Benzinga Market Primer, Friday December 7: Non-Farm Payrolls Edition

Futures Slip Ahead of EMployment Report

U.S. equity futures fell in pre-market trading ahead of the monthly Employment Situation Report. In addition, fears over the lack of a budget deal in the U.S. kept fear high and comments from ECB President Mario Draghi indicate the Bank is less open to rate cuts than previously thought.

Top News

In other news around the markets:

• The Bundesbank slashed German growth forecasts for 2012 and 2013 in the wake of deteriorating European growth prospects. The Bank expects the German economy to grow 0.7 percent in 2012 vs. 1.0 percent previously and 0.4 percent in 2013 from 1.6 percent previously.


• The Greek debt buyback plan is set to be complete by noon eastern today and comments and results should be released after that.


• ECB President Mario Draghi said that rate cuts risk sparking currency devaluation and widespread inflation, scaring investors away from believing that the Bank is set to cut rates soon. Economists have been calling for the ECB to cut rates further to spur growth.


• S&P 500 futures fell 1.1 points to 1,411.9.


• The EUR/USD was lower at 1.2929.


• Spanish 10-year government bond yields rose to 5.536 percent.


• Italian 10-year government bond yields rose to 4.598 percent.


• Gold fell 0.21 percent to $1,698.20.

Asian Markets

Asian shares were mixed overnight as a strong, 7.3 magnitude earthquake rocked Japan sending shares lower. The Japanese Nikkei Index fell 0.19 percent and the Shanghai Composite Index rose 1.6 percent while the Hang Seng Index fell 0.26 percent. In addition, the Korean Kospi rose 0.4 percent and Australian shares rose 0.94 percent.

European Markets

European shares were lower in early Friday trading as growth fears spooked investors sending shares lower. The Spanish Ibex Index fell 0.62 percent and the Italian MIB Index slipped 0.82 percent. Meanwhile, the German DAX fell 0.08 percent and the French CAC slid 0.06 percent while U.K. shares fell 0.1 percent.

Commodities

Commodities were mostly lower in early trade weighed down by global growth fears. WTI Crude futures fell 0.12 percent to $86.16 per barrel and Brent Crude futures rose 0.19 percent to $107.23 per barrel. Copper futures did rise 0.04 percent to $364.60 per pound as strength in Australia and China overnight buoyed the red metal. Gold was lower and silver futures fell 0.48 percent to $32.96 per ounce.

Currencies

The dollar reigned in currency market overnight against most pairs save for the yen in a clear risk-off tone in forex markets. The EUR/USD was lower at 1.2929 and the dollar fell against the yen to 82.37. Overall, the Dollar Index rose to 80.419 on notable strength against the euro, the Swiss franc, and the Swedish krone. In addition, the Aussie dollar was weaker against the greenback and the yen but still rose against the euro in overnight trade.

Pre-Market Movers

Stocks moving in the pre-market included:

• Comtech CMTL shares fell 12.67 percent pre-market as the company reported weaker than expected earnings and lowered guidance.


• Smith and Wesson SWHC shares rose 2.86 percent pre-market as the company reported better than expected earnings.


• Einstein Noah Bagels BAGL shares gained 7.66 percent after the company announced a special dividend of $4 per share.


• U.S. Bancorp shares USB shares fell 0.08 percent pre-market as Moody's downgraded the company citing interest rate pressures.

Earnings

Notable companies expected to report earnings Friday include:

• The Bank of Nova Scotia BNS is expected to report fourth quarter EPS of $1.19 vs. $1.10 a year ago.


• KMG Chemicals KMG is expected to report first quarter EPS of $0.31 vs. $0.31 a year ago.

Economics

On the economics calendar Friday, it's the first Friday of the month and that means it's Non-Farm Payrolls day. By the numbers:

• Median estimate is +86k, +90k private payrolls, range is an astounding 15k-145k.


• Unemployment rate est. 7.9 percent vs. 7.9 percent previous.


• ISM Manufacturing Employment Sub-Index 48.4 vs. 52.1 previous.


• ISM Non-Manufacturing Employment Sub-Index 50.3 vs. 54.9 previous.


• ADP Payrolls 118k vs. 157k previous.

Also, consumer sentiment and credit data are both due out.

Good luck and good trading.