Benzinga Market Primer, Tuesday October 23

U.S. equity futures fell in early Tuesday trading as Moody's downgraded five Spanish regions and confirmed five others. The news comes just days after more Spanish regions tapped the federal government's regional bailout fund, effectively drawing down the remaining balance of the fund and raising questions over the ability of Spain to keep its regions solvent.

Top News

In other news around the markets:

• Ambrose Evans-Pritchard at the Daily Telegraph is the latest analyst to join the chorus of strategists and journalists highlighting the risk of further Bank of Japan stimulus, most likely in the new year once elections have taken place and Prime Minister Noda's government is out.


• Spanish GDP fell at 1.7 percent annualized rate in the third quarter, showing the continued drag on the economy of its austerity measures. Also, the government reported that domestic demand fell 1.2 percent quarter-over-quarter.


• Iran's oil minister warned that further sanctions on the nation would prompt it to cut off all oil exports and that the nation would be able to generate revenue from means other than oil exports.


• S&P 500 futures fell 10.5 points to 1,419.60.


• The EUR/USD was lower at 1.3031.


• Spanish 10-year government bond yields rose to 5.537 percent.


• Italian 10-year government bond yields rose to 4.766 percent.


• Gold futures fell 0.49 percent to $1,717.19 per ounce.

Asian Markets

Asian shares were mixed in overnight trading with weak earnings from Japanese utilities weighing on stocks. The Japanese Nikkei Index rose 0.04 percent in overnight trading while the Shanghai Composite Index fell 0.86 percent and the Hang Seng Index rose 0.68 percent in Hong Kong trading. Meanwhile, the Korean Kospi fell 0.76 percent but Australian shares rose 0.05 percent on positive RBA comments.

European Markets

European shares traded lower in early trade, led lower by core stocks. Spanish shares slid on the weak economic data, as the Ibex Index fell 0.39 percent, and Italian shares fell in tandem, falling 0.33 percent. Germany's DAX fell 0.69 percent and France's CAC fell 0.47 percent as investors fretted that Spain will need a larger than expected bailout, putting further strains on core nations to front more bailout funds.

Commodities

Commodities were weaker in early trade, despite comments from Iran. WTI Crude futures fell 0.21 percent to $88.46 per barrel and Brent Crude futures fell 0.1 percent to $109.33 per barrel. Copper futures slipped 1.08 percent to $358.30 per pound on global growth fears. Gold was lower and silver futures fell 0.89 percent to $31.965 per ounce.

Currencies

Currency markets continued to show dollar strength in early trade, as the euro weakened and the yen continued its downward slide. The EUR/USD was lower at 1.301 and the dollar gained against the yen for the ninth straight trading day. Overall, the Dollar Index gained 0.09 percent on strength against the Canadian dollar, the yen, and the euro. The Aussie dollar was also broadly weak, falling against the U.S. dollar, the euro, and the yen, indicating a broad risk-off sentiment in markets.

Pre-Market Movers

Stocks moving in the pre-market included:

• Advanced Micro Devices AMD shares rose 1.9 percent pre-market after falling over 3 percent Monday.


• United States Steel X fell 1.13 percent pre-market as investors continued to be concerned over the profitability of the steel sector as a whole.


• Shares of Union Pacific UNP fell 0.8 percent pre-market despite being upgraded at FBR Capital Markets to outperform.

Earnings

There are several notable companies reporting earnings Tuesday, including:

• 3M Co. MMM is expected to report third quarter EPS of $1.65 vs. $1.52 a year ago.


• Netflix NFLX is expected to report third quarter EPS of $0.04 vs. $1.16 a year ago.


• United Technologies UTX is expected to report third quarter EPS of $1.18 vs. $1.42 a year ago.


• Harley Davidson HOG is expected to report third quarter EPS of $0.58 vs. $0.78 a year ago.

Economics

On the economic calendar Tuesday, same store sales and the Redbook are due out to shed light on the state of the American consumer. Also, the Richmond Fed Manufacturing Index is due out and the FOMC begins its two-day meeting.

Good luck and good trading.