Futures lower on weak China trade data
US markets are set for a lower open following Chinese imports and exports report and ahead of the release of minutes from the Fed policy meeting from June.
U.S. equity futures dropped slightly in early premarket trade after China released some weak trade data for June. The world's second largest economy reported slower than expected growth in both exports but imports and a wider than forecast trade surplus, indicating that the export engine of the country cooled in June.
China reported that its exports declined 3.1% in June from a year ago vs. an expected gain of 4% while imports dropped 0.7% vs. an expected 8.0% gain. The trade surplus widened to $27.1 billion vs. the forecast $27.0 billion and showed improvement from May.
Eurozone leaders reached an agreement on winding down failing banks despite German reticence. Leaders agreed that the EU can wind down failing banks, not individual countries, a key point that Germany would not endorse.
European Central Bank Board Member and Banque de France chief Christian Noyer spoke overnight saying that monetary policy will remain accommodative for as long as necessary, reflecting comments of ECB President Mario Draghi last week. He noted that price and financial stability will be key in the ECB's decision to eventually raise rates.
S&P 500 futures fell 2 points to 1,643.60.
The EUR/USD was higher at 1.2817.
Spanish 10-year government bond yields rose 5 basis points to 4.79%.
Italian 10-year government bond yields rose 7 basis points to 4.48%.
Gold rose 0.47% to $1,251.70.
Asian shares were mixed overnight as Japanese shares declined while Chinese equities rallied on hopes of new stimulus following weaker export and import data. The Japanese Nikkei 225 Index declined 0.39% and the Topix Index fell 0.14%. In Hong Kong, the Hang Seng Index rose 1.07% while the Shanghai Composite Index gained 2.17% in China. Also, the Korean Kospi fell 0.34% and Australian shares rose 0.4%.
European shares were lower in early trade following the new bank rules. The Spanish Ibex Index declined 1.02% and the Italian FTSE MIB Index lost 1.04%. Meanwhile, the German DAX declined 0.34% and the French CAC 40 Index fell 0.29% while U.K. shares lost 0.2%.
Commodities were stronger overnight as the dollar weakened. WTI crude futures rose 1.23% to $104.80 per barrel and Brent crude futures gained 0.43% to $108.27 per barrel. Copper futures rose 0.13% to $306.85 per pound. Gold was higher and silver futures rose 0.3% to $19.30 per ounce.
Currency markets were on the move overnight as the dollar weakened across the board. The EUR/USD was higher at 1.2817 and the dollar fell against the yen to 100.12. Overall, the Dollar Index fell 0.31% on weakness against the yen, the Swiss franc, the euro, and the pound.
Earnings reported Tuesday
Key companies that reported earnings Tuesday include:
Wolverine World Wide (WWW) reported second quarter earnings per share of $0.46 vs. $0.34 expected on revenue of $587.8 million vs. $591.03 million expected. The company also raised full year earnings guidance.
Stocks moving in the premarket included:
Hewlett-Packard (HPQ) shares gained 1.92% premarket after Brean Capital raised the stock to buy from hold and announced a $32 price target.
Cummins Inc. (CMI) shares gained 0.56% premarket after the company raised its quarterly dividend to $0.625 per share from $0.50 per share.
Fastenal (FAST) shares gained 0.74% premarket as the company raised its quarterly dividend to $0.25 per share from $0.20.
Nu Skin Enterprises (NUS) shares spiked 13.87% premarket after the company raised earnings per share guidance well above the street's estimates.
Notable companies expected to report earnings Wednesday include:
Yum Brands (YUM) is expected to report second quarter earnings per share of $0.54 vs. $0.67 prior on revenue of $2.93 billion vs. $3.17 bill prior.
Family Dollar (FDO) is expected to report third quarter earnings per share of $1.03 vs. $1.06 on revenue of $2.57 billion vs. $2.36 billion expected.
Fastenal Company (FAST) is expected to report second quarter earnings per share of $0.41 vs. $0.38 prior on revenue of $857.13 million vs. $804.89 million.
PriceSmart (PSMT) is expected to report third quarter earnings per share of $0.64 vs. $0.52 on revenue of $568.33 million vs. $506.77 million a year ago.
Ruby Tuesday (RT) is expected to report fourth quarter earnings per share of $0.18 vs. $0.26 on revenue of $326.06 million vs. $363.21 million a year ago.
On the economics calendar Wednesday, MBA purchase applications are due out followed by wholesale trade data. However, all eyes will be on the release of the Federal Open Market Committee minutes for June and the speech from Federal Reserve Chairman Ben Bernanke as to when tapering might start. Overnight, the Australian employment report, the Bank of Japan decision and press conference, and the ECB monthly report are all expected.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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