Benzinga Market Primer, Monday May 13

Futures Lower on Chinese Data, Fed Tapering Fears

U.S. equity futures traded lower in early pre-market trade following some weak economic data out of China and also on the heels of an article from the Wall Street Journal's Jon Hilsenrath about the Fed. Hilsenrath wrote that the Fed is now considering the methodology of when to start exiting from its current policies with the real question being when to start tapering asset purchases.

Top News

In other news around the markets:

• China reported weaker than expected industrial production and fixed asset investment for April. Industrial production rose 9.3 percent from the same period a year ago, better than March's 8.9 percent but below forecasts of a reading of 9.5 percent. Also, fixed asset investment grew 20.6 percent, slower than March's 20.9 percent growth and below forecasts of 21 percent growth.


• Carlo Cottarelli, the head of the IMF's fiscal affairs division, said that Italy and Germany have completed most of their fiscal adjustments while France still has room to go.


• Japan once again got the green light on its easing programs from the G7, sending the USD/JPY through the 102 level initially before retreating back below the level.


• S&P 500 futures fell 6.3 points to 1,623.30.


• The EUR/USD was lower at 1.2969.


• Spanish 10-year government bond yields fell 1 basis point to 4.20 percent.


• Italian 10-year government bond yields rose 1 basis point to 3.91 percent.


• Gold fell 0.32 percent to $1,432.00 per ounce.

Asian Markets

Asian shares were mixed overnight as Japanese shares led and Chinese shares lagged. The Japanese Nikkei Index rose 1.2 percent while the Shanghai Composite Index fell 0.22 percent and the Hang Seng Index lost 1.42 percent. Also, the Korean Kospi rose 0.2 percent while Australian shares rose 0.08 percent.

European Markets

European shares were lower overnight as bond spreads crept higher while the euro weakened. The Spanish Ibex Index fell 1.39 percent and the Italian FTSE MIB Index fell 1.00 percent. Meanwhile, the German DAX declined 0.59 percent and the French CAC 40 lost 0.29 percent while U.K. shares fell 0.29 percent.

Commodities

Commodities were lower overnight as the dollar continued to strengthen, following moves from late last week. WTI Crude futures fell 0.9 percent to $95.18 per barrel and Brent Crude futures fell 0.71 percent to $103.17 per barrel. Copper futures rose 0.07 percent to $335.55 per pound on hopes that China has bottomed. Gold was lower and silver futures declined 0.18 percent to $23.62 per ounce.

Currencies

Currency markets continued to show dollar strength overnight despite the yen erasing its losses against the greenback. The EUR/USD was lower at 1.2969 and the dollar rose against the yen to 101.64. Overall, the Dollar Index rose 0.09 percent on strength against the Canadian dollar, the euro, the Swiss franc, the pound, and the yen. Notably, the Australian dollar continued to weaken overnight against the greenback, falling to 0.9960 through parity.

Earnings Reported Yesterday

Key companies that reported earnings Friday include:

• Horizon Pharmaceutical HZNP reported a first quarter loss of $0.03 per shares vs. a loss of $0.35 loss per share expected on revenue of $9.17 million vs. $9.47 million expected.


• Lufkin Industries LUFK reported first quarter EPS of $0.56 vs. $0.47 expected on revenue of $318 million vs. $300.47 million expected.

Pre-Market Movers

Stocks moving in the pre-market included:

• Corning GLW shares rose 1.32 percent pre-market as the company was selected to provide a new fiber optic cable line between Atlanta and Miami.


• Raytheon RTN shares fell 5.52 percent pre-market after the shares hit a 52-week high on Friday on news that the company received a new $50 million Air Force contract.


• Carnival Corp. CCL shares declined 1.91 percent pre-market on news that 2 passenger went overboard unnoticed off the coast of Australia.


• Newmont Mining NEM shares fell 1.27 percent pre-market on weaker gold prices.

Earnings

Notable companies expected to report earnings Monday include:

• Interoil Corp. IOC is expected to report a first quarter loss of $0.12 vs. EPS of $0.19 a year ago.


• Renren RENN is expected to report a first quarter loss of $0.07 per shares vs. a loss of $0.03 per share a year ago.


• Take-Two Interactive TTWO is expected to report first quarter EPS of $0.23 vs. a loss of $0.60 per share a year ago.

Economics

On the economics calendar Monday, monthly retail sales and business inventories are the only key data points to be released. Also, the Treasury is set to auction 3- and 6-month bills. Overnight, German inflation and the German ZEW Economic Sentiment Index are both expected to be released.

Good luck and good trading.