Futures lower on mixed data from China
Four key data points only serve to create more uncertainty over the direction of the world's second-largest economy.
U.S. equity futures traded lower in early premarket trade following a mixed set of data from China. Officials released four separate key data points, all of which served to create more uncertainty over the fate of the world's second-largest economy than to alleviate fears of a slowdown.
Chinese industrial production rose 9.7% in July, besting the forecast of a gain of 9% and posting a sharp increase from June's 8.9% growth rate. Year-to-date, industrial production has grown 9.4% vs. 10.3% in 2012 through July.
Chinese fixed-asset investment, a proxy for corporate investment, rose 20.1% in July, slightly better than the forecast 20% gain and flat from June's reading. But retail sales rose just 13.2% in May, missing the forecast of a gain of 13.5% and dropping slightly from June's 13.3% rate of growth.
The country's inflation was cooler than expected in July, with consumer prices rising 2.7% from a year ago, compared with the forecast 2.8% rise and flat from June's reading. Producer prices fell 2.3%, an improvement from June's decline of 2.7% but below the forecast decline of 2.2%.
- S&P 500 futures fell 3.9 points to 1,689.90.
- The EUR/USD was higher at 1.3385.
- Spanish 10-year government bond yields fell one basis point to 4.51%.
- Italian 10-year government bond yields fell one basis point to 4.19%.
- Gold fell 0.08% to $1,308.80 per ounce.
Asian shares were mixed overnight following the mixed bag of China data. The Japanese Nikkei 225 Index rose 0.07%, and the Topix gained 0.12%. In Hong Kong, the Hang Seng rose 0.7% on reports that China will launch deposit insurance this year, while the Shanghai Composite gained 0.36%. Also, the Korean Kospi fell 0.17%, and Australian shares fell 0.19%.
European shares were mostly lower in early trade on little news. The Spanish Ibex fell 0.13%, and the Italian FTSE MIB declined 0.23%. Meanwhile, the German DAX slipped 0.2%, the French CAC 40 declined 0.2%, ande U.K. shares rose 0.24%.
Commodities were mixed as oil bounced from Thursday's losses. WTI crude futures rose 0.44% to $103.85 per barrel, and Brent crude futures gained 0.13% to $106.82 per barrel. Copper futures fell 0.03% to $327.15 per pound. Gold was lower, and silver futures were flat at $20.20 per ounce.
Currency markets were quiet overnight as the dollar was roughly flat. The EUR/USD was slightly higher at 1.3385, and the dollar was flat against the yen. Overall, the Dollar Index was marginally higher on strength against the Canadian dollar.
Earnings reported Thursday
- Priceline.com (PCLN) reported second-quarter EPS of $9.70 vs. $9.38 expected on revenue of $1.68 billion vs. $1.66 billion expected.
- Agrium (AGU) reported second-quarter EPS of $4.94, in line, on revenue of $7.02 billion vs. $6.95 billion expected.
- Canadian Solar (CSIQ) reported a second-quarter loss of 29 cents per share vs. a loss of 20 cents per share expected on revenue of $380.4 million vs. $419.83 million expected.
- Molycorp (MCP) reported a loss of 36 cents per share vs. an expected loss of 23 cents per share on revenue of $136.9 million vs. $157.56 million expected.
- Rackspace Hosting (RAX) reported second-quarter EPS of 16 cents vs. 13 cents expected on revenue of $375.8 million.
- Wright Medical Group (WMGI) shares fell 10.94% as the company disclosed a Food & Drug Administration nonapproval for one of its products.
- Priceline.com (PCLN) shares rose 5.99% following its earnings beat.
- Raxspace Hosting (RAX) shares rose 11.65% following its earnings beat.
- Canadian Solar (CSIQ) shares fell 0.84% after declining nearly 8% intraday. Solar earnings have been relatively poor overall in second-quarter earnings season, with First Solar (FSLR), SolarCity (SCTY) and Ascent Solar (ASTI) all reporting worse-than-expected earnings, to name a few.
Notable companies expected to report earnings Friday include:
- Magna International (MGA) is expected to report second-quarter EPS of $1.62 vs. $1.48 a year ago on revenue of $8.52 billion vs. $7.73 billion a year ago.
- Beacon Roofing Supply (BECN) is expected to report third-quarter EPS of 71 cents vs. 62 cents a year ago on revenue of $670.44 million vs. $560.53 million a year ago.
On the calendar Friday, the wholesale trade report is due out alongside the Canadian employment report.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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