Futures flat on as China continues to improve

Emerging market reports also indicate a rebound. Investors await the US ISM nonmanufacturing report.

By Benzinga Aug 5, 2013 8:28AM

zurbar age fotostockBy Matthew Kanterman


U.S. equity futures were flat in early premarket trade as services data out of China showed that the economy continued to chug along at low levels in July. Also, easing fears over imminent Federal Reserve tapering led to rebounds in emerging markets.


China's official non-manufacturing PMI rose to 54.1 from 53.9 in July from June, while the HSBC China services PMI was flat at 51.3 in July. Although the services sector is smaller than the manufacturing sector in China, it is growing and should become larger as China shifts more towards a consumption driven economy.


A new Reuters poll of primary dealers now sees a 50% chance that the Fed will taper in September, down from about 65% in early July, in the wake of the weaker than expected nonfarm payrolls report.


Spain's services sector continued to recover as the services PMI rose to 48.5 from 47.8 in June, the highest reading in 26 months. Economists surveyed by Reuters were looking for a reading of 48.0.

  • S&P 500 futures fell 0.4 points to 1,703.60.

  • The EUR/USD was higher at 1.3288.

  • Spanish 10-year government bond yields fell 2 basis points to 4.56%.

  • Italian 10-year government bond yields fell 3 basis points to 4.25%.

  • Gold rose 0.23% to $1,313.50 per ounce.

Asian markets

Asian shares were mixed overnight despite the largely better China data after the International Monetary Fund issued a warning to Japan over its fiscal position. The Japanese Nikkei 225 Index fell 1.44% and the Topix Index declined 0.96%. In Hong Kong, the Hang Seng Index rose 0.16% and the Shanghai Composite Index gained 1.04%. Also, the Korean Kospi fell 0.37% and Australian shares declined 0.11%.


European markets

European shares were higher in early trade heading into the services PMIs for Germany, France and the broad eurozone. The Spanish Ibex Index rose 0.35% and the Italian FTSE MIB Index gained 0.31%. Meanwhile, the German DAX rose 0.2% and the French CAC 40 Index gained 0.17% while U.K. shares added 0.5%.


Commodities

Commodities were mixed overnight as oil gained following the China data. WTI crude futures rose 0.35% to $107.31 per barrel and Brent crude futures gained 0.24% to $109.21 per barrel. Copper futures fell 0.36% to $316.10 per pound. Gold was higher and silver futures fell 0.16% to $19.88 per ounce.


Currencies

Currency markets were on the move overnight as the yen gained following the IMF warning and the dollar weakened broadly. The EUR/USD was higher at 1.3288 and the dollar fell against the yen to 98.42. Overall, the Dollar Index fell 0.11% on weakness against the yen, the Canadian dollar, the euro, the pound, and the Swiss franc.


Earnings reported Friday

Key companies that reported earnings Friday include:

  • Chevron (CVX) reported second quarter earnings per share of $2.77 vs. $2.98 expected on revenue of $55.3 billion vs. $56.01 billion expected.

  • Alpha Natural Resources (ANR) reported a second quarter loss of $0.59 per share, in line, on revenue of $1.34 billion vs. $1.24 billion expected.

  • Cablevision (CVC) reported second quarter earnings per share of $0.11 vs. $0.04 expected on revenue of $1.57 billion vs. $1.58 billion expected.

  • Eaton Corp. (ETN) reported second quarter earnings per share of $1.09 vs. $1.11 expected on revenue of $5.6 billion vs. $5.77 billion expected.

Earnings

Notable companies expected to report earnings Monday include:

  • Kindred Healthcare (KND) is expected to report second quarter earnings per share of $0.33 vs. $0.41 a year ago on revenue of $1.47 billion vs. $1.54 billion a year ago.

  • Rockwood Holdings (ROC) is expected to report second quarter earnings per share of $0.76 vs. $1.24 a year ago on revenue of $955.94 million vs. $905.6 million a year ago.

  • Hologix (HOLX) is expected to report third quarter earnings per share of $0.37 vs. $0.35 a year ago on revenue of $626.48 million vs. $470.23 million a year ago.

  • Black Hills Corp. (BKH) is expected to report second quarter earnings per share of $0.42 vs. $0.34 a year ago on revenue of $285.94 million vs. $242.4 million a year ago.

  • Jamba (JMBA) is expected to report second quarter earnings per share of $0.37 vs. $0.25 a year ago on revenue of $70.17 million vs. $66.04 million a year ago.

Economics

On the economics calendar Monday, the Gallup U.S. consumer spending survey is set to be released ahead of the ISM non-manufacturing index and the weekly 3- and 6-month bond auctions. Also, Richard Fisher of the Dallas Fed is set to speak. Overnight, the Reserve Bank of Australia rate decision, the Italian GDP report, and the German factory orders are all expected.


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