Futures rise despite weak China data
A better than expected manufacturing reading in Europe offsets a lackluster Chinese reading as investors await US figures next.
U.S. equity futures rose in early premarket trade despite weak manufacturing data out of China. The official manufacturing PMI fell to a four-month low of 50.1 in June from 50.8 in May, in line with expectations. However, the HSBC manufacturing PMI, which surveys smaller companies that are more likely to be hit by the recent liquidity crunch, dropped to a nine-month low of 48.2, below the flash reading and estimate of 48.3 and also below May's 49.2.
Meanwhile, the eurozone's manufacturing PMI unexpectedly showed less contraction than expected in June, rising to 48.8 from 48.7 in May on expectations of a flat reading. Notably, Spain's manufacturing sector improved to a flat reading of 50 in the month from 48.1, better than the forecast 48.5. Italy and France posted strong figures despite slight weakness in Germany.
The eurozone's unemployment rate dropped in May to 12.1%, below the expected 12.3%. Further, April's figure was revised downwards to 12.0% from 12.2%, easing the currency bloc's unemployment woes.
S&P 500 futures gained 4.5 points to 1,603.80.
The EUR/USD was higher at 1.3051.
Spanish 10-year government bond yields rose 1 basis point to 4.77%.
Italian 10-year government bond yields rose 1 basis point to 4.55%.
Gold gained 1.39% to $1,240.70 per ounce.
Asian shares were mostly higher overnight save for the Australian market, while Hong Kong's market was closed for the day. The Japanese Nikkei 225 Index gained 1.28% on strong economic data while the Topix Index gained 1.49%. In China, the Shanghai Composite Index rose 0.81% and the CSI 300 Index gained 0.58%. Also, the Korean Kospi fell 0.41% and Australian shares declined 1.92%.
European shares were mixed following better than expected manufacturing data as markets await the European Central Bank's and the Bank of England's much anticipated interest rate decisions on Thursday. The Spanish Ibex Index fell 0.15% and the Italian FTSE MIB Index gained 0.17%. Meanwhile, the German DAX fell 0.59% and the French CAC 40 Index dropped 0.28% while U.K. shares gained 0.06%.
Commodities were mostly stronger overnight, boosted by a weakening of the dollar. WTI crude futures rose 0.02% to $96.58 per barrel and Brent crude futures gained 0.13% to $102.29 per barrel. Copper futures bounced sharply, rising 1.64% to $310.75 per pound. Gold was higher sharply and silver futures gained 0.87% to $19.64 per ounce.
Currency markets were on the move overnight as the yen and the dollar led declines, showing a slight risk-on tone. The EUR/USD was higher at 1.3051 and the dollar gained against the yen by 0.45% to 99.59. Overall, the Dollar Index fell 0.1% on weakness against the euro, the pound, and the Canadian dollar.
Earnings reported Friday
Key companies that reported earnings Friday include:
AZZ Inc. (AZZ) reported first quarter earnings per share of $0.57 vs. 0.63 expected on revenue of $183.2 million vs. $197.08 million expected.
BlackBerry (BBRY) reported a first quarter loss of $0.13 vs. earnings per share of $0.08 expected on revenue of $3.07 billion vs. $3.37 billion expected. Also, gross margins fell a full six%age points and smartphone shipments below expectations while cash flow from operations rose and so did the total cash position.
Emmis Communication (EMMS) reported first quarter earnings per share of $0.08 on revenue of $50.6 million.
The Finish Line (FINL) reported first quarter earnings per share of $0.20 vs. $0.16 expected on revenue of $351.1 million vs. $344.22 million expected.
Stocks moving in the premarket included:
Hewlett-Packard (HPQ) shares rose 0.6% premarket on a positive recommendation from Barron's on the stock.
Notable companies expected to report earnings Monday include:
MSC Industrial (MSM) is expected to report third quarter earnings per share of $0.98 vs. $1.10 a year ago on revenue of $637.07 million vs. $611.97 million a year ago.
Shulman A Inc. (SHLM) is expected to report third quarter earnings per share of $0.65 vs. $0.69 a year ago on revenue of $576.1 million vs. $569.11 million a year ago.
On the economics calendar, the Markit manufacturing PMI and the ISM manufacturing index are due out as well as construction spending data. Also, New York Fed President William Dudley is expected to speak at 8 a.m. ET, and the Treasury will hold its weekly 3- and 6-month bill auctions. Overnight, the Reserve Bank of Australia's interest rate decision is expected as well as eurozone PPI.
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Investors are anxious to see if hiring can maintain its strong pace in the second half of the year.
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