Futures rise after Monday's losses
US markets seem set to rebound from their worst day since November.
U.S. equity futures rose in premarket trading after U.S. and global markets suffered losses Monday on the back of renewed sovereign stresses in the eurozone. On Tuesday, however, European shares bounced back, and U.S. markets seem set to start on a positive note.
In other news, retail sales in the eurozone fell 0.8% in December, worse than forecasts of a decline of 0.5%, and the November reading was revised lower.
The eurozone non-manufacturing PMI, on the other hand, expanded in January to 48.6 from 47.8 in December and was better than the initial estimate of 48.3.
OECD Chief Angel Guerria spoke overnight, saying that the recent moves were a reversal of the normalization of yields for Spain and Italy and that politics are responsible for the recent uptick in yields.
- S&P 500 futures rose 5.4 points to 1,498.80.
- The EUR/USD was was higher at 1.3539.
- Spanish 10-year government bond yields fell slightly to 5.44%.
- Italian 10-year government bond yields fell slightly to 4.47%.
- Gold rose 0.11% to $1,678.20 per ounce.
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Asian shares were weak on the back of European and American weakness as the increased political risk in Spain and Italy weighed on markets. The Japanese Nikkei Index fell 1.9% and the Shanghai Composite Index rose 0.2% while the Hang Seng Index declined 2.27%. Also, the Korean Kospi fell 0.77% and Australian shares fell 0.51% as the RBA kept rates on hold at 3.00% overnight.
European shares were mostly higher in apparent reversals of Monday's flows. The Spanish Ibex Index rose 1.02%, led by tech stocks and financials, and the italian FTSE MIB Index rose 0.57% on strength in financials. Meanwhile, the German DAX rose was flat and the French CAC rose 0.55% while U.K. shares rose 0.36%.
Commodities were mostly higher overnight following weakness Monday. WTI crude futures rose 0.44% to $96.59 per barrel and Brent crude futures rose 0.45% to $116.11 per barrel. Copper futures declined 0.07% to $376.60 per pound after the RBA decision. Gold was higher and silver futures rose 0.67% to $31.94 per ounce.
Currency markets had a slight risk-on bias over the past few hours as the euro rallied and the yen fell. The EUR/USD was higher at 1.3539 and the dollar rose against the yen to 92.96. Overall, the Dollar Index fell 0.04% on weakness against the euro, the pound, and the Swedish Krone, which rallied on stronger Brent prices. Also, the Aussie dollar was weak following inaction from the RBA, with the AUD/USD falling and the AUD/JPY lagging other yen crosses while the EUR/AUD rose.
Stocks moving in the premarket included:
- Dell (DELL) shares rose 0.6% premarket as Bloomberg reported that a deal could be announced Tuesday to take the company private in a LBO, with Silverlake owning $1 billion of the equity and Microsoft (MSFT) investing $2 billion. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
- Yum Brands (YUM) shares fell 6.44% premarket as the company reported weak fourth quarter earnings and lowered guidance. The company decreased guidance for Chinese sales in January and February by about 25%.
- JC Penney (JCP) shares fell 2.69% premarket as a group of bond investors have alleged that the company is already in default.
- Moody's (MCO) shares declined 0.91% premarket after declining over 10% Monday as prosecutors are suing rival Standard & Poor's, owned by McGraw Hill (MHP), for ratings procedures related to risky mortgage backed securities issued in he build up to the financial crisis. McGraw Hill shares declined 0.38% premarket after falling over 13% Monday.
Notable companies expected to report earnings Tuesday include:
- Archer Daniels Midland (ADM) is expected to report fiscal second quarter earnings per share of $0.56 vs. $0.45 a year ago.
- Chipotle Mexican Grill (CMG) is expected to report fourth quarter EPS of $1.96 vs. $1.81 a year ago.
- HCA Holdings (HCA) is expected to report $0.83 vs. $0.94 a year ago.
- Panera Bread (PNRA) is expected to report fourth quarter EPS of $1.74 vs. $1.42 a year ago.
- Sirius XM Radio (SIRI) is expected to report fourth quarter EPS of $0.02 vs. $0.01 a year ago.
On the economics calendar Tuesday, same-store sales, the Redbook, and the ISM non-manufacturing index are expected. Also, Elizabeth Duke of the Federal Reserve Board of Governors is set to speak. In addition, the Treasury is set to auction four- and 52-week bills. Overnight, German factory orders will be watched.
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Yesterday`s selloff was a way to get the wimpy nervous Nellies out of the market.A lot
of people don`t belong in the market.They should put their money in CD`s and be
thrilled to get 1%, or be in gold.I have rock solid stocks.While gold bugs are worried
about the price of gold I`m cashing dividends.If you want to live like a Republican
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3 stocks will be in the spotlight Thursday as investors try to make sense of the numbers from the sector.
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