Futures higher ahead of Fed minutes release
Investors await the latest policy meeting details, which could shed light on when the central bank might begin to wind down its bond-buying program.
The release of the Federal Reserve's minutes from its latest policy meeting continues to be the markets' main driver. The minutes, to be released at 2:00 p.m. ET, should provide more insight into when the Fed will begin to cut back on its bond buying program.
In other news, the euro/dollar exchange rate finally reached above $1.34 as investors pulled their money out of emerging markets and into safer currencies.
The Japanese nuclear watchdog upgraded the severity level of a toxic water leak from a level one "anomaly" to a level three "serious incident." This will be the most serious warning since the Fukushima nuclear powerplant was rocked in 2011 by an earthquake and tsunami.
Also in the news:
- The UK posted its first deficit in three years in July.
- The Japanese government may revise plans to increase the nation's sales tax to 8% from 5% in April. Instead, Prime Minister Shinzo Abe is considering raising the tax rate by one percentage point per year. However, BOJ Governor Haruhiko Kuroda has backed the 3% increase in April, saying the Japanese economy is strong enough to support the originally planned tax hike.
- In an effort to coordinate financial supervision, Chinese authorities are setting up a new agency that will help the nation's current supervisors set up cross-asset financial products and streamline information sharing and accounting across financial sectors.
- On the campaign trail this week, German Finance Minister Wolfgang Schauble said Greece will need more money to stay afloat than previously estimated in the nation's bailout agreement. Greece's financing gap has been swept under the rug by eurozone policymakers, and the IMF has already threatened to discontinue its financial support for the country if the EU doesn't address the issue.
Asian markets were mixed on the chance that the minutes will reveal the Fed will begin its tapering plan at the next meeting. Japan's NIKKEI index spent the night swinging between highs and lows but ended with a 0.21% increase. China's Shanghai composite was flat at the end of trade with just a 0.02% gain. Hong Kong's Hang Seng Index ended 0.69% down and South Korea's KOSPI fell even more by 1.08%.
European markets were mostly lower in anticipation of the Fed minutes. Only France's CAC 40 Index had squeaked out a modest gain of 0.08% as of 8:35 GMT. The eurozone's overall STOXX600 index was down 0.11% while the London's FTSE 100 Index shed 0.45%.
Wall Street is backing off commodities as the end of easy stimulus money draws nearer and commodity prices across the board dropped. Brent futures for October fell 0.67% bringing the commodity's price below $110. WTI futures also sunk 0.53%. Metals suffered losses as well with gold dropping 0.75% to $1,362.30 per ounce and silver slipping 1.07% to $22.87 per ounce.
Currency markets were relatively quiet ahead of the Fed minutes. The euro/dollar rate pushed above $1.34 overnight but dipped back to $1.3389 by 8:50 GMT. The Yen gained early after news of Fukushima's radiation leak but steadied at 97.49 yen to the dollar. The pound/dollar exchange rate was little changed with the pound gaining just 0.05% against the dollar. Emerging market currencies like the Indian rupee and the Malaysian ringgit continued to tumble.
Earnings reported Tuesday
Notable companies that reported earnings on Tuesday included:
Analog Devices (ADI) reported third quarter revenue of $674.00 million with earnings per share of $0.57 vs. last year's earnings per share of $0.56 on $683.03 million worth of revenue.
Intuit (INTU) reported fourth quarter earnings per share of $0.00 vs last year's $0.03 earnings per share. The company's revenue fell short of estimates at $634.00 million
Home Depot (HD) reported second quarter earnings per share of $1.24, beating last year's earnings per share of $1.01. The company's revenue came in ahead of expectations at $22.52 billion.
Vanguard Health Systems (VHS) reported fourth quarter earnings in line with expectations at $0.18. The company reported revenue of $1.45 billion, which is equal to last year's reported revenue.
Stocks moving in the premarket included:
Procter & Gamble (PG) rose 0.21% in premarket trade as the company lobbied in Brussels to ease limits on the company's teeth whitening products sold in the EU.
Hewlett-Packard (HPQ) slipped 0.31% in premarket trade, which some worry could be the end of an impressive rebound.
General Motors (GM) fell 0.43% in premarket trade as rumors that new smog rules which could affect car sales in China could spell disaster for the company.
Notable companies expected to report earnings on Wednesday include:
Hewlett-Packard (HPQ) is expected to report third quarter earnings per share of $0.86 on revenue of $27.25 billion, down from last year's earnings per share of $1.00 on revenue of $29.67 billion.
Lowe's Companies (LOW) is expected to report earnings per share of $0.78 vs. last year's earnings per share of $0.65. The company's revenue is expected to come in at $15.02 billion.
Staples (SPLS) is expected to report second quarter earnings per share of $0.18 on revenue of $5.39 billion, compared to last year's revenue of $5.50 billion.
Target (TGT) is expected to report second quarter earnings per share of $0.99, below last year's earnings per share of $1.06. The company's revenue is expected at $17.33 billion.
The main event on today's economic calendar is the release of the U.S. Federal Reserve's policy meeting minutes. The U.S. is also set to release another pool of data, including crude oil and gasoline inventories and existing home sales figures. China will release HSBC manufacturing PMI, and Australia will put out its CB leading index.
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Investors are anxious to see if hiring can maintain its strong pace in the second half of the year.
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