#PreMarket Primer: Thursday, December 12: US Budget Deal Gaining Momentum
Markets have been crumbling as the US' bipartisan budget deal gains support and is seen as likely to pass a vote in the House of Representatives this week.
The deal, if accepted by Democrats and Republicans in Washington, eliminates much of the fiscal uncertainty that was keeping the US Federal Reserve from tapering in the past.
With the Fed's highly anticipated meeting coming up next week, expectations of a December taper have been growing on the back of better than expected labor data, and now, a budget deal that will prevent another government shutdown in January.
- Protestors in Kiev held their ground even after riot police attempted to clear Independence Square using force overnight. However, the police withdrew by morning and the protestors continued to occupy City Hall. Ukranian President Viktor Yanukovich has asked opposition leaders to meet with him in order to negotiate a way out of this crisis, but the opposition refused and was strong in its demand that Yanukovich and his government resign.
- As speculation rises that Ford Chief Executive Alan Mulally may be offered a position as CEO at Microsoft, Ford's board of directors have become increasingly anxious over Mulally's plans. The board is planning to meet in Detroit on Thursday where they may press the issue as both the board and investors are looking for some clarity.
- Australian unemployment data for November came in at 5.8 percent as expected, a slight increase from October's 5.7 percent. The rise added to growing concern that unemployment in the nation will continue to be a weak spot for the Australian economy as the mining boom continues to fade.
- Daniele Nouy, the head of France's banking regulator, has been nominated by her peers in the European Parliament to become the top banking supervisor. Nouy will be in charge of next year's stress tests and asset quality reviews as the region prepares to implement a unified banking system.
Asian markets tumbled with the exception of China's Shenzhen composite which gained 0.21 percent. The Japanese NIKKEI lost 1.12 percent and the South Korean KOSPI and Hong Kong's Hang Seng index both fell 0.51 percent.
Europe' markets were also lower, the UK's FTSE fell 0.63 percent and the eurozone's STOXX 600 was down 0.42 percent. The German DAX lost 0.46 percent and Italy's MIB was down 0.50 percent.
Energy futures were mixed, Brent futures fell 0.22 percent but WTI future increased 0.03 percent. Gold lost 1.32 percent and silver was down 2.14 percent. Industrial metals were up across the board with tin up 0.89 percent and aluminum up 0.78 percent.
In currency markets the euro was steady at $1.37 while the pound gained 0.10 percent against the American currency. The dollar rose 0.34 percent against the yen and fell 0.02 percent against the Australian dollar.
Notable earnings released on Wednesday included:
- Men's Wearhouse, Inc. (NYSE: MW) reported third quarter EPS of $0.90 on revenue of $648.90 million, compared to last year's EPS of $0.95 on revenue of $630.97 million.
- Costco Wholesale Corporation (NASDAQ: COST) reported third quarter EPS of $0.96 on revenue of $24.47 billion, compared to last year's EPS of $0.95 on revenue of $23.72 billion.
- Joy Global Inc. (NYSE: JOY) reported third quarter EPS of $1.11 on revenue of $1.18 billion, compared to last year's EPS of $2.05 on revenue of $1.59 billion.
Stocks moving in the Premarket included:
- Merck & Co Inc (NYSE: MRK) gained 1.01 percent in premarket trade after falling 1.62 percent over the past five days.
- Johnson Controls Incorporated (NYSE: JCI) gained 0.68 percent in premarket trade after losing 2.51 percent on Wednesday.
- Citigroup Inc (NYSE: C) gained 0.28 percent in premarket trade after falling 2.56 percent over the past week.
- General Electric Co. (NYSE: GE) gained 0.11 percent in premarket trade after losing 2.06 percent on Wednesday.
Notable earnings expected on Thursday include:
- lululemon athletica in. (NASDAQ: LULU) is expected to report third quarter EPS of $0.41 on revenue of $376.16 million, compared to last year's EPS of $0.39 on revenue of $316.54 million.
- Adobe Systems Incorporated (NASDAQ: ADBE) is expected to report third quarter EPS of $0.32 on revenue of $1.03 billion, compared to last year's EPS of $0.61 on revenue of $1.15 billion.
- CIENA Corporation (NASDAQ: CIEN) is expected to report third quarter EPS of $0.24 on revenue of $567.77 million, compared to last year's loss of $0.07 on revenue of $465.53 million.
US retail sales and continuing and initial jobless claims data will be closely watched on Thursday as investors search for fresh clues about the Federal Reserve's taper timeline. Other notable economic releases include eurozone industrial production, Italian CPI, French CPI, and a speech by ECB President Mario Draghi.
For a recap of Wednesday's market action, click here.
Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.
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