Futures rebound as risk appetite returns

Better-than-expected economic data from the eurozone and a weakened yen have traders looking up again.

By Benzinga Jun 12, 2013 8:06AM
Stock traders on NY Stock ExchangeBy Matthew Kanterman

U.S. equity futures rose in early premarket trading Wednesday as better-than-expected economic data from the eurozone sparked a risk rally. The yen weakened, the Australian dollar bounced back and equity futures rose in what appears to be a return to risk.

 

In other news around the markets, the number of people claiming unemployment in the U.K. fell more than expected in May. The unemployment rate was steady at 7.8 percent. Industrial production in the eurozone rose faster than expected in April, at 0.4% vs. an expected drop of 0.2%. However, March's figure was revised slightly lower to +0.9% from +1%. On an annualized basis, industrial production fell 0.6% vs. a 1.2% expected drop.


The Bank of Japan bought $8.4 billion of bonds last night as part of its stimulus measures. Yields on Japanese government bonds were higher on the session across the curve.

  • S&P 500 futures rose 8.2 points to 1,635.30, a session high.
  • The EUR/USD was lower at 1.3278.
  • Spanish 10-year government bond yields rose 3 basis points to 4.69%.
  • Italian 10-year government bond yields rose 3 basis points to 4.4%.
  • Gold rose 0.05% to $1,377.70.
  • Click here for more of Benzinga's Top News stories

Asian markets

Asian shares were generally lower overnight, although most major indices closed off of their lows. The Japanese Nikkei 225 Index fell 0.21% after declining over 2% at the open, and the Topix Index fell 0.42%. Also, the Korean Kospi fell 0.56%, and Australian shares shed 0.69%.


European markets

European shares were mostly higher on the back of some better-than-expected economic data. The Spanish Ibex Index gained 1.22%, and the Italian FTSE MIB Index rose 0.22%. Meanwhile, the German DAX gained 0.09%, and the French CAC 40 rose 0.39%, while U.K. shares added 0.05%.


Commodities

Commodities were slightly higher overnight as global growth fears ebbed. WTI crude futures rose 0.06% to $95.44 per barrel, and Brent crude futures rose 0.34% to $103.31 per barrel. Copper futures added 1% to $322.70 per pound. Gold was higher, and silver futures rose 0.5% to $21.76 per ounce.


Currencies

Currency markets were in retracement mode overnight as the dollar gained back some ground against the yen, while risk currencies such as the Aussie dollar bounced back. The EUR/USD was lower at 1.3278, and the dollar gained against the yen to 96.57. Overall, the Dollar Index rose 0.15%.


Earnings

Key companies that reported earnings Tuesday include:

  • LDK Solar (LDK) reported a first-quarter loss of $1.21 per share vs. an expected loss of 96 cents per share on revenue of $104.3 million vs. $97.2 million expected.
  • Oxford Industries (OXM) reported first-quarter EPS of 82 cents vs. 78 cents expected on revenue of $234.2 million vs. $236.9 million expected. The company also reported mixed guidance for the second quarter and reaffirmed its full-year guidance.
  • Ulta Salon (ULTA) reported first-quarter EPS of 65 cents vs. 62 cents expected on revenue of $582.7 million vs. $576.3 million expected. However, guidance for the second quarter was slightly below forecasts.

Premarket movers

Stocks moving before New York markets open included:

  • Ulta Salon (ULTA) rose 9.59% on the earnings beat
  • First Solar (FSLR) shares fell 6.29% as the company priced a secondary offering of 8.5 million shares, or just under 10% of shares outstanding.
  • Newcastle Investment (NCT) shares fell 1.17% after the company sold 30 million shares.
  • Rambus (RMBS) shares climbed 10.46% after the company entered a new patent licensing agreement.

Earnings out today

Notable companies expected to report earnings Wednesday include:

  • Men's Warehouse (MW) is expected to report first-quarter EPS of 55 cents vs. 52 cents.
  • PVH (PVH) is expected to report first-quarter EPS of $1.35 vs. $1.30 a year ago.

Economics

On the economics calendar Wednesday, MBA Purchase Applications and a 10-year Treasury auction are expected, followed by the Treasury budget statement. Overnight, the Australian Employment Change report and the ECB Monthly Report are both expected.


More from Benzinga

7Comments
Jun 12, 2013 8:32AM
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Sentiment is now neutral and traders can have their way.  I see us slipping into stagflation as we have now rung what we could out of zero percent interest rates.  Gotta find a better drug.  Or just boost whatever you can on a daily basis..
Jun 12, 2013 8:31AM
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i don;t know.....it's my second week in england here and the people are still very bleak about their future.  we're certainly not sampling the same people
Jun 12, 2013 10:25AM
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If world economic policy is lucky we and they will just suffer inflation.  Creating inflation now is replacing low interest rates as the go to policy.  In a way creating inflation is a negative interest rate because it causes stuff to be worth less because many commodities aren't assured of rising prices. Now if you think about it negative interest rates really mean deflation right and vice versa? So if they are really lucky they will create inflation.  And if they are not really lucky at creating inflation deflation historically is a very very scary state of affairs.  Their job never seems to be done.  Once you start boosting for one result then another and another until what?  You fill in that blank.  The entire time they, the central bankers,  ask us for our support and confidence yet they seem to only come up with results that many see as prolonging the inevitable.  Free markets are wonderful to see work and benefit so many that practice them.  The FED however seems destined to not allow these markets to do their stuff, but to select a constantly moving target  few can ever predict, understand, or feel confident of planning on.  JMHO
Jun 12, 2013 10:07AM
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Is Japan really "exploding" or are they living on " hopium yen." ?
Jun 12, 2013 9:53AM
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Soaring unemployment in the Euro-Zone as we have a soaring supply of Global Debt everywhere. China is clearly slowing while Japan is literally imploding. But guess what, risk appetite is returning. Isn't that why we are have so many problems in the first place?
Jun 12, 2013 9:50AM
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I think Europe ,England and the Med-States....Not even counting the Mid-East have been "down in the dumps"...For quite sometime.

But the Rich, Well-off and Politically connected over there have been doing pretty great..

Sounds all too familar with other places such as here..

 

If you happen to have a pint with the blokes this afternoon...(their evening)

Ask them if they know what "down in the dumps"...Is.

Jun 12, 2013 9:22AM
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Markets Sag......Futures Rebound....Then Cramer or Mirhari will come out with their opinions on what is really going on...

 

Is any of this added on value, when there are no concrete decisions that anyone can use..

Am I or many others just spinning our wheels here or do some just have other motives.?

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