Benzinga Market Primer: Tuesday, July 23: Futures Higher on Earnings

Futures Higher On Earnings

U.S. equity futures rose on the back of some strong earnings in the U.S. from notable companies including Halliburton HAL and Texas Instruments TXN. As earnings season kicks into high gear this week, expect earnings to continue to drive markets.

Top News

In other news around the markets:

• The Bank of Spain updated its economic forecasts overnight and now says that Spain's recession eased to a -0.1 percent contraction in the second quarter from -0.5 percent in the first. They noted a rise in exports and a gain in tourism as drivers in the second quarter.


• After weeks of speculation, KPN KKPNY announced that it would sell its German business to Telefonica TEF.


• The Royal Baby was born Monday but importantly, economists estimate that baby fever could have boosted the U.K. economy by over $300 million.


• S&P 500 futures rose 2.6 points to 1,692.90.


• The EUR/USD was lower at 1.3176.


• Spanish 10-year government bond yields fell 3 basis points to 4.58 percent.


• Italian 10-year government bond yields were flat at 4.31 percent.


• Gold fell 0.39 percent to $1,332.10.

Asian Markets

Asian shares were higher overnight following some rumors that another fiscal stimulus may be in the pipeline in Japan. The Japanese Nikkei 225 Index rose 0.82 percent and the Topix Index gained 0.51 percent. In Hong Kong, the Hang Seng Index rose 2.33 percent while the Shanghai Composite Index rose 1.95 percent in China. Also, the Korean Kospi gained 1.27 percent and Australian shares rose 0.3 percent.

European Markets

European shares were higher overnight following some positive earnings, some strong M&A activity, and the positive Bank of Spain guidance. The Spanish Ibex Index rose 1.56 percent while the Italian FTSE MIB Index gained 0.95 percent. Meanwhile, the German DAX rose 0.27 percent and the French CAC 40 Index gained 0.18 percent while U.K. shares rose 0.21 percent.

Commodities

Commodities were lower overnight as WTI returned to a discount to Brent. WTI Crude futures fell 0.7 percent to $106.19 per barrel and Brent Crude futures declined 0.35 percent to $107.77 per barrel. Copper futures fell 0.49 percent to $316.95 per pound. Gold was lower and silver futures declined 1.09 percent to $20.22 per ounce.

Currencies

Currency markets were rather quiet overnight as moves were tepid. The EUR/USD was lower at 1.3176 and the dollar gained against the yen to 99.83. Overall, the Dollar Index rose 0.1 percent on strength against the Swiss franc, the yen, the euro, and the pound.

Earnings Reported Yesterday

Key companies that reported earnings Monday include:

• Halliburton HAL reported second quarter EPS of $0.73 vs. $0.72 expected on revenue of $7.3 billion vs. $7.25 billion.


• McDonald's MCD reported second quarter EPS of $1.38 vs. $1.40 expected on revenue of $7.08 billion vs. $7.1 billion expected.


• Kimberly-Clark KMB reported second quarter EPS of $1.41 vs. $1.39 a year ago on revenue of $5.27 billion vs. $5.34 billion a year ago.
• Gannet GCI reported second quarter EPS of $0.58, in line, on revenue of $1.3 billion vs. $1.33 billion a year ago.


• Texas Instruments TXN reported second quarter EPS of $0.42 vs. $0.41 expected on revenue of $3.05 billion vs. $3.06 billion expected. The company also sees third quarter EPS of $0.49-0.57 vs. the $0.51 estimate on revenue of $3.09-3.35 billion vs. the $3.2 billion estimate.


• Canadian National Railway CNI reported second quarter EPS of $1.66 vs. $1.62 on revenue of $2.67 billion vs. $2.69 billion expected.


• Netflix NFLX reported second quarter EPS of $0.49 vs. $0.40 on revenue of $1.07 billion, in line. Netflix sees Q3 EPS $0.30-0.56 but revenue guidance was short of expectations.

Pre-Market Movers

Stocks moving in the pre-market included:

• Texas Instruments TXN shares gained 1.95 percent after reporting strong guidance.


• Netflix NFLX shares fell 5.33 percent after the company reported a better than expected quarter but guidance was light.


• Southwest Airlines LUV shares declined 1.15 percent after a plane's nose gear collapsed on landing, but no injuries were reported.

Earnings

Notable companies expected to report earnings Tuesday include:

• Apple AAPL is expected to report third quarter EPS of $7.31 vs. $9.32 a year ago on revenue of $35.09 billion vs. $35.00 billion a year ago.


• AT&T T is expected to report second quarter EPS of $0.68 vs. $0.66 a year ago on revenue of $31.82 billion vs. $31.6 billion a year ago.


• Valero VLO is expected to report second quarter EPS of $0.92 vs. $1.50 a year ago on revenue of $30.18 billion vs. $34.66 billion a year ago.


• United Technologies UTX is expected to report second quarter EPS of $1.58 vs. $1.62 a year ago on revenue of $16.37 billion vs. $13.81 billion a year ago.

Economics

On the economics calendar Tuesday, the weekly Redbook is due out followed by the FHFA House Price Index and the Richmond Fed Manufacturing Index while Canada is expected to release its retail sales report. Also, the Treasury is set to auction 4-week, 52-week, and 2-year notes. Overnight, the Chinese flash manufacturing PMI is due out as well as the eurozone, French, and German manufacturing and services PMIs are due out.

Good luck and good trading.

Tune into Benzinga's PreMarket Info show with Dennis Dick and Joel Elconin here.

For a recap of Monday's market action, read Benzinga's daily market wrap here.