#PreMarket Primer: Tuesday, July 29: Russia Accused Of Violating Nuclear Treaty
The relationship between the U.S. and Russia became even more tense on Monday after U.S. officials accused Russia of violating the Intermediate Range Nuclear Forces treaty.
Although the accusations did not detail Russia’s infractions, the U.S. called for high-level talks with Moscow in hopes that the Kremlin would return to compliance with the treaty.
Reuters reported that Executive Director of the Arms Control Association Daryl Kimball said that Russia’s decision to disregard the treaty suggests that the nation is moving away from the its agreement with the U.S. to refrain from using their most dangerous weapons despite their disagreements.
In other news around the markets:
- Israeli Prime Minister Benjamin Netanyahu quashed any hopes of a prolonged cease fire agreement when he announced on Tuesday that his country was preparing for a long conflict in the Gaza strip. Overnight, Israeli forces bombed Gaza City and leveled the home of Hamas Gaza leader, but there were no casualties. Netanyahu has said the offensive will not be complete until the cross-border tunnels have been completely destroyed.
- On Monday, Darden Restaurants announced that its Chairman and Chief Executive Clarence Otis was leaving the company. Darden also shook up its board of directors by giving Starboard Value LP, which controls around eight percent of its stock, three seats. Darden will then nominate nine further members to sit on the board and leave three more seats open for shareholders to elect.
- With the U.S. recession over and the nation’s economy and job market on the rise, stores that served America’s poorest consumers are facing some setbacks. In an effort to thrive during a difficult period, Dollar Tree has made a deal to buy Family Dollar Stores for nearly $8.50 billion. The deal will give the number two and three dollar-store companies the ability to negotiate better deals with suppliers and compete with rival Dollar General Corp.
- The U.S. and the EU announced that they were planning to enact stricter sanctions against Russia that would target the nation’s finance, energy and defense sectors. The European sanctions are expected to kick in beginning as early as Tuesday, something that will likely create a problem for the Russian economy as the EU is Russia’s largest trading partner. However, officials say that despite the tougher sanctions, it seems that Moscow will refuse to give up its support for Ukrainian separatists.
Asian markets were mostly higher; the NIKKEI was up 0.57 percent, the Shanghai composite gained 0.24 percent, the KOSPI rose 0.64 percent and the Shenzhen composite rose 0.86 percent.
European markets were lower with the exception of the FTSE, which gained 0.03 percent. The STOXX 600 was up 0.13 percent, the DAX rose 0.20 percent, the MIB was up 0.15 percent and the CAC 40 gained 0.23 percent.
Energy futures were mixed, Brent futures gained 0.12 percent, but WTI futures lost 0.16 percent. Gold and silver gained 0.55 percent and 0.96 percent respectively and industrial metals were also higher. Copper rose 0.15 percent, aluminum was up 0.90 percent, zinc gained 0.68 percent and tin rose 0.78 percent.
Currency markets were quiet as investors awaited the outcome of the two-day Fed meeting that got underway on Tuesday. The euro was steady at $1.3435 and gained 0.02 percent against the yen, but fell 0.09 percent against the pound. The dollar gained 0.05 percent against the yen, but lost 0.05 percent against the pound.
Notable earnings released on Monday included:
- Tyson Foods (NYSE: TSN) reported EPS of $0.75 on revenue of $9.68 billion, compared to last year’s EPS of $0.69 on revenue of $8.73 billion.
- XL Group (NYSE: XL) reported EPS of $1.02 on revenue of $1.83 billion, compared to last year’s EPS of $0.75 on revenue of $1.49 billion.
- Herbalife (NYSE: HLF) reported EPS of $1.55 on revenue of $1.31 billion, compared to last year’s EPS of $1.41 on revenue of $1.22 billion.
- Cummins (NYSE: CMI) reported EPS of $2.43 on revenue of $4.80 billon, compared to last year’s EPS of $2.20 on revenue of $4.52 billion.
Stocks moving in the Premarket included:
- Under Armour (NYSE: UA) gained 1.97 percent in premarket trade after rising 18.10 percent over the past week.
- EOG Resources (NYSE: EOG) was up 0.76 percent in premarket trade after falling 1.25 percent on Monday.
- Facebook (NASDAQ: FB) rose 0.41 percent in premarket trade after gaining 7.95 percent over the past week.
- Mircosoft (NASDAQ: MSFT) was down 0.39 percent in premarket trade after falling 1.19 percent on Monday.
Notable earnings releases expected on Tuesday include:
- Express Scripts (NASDAQ: ESRX) is expected to report EPS of $1.22 on revenue of $24.38 billion, compared to last year’s EPS of $1.13 on revenue of $26.42 billion.
- United Parcel Service (NYSE: UPS) is expected to report EPS of $1.24 on revenue of $14.11 billion, compared to last year’s EPS of $1.13 on revenue of $13.51 billion.
- Pfizer (NYSE: PFE) is expected to report EPS of $0.57 on revenue of $12.50 billion, compared to last year’s EPS of $0.56 on revenue of $12.97 billion.
- Aetna (NYSE: AET) is expected to report EPS of $0.80 on revenue of $10.60 billion, compared to last year’s EPS of $0.84 on revenue of $11.01 billion.
For a recap of Monday’s market action, click here.
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