Futures up as bond yields continue to rise
US stock markets are set for a slightly higher open after a 4-day losing streak and ahead of several retail companies' earnings.
U.S. Stocks slipped for the fourth consecutive day on Monday, and bond yields have continued their climb as investors worried about when the Federal Reserve will begin winding down its stimulus program. Heavy selling has boosted long-term bond rates, and U.S. 10-year Treasury yields have risen to 2.9%.
As the time of the Fed's tapering approaches, developing nations are struggling to attract capital and sustain growth levels. Indonesian shares have fallen 5.6%, and India's stock market plunged 4% on Friday and another 1.5% on Monday. Shares in Thailand are also down 3.3%
In other news, a real estate fund run by Blackstone Group LP (BX) offered to buy Tysan Holdings LTD, a Chinese property developer, for 2.5 billion Hong Kong dollars. This is one of the first offers the Blackstone Group's Asian-focused real estate fund has made since its formation earlier in the year.
The German Bundesbank gave investors reason to doubt the European Central Bank's intentions. The Bundesbank claimed that contrary to the ECB's pledge to maintain interest rates the same in the long term, it would raise rates if it finds evidence of rising inflationary pressure.
The death toll in Egypt has risen to nearly 900 people as protestors and the Egyptian military clash. The nation's security forces have reportedly arrested the leader of the Muslim Brotherhood, a group that has supported ousted President Mohamed Morsi.
The minutes of the Reserve Bank of Australia's minutes indicated that the bank is considering another rate cut but nothing has been planned. The Australian dollar slid 0.76% following the minutes' release.
Asian shares remained depressed overnight as worries about the Fed's tapering and its effect on emerging markets hammered companies with heavy exposure to emerging markets. The Japanese NIKKEI index fell 2.63% to 13,396.63, a near two week low. In Hong Kong, the Hang Seng index fell nearly as much with a 2.20% drop. The Shanghai Composite also suffered a 0.62% loss. Only the New Zealand Exchange 50 Free Index saw gains with a 0.11% increase.
European shares were lower across the board as caution kept a lid on any big trading moves. The European Stoxx 600 index lost 0.81% and the UK's FTSE slipped 1.24%. The Swiss SMI Index fared the best of the European indexes with only a 0.18% loss, while the Spanish IBEX sustained the largest losses and slid 1.64%.
Energy futures all suffered as investors prepared for the end of easy money with the Fed's tapering in sight. Brent futures for October delivery, supported by conflict in Egypt and Libya still lost 0.85% with a price of $108.97. WTI futures fell to $106.01, a 1.02% loss. Natural gas and heating oil futures both slid 0.66% and 0.60% respectively. Precious metals also lost ground; gold fell 0.37% while silver tumbled 2% to $22.75 per ounce.
The Indian rupee made waves in the currency markets after falling 1.6% against the dollar. The central bank has stepped in to sell dollars and try to mitigate losses, but the rupee was trading at 63.635 at 9:21 GMT on Tuesday morning. The euro rose against the dollar to $1.3389 while the yen slid 0.31% against the greenback. The dollar to British pound ratio was little changed at $1.5674 dollars to the pound.
Earnings reported Monday
Notable companies that reported earnings on Monday included:
Bob Evans Farms (BOBE) reported first quarter earnings per share of $0.58, in line with expectations, on revenue of $329.4 million which fell just short of the 335.19 million that was expected.
Urban Outfitters (URBN) reported second quarter earnings per share of $0.51, beating the expected earnings per share of $0.48. The reported revenue came in at $758.50 million, just below expectations of $768.76 million
International Rectifier (IRF) reported a fourth quarter loss of $0.09 on $276.50 million in revenue.
Aegean Marine Petroleum (ANW) reported second quarter earnings per share of $0.13, lower than the $0.17 that was expected. Revenue was in line with expectations at $1.69 billion
Stocks moving in the premarket included:
Carnival (CCL) rose 0.22% in premarket trade after falling $0.63 on Monday.
Disney (DIS) also jumped 0.47% to $62.12 per share in premarket trade after the company's heavily anticipated virtual reality game hit the shelves on Monday.
General Motors (GM) increased 0.14% after glowing reviews of the company's new Corvette Stingray have sparked speculation that the new model could be GM's turnaround.
Notable companies expected to report earnings Tuesday include:
Dell (DELL) is expected to report second quarter revenue of $14.18 billion vs. $14.48 billion a year ago.
Analog Devices (ADI) is expected to report third quarter earnings per share of $0.54 on revenue of $671.70 million vs. earnings per share of $0.56 on revenue of $683.03 million a year ago.
Intuit (INTU) is expected to report fourth quarter earnings per share of $0.05 up from last year's $0.03
Home Depot (HD) is expected to report second quarter earnings per share of $1.20 on revenue of $21.72 billion, up from last year's earnings per share of $1.01 on revenue of $20.57 billion.
Not much economic data is expected Tuesday. Investors will be watching the German producer prices as well as Hong Kong's consumer prices and the release of Mexican GDP.
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Why are stronger numbers considered bad news? Investors are worried about the impact on inflation and interest rates.
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