Benzinga Market Primer, Tuesday, November 20
Futures flat on France downgrade.
U.S. equity futures were flat in pre-market trading following the Moody's downgrade of France to Aa1 from Aaa, or one notch. Moody's also left the rating on negative watch, citing a worsening growth outlook for Europe's second largest economy. Moody's is the second of the three major ratings agencies to downgrade France, following Standard and Poor's in January. French 10-year government bond yields rose to 2.112 percent.
In other news around the markets:
- The Bank of Japan did not change interest rates and did not launch any new monetary policies at its meeting overnight, although the Bank did mention a weakening economic outlook and declining Capex.
- Intel (NASDAQ: INTC) CEO Paul Otellini announced he is going to step down in May. The announcement was largely unexpected and investors await the announcement of a new CEO.
- Spain sold 4.938 billion euros of 12- and 18-month bills, with yields relatively flat as compared to the previous auction and on strong demand.
- S&P 500 futures were flat at 1,383.18.
- The EUR/USD was flat at 1.2805
- Spanish 10-year government bond yields fell to 5.872 percent.
- Italian 10-year government bond yields fell to 4.868 percent.
- Gold fell 0.05 percent to $1,733.60 per ounce.
Asian shares were mixed overnight following the France downgrade. The Japanese Nikkei Index fell 0.12 percent and the Shanghai Composite Index dropped 0.4 percent while the Hang Seng Index fell 0.16 percent. However, the Korean Kospi rose 0.64 percent and Australian shares rose 0.56 percent as the RBA minutes showed a higher chance of further easing than previously thought.
European shares were mostly lower, led lower by French banks. The Spanish Ibex Index fell 0.35 percent and the Italian MIB Index fell 0.76 percent. Meanwhile, the German DAX rose 0.2 percent while the French CAC fell 0.2 percent and U.K. shares dropped 0.21 percent.
Commodities were mostly lower overnight following Monday's large gains in commodities markets. WTI Crude futures fell 0.43 percent to $88.90 per barrel and Brent Crude futures fell 0.28 percent to $111.39 per barrel. Copper futures were lower by 0.25 percent to $352.75 despite the positive comments on mining from the RBA. Gold was slightly lower and silver futures fell 0.09 percent to $33.16 per ounce..
Currency markets were relatively tepid overnight with major currencies not moving much save for the yen. The EUR/USD was flat at 1.2805 and the dollar fell against the yen to 81.25. Overall, the Dollar Index fell 0.06 percent to 80.82 on weakness against the yen and the pound.
Stocks moving in the pre-market included:
- Apple (NASDAQ: AAPL) shares rose 0.37 percent in the pre-market following a massive 7.21 percent gain Monday.
- Cliffs Natural Resources (NYSE: CLF) fell 3.66 percent as the company made significant revisions to its earnings.
- Credit Suisse (NYSE: CS) shares fell 2.6 percent in Swiss trading as the bank announced a restructuring of its Investment Bank and Private Bank.
- Verizon (NYSE: VZ) shares rose 0.33 percent following a 3.41 percent gain Monday as investors bought the stock as its yield rose above 5 percent briefly.
Notable companies expected to report earnings Tuesday include:
- Best Buy (NYSE: BBY) is expected to report second quarter EPS of $0.12 vs. $0.47 a year ago.
- Campbell's Soup (NYSE: CPB) is expected to report first quarter EPS of $0.85 vs. $0.82 a year ago.
- Diana Shipping (NYSE: DSX) is expected to report third quarter EPS of $0.14 vs. $0.33 a year ago.
- Hewlett-Packard (NYSE: HPQ) is expected to report fourth quarter EPS of $1.14 vs. $1.17 a year ago.
- H.J. Heinz and Co. (NYSE: HNZ) is expected to report second quarter EPS of $0.88 vs. $0.81 a year ago.
- Salesforce.com (NASDAQ: CRM) is expected to report third quarter EPS of $0.32 vs. $0.34 a year ago.
On the economics calendar Tuesday, housing starts and building permits data are due out. In addition, the Fed's Lacker is set to speak at 9:00 am, Chairman Bernanke is set to speak at noon, and the Treasury is set to auction 4-week bills. Overnight, trade balance data from both Japan and Spain are due out and the Bank of England's Monetary Policy Committee (MPC) is set to release its minutes, which could hint at further easing in the future.
Good luck and good trading.
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