Benzinga Market Primer, Tuesday January 15

Futures Flat on Weak German GDP

U.S. equity futures traded fractionally lower in early Tuesday trade following the release of fourth quarter and full year 2012 GDP data for Germany. German GDP contracted 0.5 percent in the fourth quarter bringing the 2012 total rate of growth of +0.7 percent, weaker than economist forecasts of a 0.8 percent rate of growth.

Top News

In other news around the markets:

• Reports surfaced late Monday that Treasury Secretary Tim Geithner believes that the Treasury could run out of money as soon as mid-February unless the debt ceiling is raised. Fed Chairman Ben Bernanke, speaking at the University of Michigan Monday, reiterated his stance that a deal needs to get done.


• Fitch overnight has threatened the ratings of France, the U.S., and the U.K. citing the lack of a long-term fiscal plan in the U.S. and a poor European economy.


• Former Italian Prime Minister and PM Candidate Silvio Berlusconi recently conducted a series of television interviews which have paid off, as his rating in opinion polls increased some 2.5 percent last month according to La 7.


• S&P 500 futures were flat at 1,463.70.


• The EUR/USD was was flat at 1.3384.


• Spanish 10-year government bond yields fell to 5.033 percent.


• Italian 10-year government bond yields fell to 4.169 percent.


• Gold rose 0.69 percent to $1,680.90.

Asian Markets

Asian shares were mixed overnight with Japanese shares gaining on stimulus hopes and Korean shares plummeting. The Japanese Nikkei Index rose 0.72 percent and the Shanghai Composite Index rose 0.6 percent while the Hang Seng Index fell 0.14 percent in Hong Kong. Also, the Korean Kospi declined 1.16 percent and Australian shares slipped 0.07 percent.

European Markets

European shares were mostly flat to slightly higher in early trade with notable weakness seen in Spain. The Spanish Ibex Index fell 0.36 percent while the Italian MIB Index rose 0.41 percent. Meanwhile, the German DAX rose 0.06 percent and the French CAC gained 0.25 percent while U.K. shares rose 0.08 percent.

Commodities

Commodities were mostly higher overnight, buoyed by energy strength. WTI Crude futures rose 0.25 percent to $94.38 per barrel and Brent Crude futures gained 0.4 percent to $112.33 per barrel. Copper futures declined with Australian mining stocks as futures lost 0.21 percent to $362.65. Gold was higher and silver futures rose 0.72 percent to $31.34 per ounce.

Currencies

Currency markets were fairly quiet overnight with the exception being yen strength following comments from Japanese Economy Minister Amari that too much yen weakness too soon is not healthy. The EUR/USD was flat at 1.3384 and the dollar declined against the yen to 88.83. Overall, the Dollar Index fell 0.08 percent with weakness against the yen offset by strength against the Canadian dollar and Swiss franc. In addition, the AUD/JPY cross was the biggest mover, declining 0.83 percent, and the EUR/JPY followed the pair lower.

Pre-Market Movers

Stocks moving in the pre-market included:

• Hewlett-Packard HPQ shares rose 0.29 percent pre-market as the company announced that it is launching a new cloud computing unit.


• Bank of America BAC shares declined 0.39 percent ahead of its earnings report later this week.

Earnings

Notable companies expected to report earnings Tuesday include:

• El Paso Pipeline Partners LP EPB is expected to report fourth quarter EPS of $0.55 vs. $0.51 a year ago.
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• Forest Labs FRX is expected to report a third quarter loss of $0.14 per share vs. a profit of 1.04 per share a year ago.


• Interactive Brokers IBKR is expected to report fourth quarter EPS of $0.21 vs. $0.27 a year ago.


• Lennar Corporation LEN is expected to report fourth quarter EPS of $0.44 vs. $0.16 a year ago.

Economics

On the economics calendar Tuesday, Boston Fed President Eric Rosengren speaks ahead of the PPI and retail sales data releases. Also, the Empire State Manufacturing Index is due out as well as the Redbook and Naryana Kocherlakota of the Minneapolis Fed and Charles Plosser of the Philly Fed are set to speak. Lastly, business inventories data is due out and the Treasury is set to auction 4-week bills. Overnight, Australian auto sales, Chinese FDI data, and a German 1-year bund auction will set the tone for markets.

Good luck and good trading.