Benzinga Market Primer, Thursday, Novermber 15
Futures rise on stimulus hopes.
U.S. equity futures rose in early Thursday trading as the Fed signaled that it may be forced to do more easing under its third quantitative easing program to stimulate the economy. Should the U.S. go over the fiscal cliff, the Fed, in its minutes of its latest meeting of the FOMC, said that members discussed increasing the size of asset purchases once Operation Twist expires at the year end.
In other news around the markets:
- Eurozone GDP fell 0.1 percent in the third quarter as compared to the previous quarter, better than economist expectations of a drop of 0.2 percent but still showing that the Eurozone is still in a recession. Strength in France and a slower than expected rate of contraction in Italy were offset by weakness in Spain and the Netherlands, which saw GDP drop 1.1 percent in the quarter while Germany was in line.
- EU Commissioner for Economic and Monetary Affairs Olli Rehn spoke overnight, stating that he believes that the economy in Europe is bottoming, that the ECB has helped to lower yields on peripheral debt, and that continued credit contraction weighs on growth.
- As European leaders mull creating a banking union, it appears as though leaders will attempt to attract Swedish and Danish banks into the union.
- S&P 500 futures rose 4.9 points to 1,357.90.
- The EUR/USD was higher at 1.2758.
- Spanish 10-year government bond yields fell to 5.924 percent.
- Italian 10-year government bond yields fell to 4.941 percent.
- Gold futures fell 0.39 percent to $1,723.40 per ounce.
Asian shares were lower overnight except for Japan on fears that fiscal cliff will have negative effects on global trade and affect Asian exporters. The Japanese Nikkei Index rose 1.9 percent and the Shanghai Composite Index fell 1.22 percent while the Hang Seng Index dropped 1.55 percent in Hong Kong trading. Also, the Korean Kospi dropped 1.32 percent and Australian shares fell 0.89 percent.
European shares were mostly lower following the GDP data and fears over the finances of Greece, Italy and Spain. The Spanish Ibex Index rose 0.1 percent while the Italian MIB Index fell 0.48 percent while Greek shares dropped 1.14 percent. Meanwhile, the German DAX slipped 0.54 percent and the French CAC dropped 0.34 percent while U.K. shares fell 0.39 percent.
Commodities were mostly weaker in overnight trade led lower by metals. WTI Crude futures fell 0.01 percent to $86.31 per barrel and Brent Crude futures rose 0.43 percent to $110.08 per barrel. Copper futures rose 0.46 percent to $346.95 per pound while gold was lower and silver futures dropped 0.7 percent to $32.65 per ounce.
Currency markets were mixed overnight as the euro gained against most trading partners. The EUR/USD was higher and the dollar rose against the yen to 81.19. Overall, the Dollar Index rose 0.07 percent on strength against the yen, the Canadian dollar, and the Swiss franc. Also, the Aussie dollar was slightly weaker overnight, falling against the euro and the U.S. dollar.
Stocks moving in the pre-market included:
- Bank of America (NYSE: BAC) shares rose 1.11 percent as the company is set to purchase notes issued by MBIA to block an amendment to a lawsuit against it.
- BP (NYSE: BP) shares rose 0.32 percent pre-market as the company is close to settling claims with the government over the oil spill despite hints that the firm could face criminal charges.
- Pepsi (NYSE: PEP) shares rose 0.63 percent in pre-market trading despite breaking below its 200-day moving average yesterday.
- NetApp (NASDAQ: NTAP) shares rose 10.21 percent pre-market as the company reported strong earnings.
Notable companies expected to report earnings Thursday include:
- Aruba Networks (NASDAQ: ARUN) is expected to report first quarter EPS of $0.17 vs. $0.14 a year ago.
- Buckle Inc. (NYSE: BKE) is expected to report third quarter EPS of $0.84 vs. $0.81 a year ago.
- Autodesk (NASDAQ: ADSK) is expected to report third quarter EPS of $0.44 vs. $0.44 a year ago.
- Gamestop (NYSE: GME) is expected to report third quarter EPS of $0.33 vs. $0.39 a year ago. Look for comments on the launch of Activision-Blizzard's (NASDAQ: ATVI) Call of Duty: Black Ops 2 and Microsoft's (NASDAQ: MSFT) Halo 4.
- Marvell Technology Group (NASDAQ: MRVL) is expected to report third quarter EPS of $0.20 vs. $0.40 a year ago.
- Sears Holdings (NASDAQ: SHLD) is expected to report a third quarter loss of $2.18 per share vs. a $2.57 per share loss a year ago.
- Target (NYSE: TGT) is expected to report third quarter EPS of $0.77 vs. $0.82 a year ago.
- Viacom (NASDAQ: VIAB) is expected to report third quarter EPS of $1.16 vs. $1.06 a year ago.
- Wal-Mart (NYSE: WMT) is expected to report third quarter EPS of $1.07 vs. $0.97 a year ago.
On the economics calendar Thursday, weekly jobless claims and continuing claims are due out. Also, inflation data in the CPI is set to be released alongside the Empire State Manufacturing Index and the Philly Fed Index is due out as well. Fed Chairman Bernanke is set speak on the housing market and Richmond Fed President Lacker is set to speak on the economic outlook in West Virginia. In addition, Dallas Fed President Richard Fisher is set to speak at Stanford University, Philly Fed President Plosser is set to speak at the Cato Institute, and New York Fed President Dudley is to speak in New York. Also, the Chicago Fed's International Banking Conference kicks off.
Good luck and good trading.
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