Futures higher on China trade data
After a 3-day sell-off caused by fear of Fed tapering markets seem set to open higher.
U.S. equity futures shrugged off fears of Federal Reserve tapering in early trade and moved slightly higher following a largely better than expected trade report from China for July. Also, the European Central Bank issued its monthly report, revising down growth estimates for the currency zone and forecasting lower inflation.
China's trade balance was reported at $17.82 billion in July, below the consensus forecast of $26.9 billion. However, the trade balance was lower due to stronger than expected imports. Imports rose 10.9% in July from a year ago vs. the expected 1.0% rise, while exports rose 5.1% vs. the expected 2.0% gain.
The European Central Bank issued its monthly report and cut its growth forecast for the eurozone to -0.6% from -0.4% for 2013 and 1.0% growth to 0.9% growth in 2014. Also, the ECB cut its inflation outlook from 1.7% to 1.5% for 2013 and from 1.6% to 1.5% for 2014.
The Bank of Japan kept policy on hold overnight, as expected, but looked content to support Prime Minister Abe's plan of a sales tax hike early next year to plug a budget hole, a move which is seen as threatening the economic recovery.
S&P 500 futures rose 2.6 points to 1,690.80.
The EUR/USD was higher at 1.3355.
Spanish 10-year government bond yields fell 2 basis points to 4.54%.
Italian 10-year government bond yields fell 2 basis points to 4.23%.
Gold rose 0.34% to $1,289.70 per ounce.
Asian shares were mixed overnight with Australia getting a boost from the Chinese imports figure despite a poor employment report. The Japanese Nikkei 225 Index fell 1.59% and the Topix Index dropped 1.36%. In Hong Kong, the Hang Seng Index rose 0.31% while the Shanghai Composite Index fell 0.09% in China. Also, the Korean Kospi rose 0.3% and Australian shares gained 1.07%.
European shares were higher following the ECB comments, which largely indicated that the ECB may have to do more to stimulate growth across the currency zone. The Spanish Ibex Index rose 0.59% and the Italian FTSE MIB Index gained 0.74%. Meanwhile, the German DAX rose 0.29% and the French CAC 40 gained 0.26% while U.K. shares rallied 0.23%.
Commodities were mixed overnight as oil dropped but copper rallied on the China data. WTI crude futures fell 0.12% to $104.24 per barrel and Brent crude futures fell 0.34% to $107.08 per barrel. Copper futures rallied 2.4% to $324.90 per pound. Gold was higher and silver futures gained 1.14% to $19.73 per ounce.
Currency markets were on the move overnight as the dollar was sold across the board. The EUR/USD was higher at 1.3355 and the dollar was flat against the yen, erasing earlier gains. Overall, the Dollar Index fell 0.12% on weakness against the pound, the euro, the Canadian dollar, and the Swiss franc.
Earnings reported Wednesday
Key companies that reported earnings Wednesday include:
Tesla (TSLA) reported second quarter earnings per share of $0.05 vs. an expected loss of $0.17 per share on revenue of $405.14 million vs. $393.67 million.
Green Mountain Coffee Roasters (GMCR) reported third quarter earnings per share of $0.82 vs. $0.77 expected on revenue of $967.1 million vs. $981.9 million.
Groupon (GRPN) reported a second quarter loss of $0.02 vs. an expected profit of $0.02 per share on revenue of $608.7 million vs. $605.54 million expected.
SolarCity (SCTY) reported a second quarter loss of $0.43 per share vs. an expected loss of $0.38 per share on revenue of $46.6 million vs. $27.44 million expected.
Time Warner (TWX) reported second quarter earnings per share of $0.83 vs. $0.76 expected on revenue of $7.4 billion vs. $7.1 billion expected.
Stocks moving in the premarket included:
Freeport-McMoRan Copper & Gold (FCX) rose 1.8% premarket to $29.96 as copper prices rallied on the back of strong Chinese imports.
Potash Corp. (POT) shares rallied 1.76% premarket to $30.10 on comments from the CEO that the breakup of the Russian cartel will not have as large of an impact as previously thought.
Tesla (TSLA) shares rose 12.15% premarket following the earnings report.
Groupon (GRPN) rose 23.51% premarket following its new $300 million share buyback and CEO announcement.
Notable companies expected to report earnings Thursday include:
Priceline.com (PCLN) is expected to report second quarter earnings per share of $9.38 vs. $7.35 a year ago on revenue of $1.66 billion vs. $1.33 billion a year ago.
LinnCo (LNCO) is expected to report second quarter earnings per share of $0.33 on revenue of $592.17 million.
AMC Networks (AMCX) is expected to report second quarter earnings per share of $0.79 vs. $0.58 a year ago on revenue of $368.48 million vs. $327.57 million a year ago.
Molycorp (MCP) is expected to report a second quarter loss of $0.23 per share vs. a loss of $0.03 per share a year ago on revenue of $157.56 million vs. $104.58 million a year ago.
Dendreon (DNDN) is expected to report a second quarter loss of $0.42 per share vs. a loss of $0.65 per share a year ago on revenue of $75.61 million vs. $79.99 million a year ago.
On the economics calendar Thursday, initial jobless claims are due out followed by a 30-year bond auction. Overnight, Chinese inflation, fixed asset investment, industrial production, and retail sales are all due out.
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