Benzinga Market Primer: Tuesday, January 22
Futures Flat on Bank of Japan Stimulus
U.S. equity futures were flat overnight despite new pledges by the Bank of Japan to adopt a 2 percent inflation target and print unlimited amounts of new money to reach this target. The move signals a bold stance by Japanese economic authorities that they are truly serious in devaluing the yen to restore competitiveness.
In other news around the markets:
- Deutsche Bank (NYSE: DB) shares fell over 2 percent in German trading as the German banking regulator ordered the bank to simulate a breakup of the bank.
- The German ZEW Economic Survey rose demonstrably to 31.5 in January from 6.9 in December, trumping economist forecasts of a reading of 12.0. The result is the highest reading since May of 2010 and signals new-found optimism on the health of the German and European economy.
- President Obama, in his inauguration speech Monday, pledged new efforts on gun reform, taxes, and immigration, hot-button issues that the President has vowed to address since his first campaign.
- S&P 500 futures rose 1.6 points to 1,480.40.
- The EUR/USD was higher at 1.3346.
- Spanish 10-year government bond yields fell to 5.143 percent.
- Italian 10-year government bond yields fell to 4.199 percent.
- Gold rose 0.35 percent to $1,692.90.
Asian shares were mixed overnight despite the positive developments from the Bank of Japan in its inflation stance. The Japanese Nikkei Index fell 0.35 percent and the Shanghai Composite Index fell 0.56 percent while the Hang Seng Index rose 0.29 percent in Hong Kong trading. Also, the Korean Kospi rose 0.49 percent and Australian shares rose 0.03 percent.
European shares were mostly lower but already began to recoup earlier losses in early Tuesday trade. The Spanish IBEX Index fell 0.35 percent and the Italian MIB Index rose 0.17 percent. Meanwhile, the German DAX fell 0.7 percent, weighed lower by financials, and the French CAC fell 0.29 percent while U.K. shares fell 0.05 percent.
Commodities were mostly higher overnight led by energy as natural gas futures gained on the bitter cold weather that is striking the U.S. currently. WTI Crude futures fell 0.05 percent to $95.51 per barrel and Brent Crude futures rose 0.33 percent to $112.08 per barrel while Natural Gas futures rose 2.02 percent to $3.64 per million BTU. Copper futures rose 0.31 percent to $369 per pound following the announcement of unlimited easing by the Bank of Japan. Gold was higher and silver futures rose 0.29 percent to $32.03 per ounce.
Currency markets showed broad dollar weakness in overnight trade as the yen recouped some losses. The EUR/USD was higher at 1.3346 and the dollar fell against the yen by 0.95 percent to 88.75. Overall, the Dollar Index fell 0.31 percent on weakness against the euro, the yen, and every other currency used in calculating the index. Notably, the the EUR/JPY and the AUD/JPY also declined on broad yen strength despite the Aussie dollar gaining against the euro and the greenback.
Stocks moving in the pre-market included:
- Caterpillar (NYSE: CAT) shares fell 1.76 percent pre-market as the company will be forced to take an $0.87 per share write down as the company discovered accounting fraud at a recently acquired company.
- Boeing (NYSE: BA) shares fell 1.25 percent pre-market as the company has discovered that the recent 787 problems are results of a faulty batch of batteries, not a broad problem.
- GE (NYSE: GE) shares rose 0.57 percent pre-market after analysts at Nomura maintained a Buy rating on the stock and kept the price target at $24.
- Apple (NASDAQ: AAPL) shares rose 0.65 percent pre-market as the company is set to launch an online store in Indonesia.
Notable companies expected to report earnings Tuesday include:
- CSX Corp. (NYSE: CSX) is expected to report fourth quarter EPS of $0.39 vs. $0.43 percent a year ago.
- Delta Airlines (NYSE: DAL) is expected to report fourth quarter EPS of $0.28 vs. $0.45 a year ago.
- Freeport-McMoRan Copper and Gold (NYSE: FCX) is expected to report fourth quarter EPS of $0.72 vs. $0.67 a year ago and should comment on its recent large acquisitions.
- Google (NASDAQ: GOOG) is expected to report fourth quarter EPS of $10.58 vs. $9.50 a year ago.
- IBM (NYSE: IBM) is expected to report fourth quarter EPS of $5.25 vs. $4.71 a year ago.
- Johnson and Johnson (NYSE: JNJ) is expected to report fourth quarter EPS of $1.17 vs. $1.13 a year ago.
- Verizon Communications (NYSE: VZ) is expected to report fourth quarter EPS of $0.52 vs. $0.52 a year ago.
On the economics calendar Tuesday, the Chicago Fed National Activity Index is due out as well as Existing Home Sales and the Richmond Fed Manufacturing Index. Also, the Treasury is set to auction 3- and 6-month bills and ECB President Mario Draghi is set to speak at 1 pm eastern.
Good luck and good trading.
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