Benzinga Market Primer: Friday, March 15: Quadruple Witching Day
Futures Flat On Bank of Japan Confirmations, European Summit, Quadruple Witching
U.S. equity futures were little changed in early pre-market trade as the latest European summit to target growth continued and the Japanese upper house of parliament approved the three new Bank of Japan board member nominations. Markets await to see if European leaders agree on more pro-growth policies or stick to austerity, as well as any new details on the bailout of Cyprus.
In other news around the markets:
- The Federal Reserve criticized J.P. Morgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS) for their capital raising plans in the second part of the Stress Test review. The Fed did not block the capital distribution plans but asked the banks to resubmit plans later on.
- A Senate committee investigating the London Whale losses at J.P. Morgan Chase criticized the bank's executives for negligence in the massive trades that lost the bank billions of dollars this past summer.
- Bank of England Governor Mervyn King, in responses to critics claiming that England is also intentionally weakening its currency, spoke overnight explicitly stating that the BoE is not talking down the sterling. The pound is having its best day of 2013.
- S&P 500 futures fell 1.1 points to 1,554.90.
- The EUR/USD was higher at 1.3053.
- Spanish 10-year government bond yields rose to 4.87 percent from 4.83 percent.
- Italian 10-year government bond yields rose to 4.65 percent from 4.64 percent.
- Gold rose 0.04 percent to $1,591.50 per ounce.
Asian shares were mixed overnight as Japanese shares rose on the Bank of Japan confirmations and Australian shares popped a day after the blowout employment report. The Japanese Nikkei Index rose 1.45 percent and the Shanghai Composite Index gained 0.36 percent while the Hang Seng Index fell 0.38 percent. Also, the Korean Kospi fell 0.78 percent and Australian shares gained 1.75 percent.
European shares were mixed overnight as Spanish shares fell on higher bond yields. The Spanish Ibex Index fell 0.52 percent and the Italian FTSE MIB Index rose 0.13 percent as the Bersani-controlled lower house of parliament reconvenes today. Meanwhile, the German DAX was flat and the French CAC fell 0.45 percent while U.K. shares fell 0.08 percent.
Commodities were higher overnight on the back of Asian equity strength on renewed hopes that Japan can emerge from its new decade. WTI Crude futures rose 0.15 percent to $93.19 per barrel and Brent Crude futures rose 0.28 percent to $109.26 per barrel. Copper futures rose 0.16 percent to $354.20 per pound, Gold was higher, and silver futures rose 0.25 percent to $28.87 per ounce.
Currency markets were in flux as the pound was stronger alongside the euro and the yen flipped between gains and losses. The EUR/USD was higher at 1.3053 and the dollar was flat against the yen at 96.11 as the pound gained 0.4 percent against the dollar to 1.5144. Overall, the Dollar Index fell 0.29 percent on weakness against the pound, the euro, the Swiss franc, and the Canadian dollar.
Stocks moving in the pre-market included:
- J.P. Morgan Chase (NYSE: JPM) shares fell 1.49 percent pre-market after the Senate committee commented on the London Whale losses.
- Bank of America (NYSE: BAC) shares rose 3.3 percent as the Fed approved the bank's capital plan.
- Citigroup (NYSE: C) shares rose 1.35 percent pre-market as the company had its new $1.2 billion in share buybacks and $0.01 per share quarterly dividend approved by the Fed.
- Aeropostale (NYSE: ARO) shares fell 4.89 percent pre-market after the company lowered its first quarter forecast.
Notable companies expected to report earnings Friday include:
- Brown Shoe Company (NYSE: BWS) is expected to report fourth quarter EPS of $0.08 vs. $0.10 a year ago.
On the economics calendar Friday, the consumer price index is due out alongside the Empire State Manufacturing Index. Later, TIC flows, industrial production, and consumer sentiment are due out. Also, Richard Fisher of the Dallas Fed is set to speak on too big to fail in Maryland. Also, traders take note that today is quadruple witching, which could cause some volatility into the close of markets as options and futures are settled.
Good luck and good trading.
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