Benzinga Market Primer: Thursday, June 6: ECB, BoE In Focus
Futures Rise Ahead of Central Banks, Jobless Claims as Nikkei Approaches Bear Market Territory
U.S. equity futures rose in early pre-market trade ahead of key interest rate decision from both the European Central Bank and the Bank of England. Also, the initial jobless claims report in the U.S. and the Challenger job cuts estimate set up the stage for Friday's much anticipated Employment Situation Report.
In other news around the markets:
- The Japanese Nikkei 225 Index closed below 13,000 for the first time in two months overnight and is down 19 percent from the high reached back on May 22. If the index declines one more percent, it officially enters bear market territory after rising over 60 percent from 2012's low.
- France's unemployment rate rose to 10.8 percent in the first quarter but was better than the expected 10.9 percent. Further, the fourth quarter's reading was revised lower to 10.5 percent from 10.6 percent, although the numbers still remain high in absolute terms.
- Spain had a strong bond auction of 2-, 3-, and 10-year bonds overnight with demand outpacing the targeted 3-4 billion euros. Spain has now raised over 60 percent of its targeted debt funding for the year with more than half of the year remaining.
- S&P 500 futures rose 5.8 points to 1,613.80.
- The EUR/USD was higher at 1.3118 after posting a 4-week high overnight above 1.3120.
- Spanish 10-year government bond yields rose 1 basis point to 4.45 percent.
- Italian 10-year government bond yields were flat at 4.14 percent.
- Gold rose 0.31 percent to $1,402.90 per ounce.
Asian shares were lower overnight as the Nikkei dropped to a two and a half week low. The Japanese Nikkei 225 Index declined 0.85 percent and the broad Topix Index declined 1.77 percent. The Shanghai Composite Index shed 1.12 percent as the Hang Seng Index lost 1.05 percent. Also, the Korean Kospi declined 1.52 percent and Australian shares fell 1.12 percent.
European shares were less pessimistic in early trade ahead of the central bank decisions as Spanish shares following the strong debt auction and other data earlier this week. The Spanish Ibex Index gained 0.77 percent while Italian shares dipped 0.12 percent. Meanwhile, the German DAX rose 0.13 percent and the French CAC 40 Index gained 0.28 percent as U.K. shares eked out a gain of 0.03 percent.
Commodities were mixed overnight as energy futures gained following the crude inventory report Wednesday which showed crude inventories declined nearly eight times the expected drop in the week. WTI Crude futures rose 0.63 percent to $94.33 per barrel and Brent Crude futures gained 0.36 percent to $103.41 per barrel. Copper futures declined 0.86 percent to $334.25 per pound as global growth fears weighed. Gold was higher and silver futures fell 0.03 percent to $22.47 per ounce.
Currency markets saw good action overnight as the euro and the pound set up nicely ahead of their respective central banks. The EUR/USD was higher at 1.3118 and the dollar gained slightly against the yen to 99.15. Overall, the Dollar Index fell 0.2 percent on weakness against the pound, the euro, the Canadian dollar, and the Swiss franc.
Earnings Reported Yesterday
Key companies that reported earnings Wednesday include:
- Brown Forman (NYSE: BFB) reported fourth quarter EPS of $0.52 vs. $0.46 expected on revenue of $866.00 million vs. $861.73 million expected.
- Hovnanian (NYSE: HOV) reported second quarter EPS of $0.01 vs. an expected loss of $0.05 per share.
- Joseph A Bank (NASDAQ: JOSB) reported first quarter EPS of $0.29 vs. $0.29 expected on revenue of $196.1 million vs. $195.4 million expected.
- Francesca's Holdings (NASDAQ: FRAN) reported first quarter EPS of $0.26 vs. $0.26 expected on revenue of $79.0 million vs. $79.56 million expected.
- Verifone Systems (NYSE: PAY) reported second quarter EPS of $0.42 vs. $0.47 on revenue of $426.3 vs. $440.3 million expected. The company also lowered guidance.
Stocks moving in the pre-market included:
- Verifone Systems (NYSE: PAY) shares declined a whopping 18 percent pre-market after the company reported weak earnings and cut guidance again.
- Vera Bradley Inc. (NASDAQ: VRA) shares declined 10.95 percent pre-market after the company also cut guidance.
- Thermo Fischer Scientific (NYSE: TMO) shares declined 1.39 percent pre-market as the company amended the terms of its deal to purchase Life Technologies (NASDAQ: LIFE). Thermo announced a $2 billion secondary offering as part of the terms.
- Tesla (NASDAQ: TSLA) shares rose 0.56 percent pre-market after staging a late intraday rally Wednesday on a technical bounce.
Notable companies expected to report earnings Thursday include:
- Thor Industries (NASDAQ: THOR) is expected to report third quarter EPS of $0.88 vs. $0.78 a year ago.
- Vail Resorts (NYSE: MTN) is expected to report third quarter EPS of $2.74 vs. $2.17 a year ago.
- CIENA Corp. (NASDAQ: CIEN) is expected to report a second quarter loss of $0.01 vs. EPS of $0.04 a year ago.
- Titan Machinery (NASDAQ: TITN) is expected to report first quarter EPS of $0.19 vs. $0.36 a year ago.
On the economics calendar Thursday, the Bank of England and the European Central Bank are both expected to release their interest rate decisions early this morning. Later, the Challenger job cuts report is due out with the weekly jobless claims report and the Canadian Ivey PMI is expected to be released. Overnight, German industrial production data is due out.
Good luck and good trading.
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