percent to $382.45 per pound, gold rose, and silver slipped 0.14 percent.
The dollar continued its three day streak of getting whacked, with the Dollar Index falling 0.58 percent and remaining below 80. The strength in the EUR/USD weighed on the index, however the greenback did gain against the yen as traders looked for currency intervention by the Bank of Japan as the yen weakens back towards multi-year lows. The pound was also stronger against the dollar despite rumors of further QE from the Bank of England next month and the Canadian dollar continued to strengthen against its southern cousin.
In economics, investors will get data on inflation, retail sales, industrial production, and inventories. Also, Fed member Dennis Lockhart is set to speak at 1:00 pm EST.
Good luck and good trading.
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