Futures lower on disappointing eurozone data
The economic union reported worse than expected economic growth in the fourth quarter.
U.S. equity futures were lower in early trade after eurozone economy shrank even more than was expected in the fourth quarter.
Eurozone GDP fell 0.6% in the fourth quarter, worse than the 0.4% decline economists had expected and below the previous reading of a 0.1% contraction.
The European Central Bank's monthly report made direct comments about the threats of a strong euro and warned that a strong currency poses downside risks to inflation targets.
Russia releases a statement overnight calling on the G20 to make a specific, targeted statement against Japan and its moves on foreign exchange rates.
The Bank of Korea took no retaliatory measures against the Bank of Japan overnight, but the Bank of Korea did mention that the weak yen policy of Japan poses economic uncertainty to Korea, whose currency has strengthened the most against the yen since the beginning of the BoJ easing cycle.
In other news around the markets:
- S&P 500 futures fell 2.7 points to 1,514.60.
- The EUR/USD was lower at 1.3331.
- Spanish 10-year government bond yields rose to 5.22%.
- Italian 10-year government bond yields rose to 4.41%.
- Gold fell 0.11% to $1,643.00 per ounce.
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Asian shares were mostly higher overnight as Japanese shares rose on monetary easing prospects. The Japanese Nikkei Index rose 0.5% overnight as the yen weakened. Also, the Korean Kospi rose 0.18% and Australian shares rose 0.66%.
European shares were sharply lower following the weak GDP data in early trade. The Spanish Ibex Index fell 1.23% and the Italian FTSE MIB Index declined 0.83%. Meanwhile, the German DAX fell 0.58% and the French CAC declined 0.29% and U.K. shares shed 0.36%.
Commodities were mixed overnight as gold and oil traded lower. WTI crude futures fell 0.09% to $96.96 per barrel and Brent crude futures fell 0.22% to $117.65 per barrel. Copper futures fell 0.39% to $372.85. Gold was lower and silver futures fell 0.22% to $30.80 per ounce.
Currency markets were in flux overnight as the euro, the yen, and the sterling all weakened. The EUR/USD was lower at 1.3331 and the dollar rose against the yen to 93.44 while the cable broke below 1.55 briefly and trades at 1.5502. Overall, the Dollar Index rose 0.59% on strength against the euro, the pound, the yen, and the Swiss franc.
Stocks moving in the premarket included:
- Constellation Brands (STZ) shares rose over 9% premarket after the company announced that it was buying the remaining part of Grupo Modelo from AB InBev (BUD), whose shares rose over 4%.
- CenturyLink (CTL) shares fell 13.14% premarket as the company reported weaker than expected earnings and lowered guidance.
- AIG (AIG) shares fell 1.6% premarket despite a new 13-F filing showing the Baupost Group has taken a new stake in the company.
- Zillow (Z) shares rose 7.01% premarket after rising 7.79% Wednesday following the company's better than expected earnings report.
Notable companies expected to report earnings Thursday include:
- CBS (CBS) is expected to report fourth quarter earnings per share of $0.71 vs. $0.57 a year ago.
- Discovery Communications (DISCA) is expected to report fourth quarter EPS of $0.76 vs. $0.86 a year ago.
- General Motors (GM) is expected to report fourth quarter EPS of $0.51 vs. $0.39 a year ago.
- PepsiCo (PEP) is expected to report fourth quarter EPS of $1.05 vs. $1.15 a year ago.
- Waste Management (WM) is expected to report fourth quarter EPS of $0.60 vs. $0.60 a year ago.
On the economics calendar Thursday, initial jobless claims are due out. Also, the Treasury is set to auction 30-year bonds and speeches from the Federal Reserve's Daniel Tarullo and James Bullard are expected. Overnight, Chinese FDI data, the Bank of Japan's monthly report, and British retail sales data are due out and could move markets.
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After Tuesday's rally, expect a big raid no matter the news. That's probably the safest way to play it ahead of the Fed.
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