Futures higher on Japan, eurozone developments
US markets are set to rise at the open after several down days and in response to positive economic reports.
U.S. equity futures were higher overnight on reports out of Japan and the eurozone. Japan may look to cut corporate taxes following the weak GDP report Monday. Also, eurozone data pointed to economic improvement early Tuesday. Both factors are acting as catalysts in the early morning rally.
Nikkei reported that Japanese Prime Minister Shinzo Abe is considering cutting the corporate tax rate. The move should ease the economic burden of the sales tax increase, and Prime Minister Abe will look for businesses to begin raising wages in response to the tax cut.
The German ZEW economic sentiment index rose to 42.0 in August from 36.3 in July on expectations of a reading of 40.0, the highest reading since March. The reading shows that Germans are becoming more confident about the economy, and the survey tends to act as a leading indicator for European growth.
British inflation data was released overnight and revealed that CPI inflation rose at a 2.8% annualized rate in July, slowing from the 2.9% rate in June. Core producer prices rose 1.1%, slower than the expected 1.2%.
S&P 500 futures rose 6.1 points to 1,693.20.
The EUR/USD was higher at 1.3309.
Spanish 10-year government bond yields fell 1 basis point to 4.47%.
Italian 10-year government bond yields fell 1 basis point to 4.16%.
Gold rose 0.12% to $1,335.80.
Asian shares were higher overnight with Japanese stocks leading gains on the proposed tax cut plan. The Japanese Nikkei 225 Index rose 2.57% and the Topix Index gained 1.99%. In Hong Kong, the Hang Seng Index rose 1.21% and the Shanghai Composite Index rose 0.23% in China. Also, the Korean Kospi gained 1.5% and Australian shares rose 0.96%.
European shares were higher on the stronger than expected ZEW survey. The Spanish Ibex Index rose 0.62% and the Italian FTSE MIB Index gained 0.74%. Meanwhile, the German DAX rose 0.87% and the French CAC 40 Index gained 0.44% while U.K. shares rose 0.65%.
Commodities were higher overnight on broad risk-on sentiment. WTI crude futures rose 0.69% to $106.84 per barrel and Brent crude futures rose 0.64% to $109.67 per barrel. Copper futures rose 0.85%. Gold was higher and silver futures rose 1.62% to $21.69 per ounce.
Currency markets were on the move as the dollar gained, and the yen sold off sharply on the tax cut proposal. The EUR/USD was higher at 1.3309 and the dollar rose against the yen to 97.92. Overall, the Dollar Index rose 0.24% on strength against the yen, the Canadian dollar, and the Swiss franc.
Earnings reported Monday
Key companies that reported earnings Monday include:
Sysco (SYY) reported fourth quarter earnings per share of $0.50 vs. $0.55 expected on revenue of $11.6 billion vs. $11.62 billion expected.
Buckeye Technologies (BKI) reported fourth quarter earnings per share of $0.58 vs. $0.56 a year ago.
NQ Mobile (NQ) reported second quarter earnings per share of $0.26 vs. $0.20 expected on revenue of $41.4 million vs. $39.34 million expected.
Sina (SINA) reported second quarter earnings per share of $0.21 vs. $0.12 expected on revenue of $152.8 million vs. $145.18 million expected.
Stocks moving in the premarket included:
Sina (SINA) shares rose 7.28% after the company beat earnings estimates and raised sales guidance.
NQ Mobile (NQ) shares rose 6.92% premarket after the company also beat earnings estimates and raised sales guidance.
J.C. Penney (JCP) shares rose 0.99% premarket after CNBC's Scott Wapner reported that Glenview Asset Management had not taken a side in the boardroom debate. Then, Reuters reported that Pershing Square's Bill Ackman was set to resume amicable talks with the board as soon as last night.
Yum Brands (YUM) shares fell 3.99% premarket after the company reported worse than expected China same store sales data. The company reported China SSS fell 13% with sales at KFC restaurants falling 16% and Pizza Hut sales rising 3%. The company also said it expects SSS to recover and turn positive in the fourth quarter in China.
Notable companies expected to report earnings Tuesday include:
Brocade Communications (BRCD) is expected to report third quarter earnings per share of $0.12 vs. $0.14 a year ago on revenue of $518.85 million vs. $555.33 million a year ago.
Cree (CREE) is expected to report fourth quarter earnings per share of $0.38 vs. $0.25 a year ago on revenue of $377.21 million vs. $306.76 million expected.
JDS Uniphase (JDSU) is expected to report fourth quarter earnings per share of $0.13 vs. $0.15 a year ago on revenue of $430.64 million vs. $439.3 million a year ago.
On the economics calendar Tuesday, the NFIB small business optimism index is due out followed by the retail sales report and the weekly Redbook. The Federal Reserve's Dennis Lockhart is also expected to speak and the Treasury will auction 4-week bills. Overnight, the German, French and eurozone GDP reports are due out as well as the British employment report and Bank of England Monetary Policy Committee minutes.
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