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#PreMarket Primer: Tuesday, December 16: Industrial Activity In China Adds To Growing Concern About A Slowdown

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#PreMarket Primer: Tuesday, December 16: Industrial Activity In China Adds To Growing Concern About A Slowdown

China’s factory sector disappointed on Tuesday, declining for the first time in seven months. The nation’s HSBC/Markit manufacturing purchasing managers’ index dropped below the 50 mark, which separates expansion and contraction to 49.5 in December. Most had expected the figure to come in at 50, so a reading indicating a contraction was an unpleasant surprise. Weak manufacturing data will likely contribute to the nation’s poor fourth quarter performance, with most estimating that the nation underperformed from October to December.

Top News

In other news around the markets:

  • Apple Inc. (NASDAQ: APPL) continued on with its appeal against a court ruling that the company conspired with publishers and fixed e-book prices. Apple argued that Amazon.com, Inc. (NASDAQ: AMZN) held a monopoly in the e-book industry and that the company’s negotiations with publishing houses was the only way to spur on competition. The case will set the tone for e-book publishing in the future and could have far reaching implications. The court is expected to make a decision regarding the appeal in the next few months.
  • In a downtown Sydney cafe, three people were killed after an armed man broke into the cafe and held 17 people hostage for over 16 hours. Many of the hostages escaped throughout the day, but two were killed when police stormed the cafe, also fatally wounding the gunman. The gunman was identified as Man Haron Monis, a self-proclaimed Muslim cleric and activist. Though he claimed there were explosives placed around Sydney, no evidence that his threats were founded has been uncovered. So far, Monis is not believed to be part of any other organizations and carried out the attack on his own.
  • Analysts believe that the oil market still has a way to go before bottoming out despite new supply interruptions in Libya. The North African nation’s supplies were briefly interrupted over the weekend as government forces clashed with armed rebels. However, the nation’s political problems were not enough to derail crude prices from their downward trajectory as investors worried about the growing global supply glut. Brent crude prices fell to their lowest level since July 2009, while WTI prices have lost a whopping 48 percent in just the past six months.
  • Spanish oil company Repsol SA has made an acquisition deal with Canadian Talisman Energy Inc. worth $83 billion. Both boards unanimously approved the agreement in which Repsol will pay $83 billion in cash or $8 per Talisman share, a 60 percent premium on the company’s market price. The deal is expected to close in mid-2015 and will likely double Repsol’s oil output.

Asian Markets

Asian markets were mostly lower with the exception of China’s Shanghai and Shenzhen composites, which gained 2.30 percent and 0.48 percent, respectively. The NIKKEI was down 2.01 percent, the KOSPI fell 0.85 percent and the Hang Seng index lost 1.55 percent.

European Markets

European markets were mixed; the FTSE was up 0.18 percent but the STOXX 600 fell 0.28 percent. The DAX gained 0.36 percent and the MIB rose 0.53 percent, while the CAC 40 fell 0.22 percent and the IBEX lost 0.60 percent.

Commodities

Energy futures were lower; Brent futures lost 2.87 percent and WTI futures were down 2.88 percent. Gold and silver lost 0.83 percent and 2.52 percent respectively, and industrial metals were also lower. Copper fell 0.71 percent, aluminum lost 0.67 percent and zinc was down 0.91 percent.

Currencies

The euro made its way above $1.25 on Monday to trade at $1.2513 and gained 0.19 percent against the pound, but lost 0.56 percent against the yen. The dollar was also lower against the yen, down 1.15 percent. The greenback also lost against the pound, down 0.41 percent, and fell 0.56 percent against the Australian dollar.

Earnings

Notable earnings reports released on Monday included:

  • Verifone Systems Inc (NYSE: PAY) reported fourth quarter EPS of $0.44 on revenue of $491.00 million, compared to last year’s EPS of $0.27 on revenue of $432.30 million.

Pre-Market Movers

Stocks moving in the Premarket included:

  • Alcoa Inc (NYSE: AA) was up 1.14 percent in premarket trade after falling 8.35 percent over the past week.
  • Transocean Ltd (NYSE: RIG) gained 0.80 percent in premarket trade after losing 1.34 percent on Monday.
  • Royal Caribbean Cruises Ltd (NYSE: RCL) was down 1.1 percent in premarket trade after rising 1.04 percent on Monday.
  • ConocoPhillips (NYSE: COP) was down 1.1 percent in premarket trade after falling 1.22 percent on Monday.

Earnings

Notable releases expected on Tuesday include:

  • Darden Restuaurants, Inc. (NYSE: DRI) is expected to report second quarter EPS of $0.27 on revenue of $1.55 billion, compared to last year’s EPS of $0.15 on revenue of $2.05 billion.
  • Navistar International Corp (NYSE: NAV) reported fourth quarter EPS loss of $0.88 on revenue of $3 billion, compared to last year’s loss of $1.90 on revenue of $2.75 billion.

Economics

Notable economic releases expected on Tuesday include eurozone services and composite PMI, French services and composite PMI, German manufacturing, services and composite PMI, Italy’s trade balance, British PPI, Germany’s ZEW economic sentiment index and U.S. manufacturing PMI.

Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.

Posted-In: Earnings News Guidance Emerging Markets Eurozone Futures Commodities Previews

 

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