Futures lower after Asia sell-off
Markets are set to fall at the open as concerns over Fed tapering increases.
U.S. equity futures were lower in early premarket trade after a sharp sell-off overnight in Asia in which Japanese stocks sank 4%. Also, investors will have their eyes on Elon Musk, whose two companies are set to report earnings.
Japanese stocks led declines overnight on tapering fears and concerns that Chinese trade growth might continue to slow throughout the second half of the year. A State Information Report highlighted that the Chinese government now sees more downside to trade figures, according to the China Securities Journal.
In its Inflation Report, the Bank of England tied for the first time future rate hikes to the unemployment rate. The BOE said that it will not raise rates until the unemployment rate crosses the 7% threshold, which it does not expect to happen before 2016.
BOE Governor Mark Carney, in the following press conference, said that the BOE calls this "explicit rate guidance" and noted that changes in inflation or financial stability may not tempt the Bank to change its policy path.
S&P 500 futures fell 5.4 points to 1,688.50.
The EUR/USD was lower at 1.3268.
Spanish 10-year government bond yields rose 2 basis points to 4.59%.
Italian 10-year government bond yields rose 1 basis point to 4.26%.
Gold fell 0.38% to $1,276.60 per ounce.
Asian shares were lower overnight with Japanese stocks leading declines. The Japanese Nikkei 225 Index fell 4.00% and the Topix Index dropped 3.22%. In Hong Kong, the Hang Seng Index fell 1.53% while the Shanghai Composite Index dropped 0.67% in China. Also, the Korean Kospi fell 1.48% and Australian shares declined 1.85%.
European shares were mixed in early trade. The Spanish Ibex Index declined 0.37% while the Italian FTSE MIB Index rose 0.45%. Meanwhile, the German DAX fell 0.47% and the French CAC 40 was flat while U.K. shares erased earlier losses and traded down only 0.04%.
Commodities were mostly lower overnight on global growth fears. WTI crude futures did gain 0.24% to $105.55 per barrel but Brent crude futures declined 0.15% to $108.22 per barrel. Copper futures fell 0.16% to $316.80 per pound. Gold was lower and silver futures fell 1.19% to $19.29 per ounce.
Currency markets were on the move as the pound sterling got whacked following the BoE news. The EUR/USD was lower at 1.3272 and the dollar fell against the yen to 97.06 while the pound dropped 0.9% against the dollar to 1.5211. Overall, the Dollar Index rose 0.22% on strength against the pound, the Canadian dollar, the euro, and the Swiss franc.
Earnings reported Tuesday
Key companies that reported earnings Tuesday include:
Disney (DIS) reported second quarter earnings per share of $1.03 vs. $1.01 expected on revenue of $11.58 billion vs. $11.64 billion expected. Disney also disclosed that it will take a large loss in the fiscal fourth quarter due to the Lone Ranger.
First Solar (FSLR) reported second quarter earnings per share of $0.39 vs. $0.53 expected on revenue of $519.8 million vs. $721.08 million expected.
CVS (CVS) reported second quarter earnings per share of $0.97 vs. $0.96 expected on revenue of $31.25 billion vs. $31.14 billion expected.
Archer-Daniels-Midland (ADM) reported second quarter earnings per share of $0.46 vs. $0.44 expected on revenue of $22.54 billion vs. $22.87 billion expected.
21st Century Fox (FOXA) reported fourth quarter earnings per share of $0.42 vs. $0.34 expected on revenue of $7.21 billion vs. $7.12 billion expected.
Stocks moving in the premarket included:
First Solar (FSLR) shares dropped 10.59% premarket on the earnings miss.
Bank of America (BAC) shares fell 2.25% premarket after the bank was sued by the Justice Department over alleged mortgage fraud in a 2008 securitization.
Finisar (FNSR) reported preliminary Q1 data that was much better than expected and shares rose 16.57% premarket.
Herbalife (HLF) shares rose slightly in the premarlet by 0.12% as Carl Icahn reiterated that he sees the stock going a lot higher.
Notable companies expected to report earnings Wednesday include:
Time Warner (TWX) is expected to report second quarter earnings per share of $0.76 vs. $0.59 a year ago on revenue of $7.1 billion vs. $6.74 billion a year ago.
Green Mountain Coffee Roasters (GMCR) is expected to report third quarter earnings per share of $0.77 vs. $0.52 a year ago on revenue of $981.9 million vs. $869.19 million a year ago.
Groupon (GRPN) is expected to report second quarter earnings per share of $0.02 vs. $0.08 a year ago on revenue of $605.54 million vs. $568.34 million a year ago.
Tesla Motors (TSLA) is expected to report a second quarter loss of $0.17 vs. a loss of $0.89 a year ago on revenue of $393.67 million vs. $26.65 million a year ago.
SolarCity (SCTY) is expected to report a second quarter loss of $0.38 per share on revenue of $27.44 million.
On the economic calendar Wednesday, MBA purchase applications are due out followed by a 10-year bond auction, a speech from the Federal Reserve's Sandra Pinalto, and the consumer credit report. Overnight, the Chinese trade balance and the Bank of Japan interest rate decision and press conference are expected.
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