Benzinga Market Primer: Tuesday, January 8
Futures Slip on Weak Euro Data
U.S. equity futures declined in overnight trading as weak retail sales data in the eurozone sent markets lower. Also, earlier this morning, it was reported that the eurozone unemployment rate increased to a new record-high of 11.8 percent from 11.7 percent in the past month. Also, weak German export data declined in the past month, further weighing on markets.
UPDATE: German Factory Orders were released as falling 1.8 percent in November from October, well below the consensus forecast of a 1.4 percent decline.
In other news around the markets:
- Spain increased in net borrowing target for 2013 by 7.5 percent from its September budget. The increase in borrowing needs is a further sign that Spain still has a long way to go to right its ship and get its finances back in order.
- S&P released a report on Japan overnight stating that hopes for reflationary policies need to be tempered and looks at past attempts as signs that there is a high probability of failure of policies.
- Unless swift action is taking on the Debt Ceiling, the Bipartisan Policy Center believes that the U.S. could default as soon as February 15 and most likely by March 1.
- S&P 500 futures fell 2.9 points to 1,452.90.
- The EUR/USD was flat at 1.3116.
- Spanish 10-year government bond yields fell to 5.09 percent.
- Italian 10-year government bond yields fell to 4.32 percent.
- Gold rose 0.47 percent to $1,654.10 per ounce.
Asian shares were lower overnight on Debt Ceiling and global macroeconomic fears. The Japanese Nikkei Index fell 0.86 percent and the Shanghai Composite Index fell 0.41 percent while the Hang Seng Index fell 0.94 percent in Hong Kong trading. Also, the Korean Kospi fell 0.66 percent and Australian shares declined 0.57 percent.
European shares were mostly higher overnight, albeit modestly, despite the weak data released earlier. The Spanish Ibex Index rose 0.06 percent and the Italian MIB Index rose 0.35 percent, driving most peripheral shares higher. However, Spanish shares have slipped slightly since the budget data was released. Meanwhile, the German DAX fell 0.15 percent and the French CAC rose 0.36 percent while U.K. shares gained a modest 0.08 percent.
Commodities were mostly higher overnight despite weak data in Europe. WTI Crude futures rose 0.24 percent to $93.41 per barrel and Brent Crude futures rose 0.23 percent to $111.66 per barrel. Copper futures declined 0.1 percent to $367.45 per pound as investors had fears over global growth and specifically the Chinese economy. Gold was higher and silver futures rose 0.64 percent to $30.28 per ounce.
Currency markets were rather quiet overnight after significant price moves over the past week or so and major pairs were largely unchanged. The EUR/USD was basically flat at 1.3116 and the dollar declined against the yen to 87.48. Overall, the Dollar Index declined slightly on weakness against the yen and the Canadian dollar; however, the greenback was stronger against the pound, the Swiss franc, and the Swedish krone overnight. Notably, the EUR/JPY pair declined back below 115 overnight and the pound was just broadly weak.
Stocks moving in the pre-market included:
- Boeing (NYSE: BA) shares declined 0.17 percent pre-market as a 787 Dreamliner operated by Japan Airlines caught on fire at Boston's Logan Airport Monday.
- Delta Air Lines (NYSE: DAL) shares rose 0.46 percent pre-market as the company's new partner, Virgin America, appointed a new CEO with lots of American airline experience, bolstering hopes that the new partnership will payoff.
- Halliburton (NYSE: HAL) shares declined 0.63 percent pre-market as Nat Gas futures slid nearly 1 percent as winter weather remained rather mild across large swaths of the U.S.
- EMC (NYSE: EMC) shares declined 0.54 percent pre-market following the announcement of a new Joint Venture with Lenovo Monday.
Notable companies expected to report earnings Tuesday include:
- Alcoa (NYSE: AA) is expected to kick off fourth quarter earnings season by reporting fourth quarter EPS of $0.07 vs. a loss of $0.03 per share a year ago.
- Apollo Group (NASDAQ: APOL) is expected to report first quarter EPS of $0.90 vs. $1.28 a year ago.
- Monsanto (NYSE: MON) is expected to report first quarter EPS of $0.37 vs. $0.23 a year ago.
On the economics calendar Tuesday, the NFIB Small Business Optimism Index is due out as well as ICSC Store Sales. In addition, the Redbook is due out and the Treasury is set to auction 4-week and 52-week bills and 3-year notes. Also, Jeffery Lacker of the Richmond Fed is set to speak at 3:30 pm eastern.
Good luck and good trading.
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