Futures flat ahead of decisions from central banks
Interest rate decisions are expected today from the European Central Bank and Bank of England.
U.S. equity futures were flat Thursday ahead of interest rate decisions from both the European Central Bank and the Bank of England. Also, overnight Greek leaders approved the latest round of austerity measures by a narrow margin, paving the way for Greece to get its next round of bailout funding from the Troika.
On Wednesday, markets sold off strongly one day after President Obama was reelected for a second term. Investors feared that a stalemate in Congress would mean our leaders would be unable to reach a deal, sending us over the fiscal cliff.
The People's Bank of China Governor Zhou spoke overnight, saying that the economy has recently shown signs of improvement and the PBOC will stand ready to act if necessary. China's leadership changeover begins today.
Spain auctioned three-, six-, and 20-year bonds in a rather strong auction with yields falling and the bid-to-cover ratios improving.
- S&P 500 futures were flat at 1,398.20.
- The EUR/USD was much weaker at 1.2734.
- Spanish 10-year government bond yields rose to 5.817%.
- Italian 10-year government bond yields rose to 5.017%.
- Gold rose 0.04% to $1,714.70.
Commodities were mostly stronger in early Wednesday trade following broad sell-offs in the commodity complex Wednesday (oil fell more than 4 percent). WTI crude futures rose 0.68% to $85.01 per barrel and Brent crude futures rose 0.6% to $107.46 per barrel. Copper futures were weaker on global growth fears, sliding 0.15% to $343.65 per pound. Gold was higher and silver futures rose 0.06% to $31.68.
Currency markets showed broad euro weakness in overnight trading ahead of the ECB. The EUR/USD was lower at 1.2734 and the dollar fell against the yen to 79.86. Overall, the Dollar Index rose 0.2% to 80.92 on strength against the euro, the pound, and the Swedish Krone. The euro was broadly weak, falling against the U.S. dollar, the yen, and the Aussie dollar; the EUR/AUD cross is trading at its lowest levels since late August.
- VirentX Holding Corp. (VHC) shares fell 1.07% premarket following a 27% gain Wednesday as the company won a lawsuit against Apple (AAPL).
- Merck and Co. (MRK) shares fell 0.58% premarket following the weak earnings from Vivus (VVUS), which sent its shares to the lowest level on record.
- Shares of the Southern Company (SO) rose 0.33% as fears over dividend payers in the higher tax environment after the fiscal cliff receded.
- Marathon Petroleum Corp. (MPC) shares rose 0.43% premarket as the company was highlighted at Zacks Equity Research.
- Duke Energy (DUK) is expected to report third quarter earnings per share of $1.45 vs. $1.50 a year ago.
- International Game Technology (IGT) is expected to report fourth quarter earnings per share of $0.32 vs. $0.24 a year ago.
- Kohl's (KSS) is expected to report third quarter earnings per share of $0.86 vs. $0.80 a year ago.
- Nvidia (NVDA) is expected to report third quarter earnings per share of $0.30 vs. $0.29 a year ago.
- Walt Disney (DIS) is expected to report third quarter earnings per share of $0.68 vs. $0.59 a year ago and should comment on the recent Lucasfilm acquisition.
- Zipcar (ZIP) is expected to report third quarter earnings per share of $0.01 vs. $0.02 a year ago.
On the economic calendar Thursday, all eyes are on the ECB and the BOE. Neither Bank is expected to cut rates nor expand any existing non-traditional policies. However there are some economists who have said a rate cut by the ECB could lead to a boost to growth. Also, jobless claims and trade data are due out. Lastly, the Federal Reserve's James Bullard is set to speak tonight at Washington University in St. Louis.
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