Benzinga Market Primer: Wednesday, April 17
Futures Lower on Weak U.K. Employment Data, Easing Fears
U.S. equity futures declined in the pre-market following weaker than expected U.K. employment data which showed that the U.K. economy lost jobs unexpectedly in March. Also, fears over the massive global QE, specifically in the U.S. and Japan, emanated following comments by a key Chinese banker.
In other news around the markets:
- China Investment Corp Chairman Jin Liqun said that the CIC is worried that U.S. and Japanese easing effort are negatively distorting markets. Also, he said that China's banking system is healthy and robust and that Fitch's downgrade of local government debt is "conservative."
- The U.K. Claimant Count for March fell 7,000 on expectations of a flat reading month-over-month, raising more fears that the U.K. economy will fail to escape a third recession since 2008. The unemployment rate unexpectedly rose to 7.9 percent from 7.8 percent as well when it was expected to remain flat.
- The Bank of England's Monetary Policy Committee's most recent meeting's minutes were released overnight, showing that the bank of England continues to hold policy firm despite a deteriorating economic outlook. The MPC voted 6-3 to hold the size of QE constant and 9-0 against rate cuts, the same as the previous meetings. Governor King was defeated for a third straight month in hopes of further stimulus however many economists believe that other MPC members are waiting for incoming Governor Mark Carney to increase easing efforts.
- S&P 500 futures declined 7.2 points to 1,561.60.
- The EUR/USD was flat at 1.3163.
- Spanish 10-year government bond yields were higher at 4.73 percent from 4.72 percent.
- Italian 10-year government bond yields fell to 4.31 percent from 4.32 percent.
- Gold fell 0.68 percent to $1,378.00 per ounce as Cyprus' finance minister confirmed the nation may have to sell SOME of its gold reserves to fund its bail-in.
Asian shares were mixed overnight as the yen weakened despite Chinese officials raising fears of Japan's easing efforts. The Japanese Nikkei Index rose 1.22 percent while the Shanghai Composite Index fell 0.05 percent and the Hang Seng Index lost 0.47 percent. Also, the Korean Kospi rose 0.08 percent one day after the country announced a new $17.3 billion fiscal stimulus and Australian shares rose 1.08 percent on RBA easing hopes.
European shares were lower overnight on growth fears following the IMF's growth outlook cut yesterday as well as demand fears across the continent. The Spanish Ibex Index declined 0.81 percent and the Italian FTSE MIB Index fell 0.41 percent. Meanwhile, the German DAX declined 1.19 percent and the French CAC fell 0.85 percent while U.K. shares lost 0.53 percent.
Commodities were lower overnight sparked by news that Cyprus' finance minister confirmed the nation will be selling some of its gold reserves as well as global growth fears. WTI Crude futures declined 0.79 percent to $88.22 per barrel and Brent Crude futures fell 0.7 percent to $100.39 per barrel. Copper futures slid 2.03 percent to $323.75 per pound on both supply fears and also global growth fears leading to weakening demand. Gold was lower and silver futures declined 1.16 percent to $23.34 per ounce.
Currency markets were in flux overnight as the yen continued to weaken for the second consecutive day. The EUR/USD was lower at 1.3163 and the dollar gained against the yen to 98.10. Overall, the Dollar Index rose 0.34 percent on strength against the euro, the yen, the pound, the Canadian dollar, and the Swiss franc. Notably, the pound slid 0.66 percent against the dollar to 1.5261 and EUR/GBP rate gained 0.52 percent, also reflecting pound weakness.
Earnings Reported Yesterday
Key companies that reported earnings Tuesday include:
- BlackRock (NYSE: BLK) reported first quarter EPS of $3.65 vs. $3.58 expected on revenue of $2.45 billion vs. $2.43 billion forecast.
- CSX Corp. (NYSE: CSX) reported first quarter EPS of $0.45 vs. $0.40 expected on revenue of $3.00 billion vs. $2.91 billion expected.
- Goldman Sachs (NYSE: GS) reported first quarter EPS of $4.29 vs. $3.84 expected on revenue of $10.09 billion vs. $9.6 billion expected.
- Intel (NASDAQ: INTC) reported first quarter EPS of $0.40 vs. $0.41 expected on revenue of $12.6 billion vs. $12.61 billion expected.
- Johnson and Johnson (NYSE: JNJ) reported first quarter EPS of $1.44 vs. $1.40 expected on revenue of $17.51 billion vs. $17.46 billion expected.
- Coca-Cola (NYSE: KO) reported first quarter EPS of $0.46 vs. $0.45 expected on revenue of $11.04 billion vs. $11.02 billion a year ago.
- Yahoo! (NASDAQ: YHOO) reported first quarter EPS of $0.38 vs. $0.24 expected on revenue of $1.07 billion vs. $1.1 billion expected.
Stocks moving in the pre-market included:
- Yahoo! (NASDAQ: YHOO) shares fell 4.83 percent following the company's earnings report.
- U.S. Steel (NYSE: X) shares declined 1.81 percent pre-market as commodities sold off on global growth fears.
- Alcoa (NYSE: AA) shares declined in tandem with U.S. Steel pre-market, falling 0.99 percent in early trade.
- Facebook (NASDAQ: FB) shares declined 0.82 percent pre-market following news that the company is working with Apple (NASDAQ: AAPL) to develop the Home interface for iPhone.
Notable companies expected to report earnings Wednesday include:
- Abbott Labs (NYSE: ABT) is expected to report first quarter EPS of $0.41 vs. $1.03 a year ago.
- American Express (NYSE: AXP) is expected to report first quarter EPS of $1.12 vs. $1.07 a year ago.
- Bank of America (NYSE: BAC) is expected to report first quarter EPS of $0.23 vs. $0.03 a year ago.
- eBay (NASDAQ: EBAY) is expected to report first quarter EPS of $0.62 vs. $0.55 a year ago.
- PNC Financial (NYSE: PNC) is expected to report first quarter EPS of $1.57 vs. $1.44 a year ago.
- Sandisk (NASDAQ: SNDK) is expected to report first quarter EPS of $0.77 vs. $0.63 a year ago.
On the economics calendar Wednesday, MBA Mortgage Applications and the Beige Book are expected. Also, Fed members Stein, Bullard and Rosengren are expected to speak. Overnight, British retail sales as well as British, French, and Spanish bond offerings should move markets.
Good luck and good trading.
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