Futures gain on stronger Chinese data

Investors optimism improves after China reported better than expected inflation figures.

By Benzinga Jul 9, 2013 8:20AM

zurbar age fotostockBy Matthew Kanterman


U.S. equity futures gained in early premarket trade on better than expected Chinese inflation data. The new data eased fears that the world's second largest economy is headed for a sharp contraction amid a financial liquidity crisis.


Chinese consumer price index was flat in June from May vs. an expected drop of 0.2% and much better than the prior reading of a drop of 0.6%. On an annualized basis, CPI rose 2.7% from a year ago vs. the expected gain of 2.5% and the prior reading at 2.1%, while producer prices declined 2.5% in June, better than the expected decline of 2.7% and the prior decline of 2.9%.


U.K. industrial production unexpectedly stalled in June, posting a flat reading from May vs. an expected gain of 0.2%, while May's figure was revised lower to -0.1% from 0.1%. Manufacturing production in particular was weak in June.


Intuitive Surgical (ISRG) issued some guidance for the second quarter after the close Monday. It now expects to earn between $3.86 per share and $3.98 per share vs. the consensus estimate of $4.29 per share. Revenue is expected to be $537 million-$575 million vs. $629.61 million expected.


Amarin (AMRN) announced a stock offering of 21.7 million shares Monday after the close, sending the stock lower after-hours. The issuance represents nearly one-sixth of total shares.

  • S&P 500 futures rose 7.3 points to 1,642.80.

  • The EUR/USD was higher at 1.2873.

  • Spanish 10-year government bond yields fell 1 basis points to 4.67%.

  • Italian 10-year government bond yields fell 2 basis points to 4.36%.

  • Gold rose 1.56% to $1,254.20 per ounce.

Asian markets

Asian shares rose overnight on the back of the stronger Chinese inflation report as investors see the data as confirmation that China can withstand a financial liquidity crisis without a hard landing of the economy. The Japanese Nikkei 225 Index rose 2.58% and the Topix Index rose 2.07%. In Hong Kong, the Hang Seng Index gained 0.49% and the Shanghai Composite Index rose 0.37% in China. Also, the Korean Kospi gained 0.74% and Australian shares rose 1.5%.


European markets

European shares were higher in early trade on the back of the positive data out of China. The Spanish Ibex Index gained 0.73% and the Italian FTSE MIB Index rose 0.79%. Meanwhile, the German DAX rose 1.04% and the French CAC 40 Index gained 0.76% while U.K. shares climbed 1.05%.


Commodities

Commodities were mixed as energy futures dropped while metals gained. WTI Crude futures fell 0.15% to $102.99 per barrel and Brent Crude futures declined 0.2% to $107.22 per barrel. Copper futures fell 0.94% to $307.05 per pound. Gold was higher and silver futures gained 1.53% to $19.33 per ounce.


Currencies

Currency markets were rather quiet save for the pound, which declined on the weak industrial production data. The data point to renewed stimulus efforts from the Bank of England, which would most likely devalue the currency. The EUR/USD was higher at 1.2873 and the dollar gained against the yen to 101.19. Overall, the Dollar Index rose 0.09% on strength against the pound, the yen, and the Swiss franc. Notably, the GBP/USD declined 0.45% to 1.4882 and the EUR/GBP rose 0.5% to 0.8650, marking solid declines for the sterling.


Earnings reported Monday

Key companies that reported earnings Monday include:

  • Alcoa (AA) reported second quarter adjusted earnings per share of $0.07 vs. $0.06 expected on revenue of $5.85 billion vs. $5.83 billion expected.

  • WD 40 Company (WDFC) reported third quarter earnings per share of $0.66 vs. $0.56 expected on revenue of $93.1 million vs. $89.45 million expected.

Premarket movers

Stocks moving in the premarket included:

  • Alcoa (AA) shares rose 1.39% in premarket trade as shares whipsawed between positive and negative territory following the earnings release.

  • Intuitive Surgical (ISRG) shares plummeted 11.31% on the weak second quarter guidance.

  • Amarin (AMRN) shares declined 10.21% premarket following the stock issuance.

  • Sprint (S) shares rose 0.99% premarket as 97% of shareholders opted to take cash and new stock as part of the Softbank deal following the approval of the takeover of Clearwire (CLWR) by Clearwire shareholders.

Earnings

Notable companies expected to report earnings Tuesday include:

  • ADTRAN (ADTN) is expected to report second quarter earnings per share of $0.16 vs. $0.33 a year ago on revenue of $154.16 million vs. $184.00 million prior.

  • Healthcare Services Group (HCSG) is expected to report second quarter earnings per share of $0.20 vs. $0.17 a year ago on revenue of $281.77 million vs. $267.11 million a year ago.

  • Wolverine World Wide (WWW) is expected to report second quarter earnings per share of $0.34 vs. $0.48 a year ago on revenue of $591.03 million vs. $312.72 million a year ago.

Economics

On the economics calendar Tuesday, the NFIB small business optimism index is due out followed by the weekly chain store sales and Redbook reports. Also, the Treasury is set to hold a 4-week bill and 3-year note auction. Overnight, the Chinese trade report is due out.

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