Futures slide as Apple disappoints

The iPhone maker shares are down more than 8% in premarket. Chinese manufacturing data were better than expected.

By Benzinga Jan 24, 2013 9:19AM
zurbar age fotostockU.S. equity futures slid in premarket trading following the disappointing earnings report from Apple (AAPL). Apple posted first quarter earnings that beat expectations but revenue was light and margins dropped precipitously.

In other news, the HSBC Flash China manufacturing PMI rose to 51.9 in January, better than economist forecasts of 51.7 and a continued improvement from the previous 51.5.

Data released early Thursday showed the eurozone contracted less than expected in the first half of January. The eurozone manufacturing PMI rose to 47.5 from 46.1, still in contraction territory but better than forecasts of 46.6. And the eurozone services PMI rose to 48.3 from 47.8, besting expectations of 48.1.

Spain's unemployment rate rose to a massive 26.02% in the fourth quarter, worse than the 25% rate of the third quarter and slightly worse than forecasts of 26%.
  • S&P 500 futures fell 2.6 points to 1,487.50.
  • The EUR/USD was slightly higher at 1.3329.
  • Spanish 10-year government bond yields fell to 5.03%.
  • Italian 10-year government bond yields fell to 4.185%.
  • Gold fell 0.63% to $1,675.90 per ounce.
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Asian markets
Asian shares were mixed overnight following Apple's weakness despite the stronger than expected Chinese data. The Japanese Nikkei Index rose 1.28% while the Shanghai Composite Index slipped 0.79% and the Hang Seng Index declined 0.15%. Also, the Korean Kospi fell 0.8% and Australian shares rose 0.47%.

European markets
European shares were higher in early trade following the strong PMI data on both the manufacturing and services side, with strength in these reports led by Germany. The Spanish IBEX Index rose 0.17% and the Italian MIB Index rose 0.13%. Meanwhile, the German DAX gained 0.05% and the French CAC rose 0.23% while U.K. shares rose 0.27%.

Commodities were mostly weaker overnight despite the strong Chinese and European data. WTI crude futures rose 0.37% to $96.24 per barrel and Brent crude futures fell 0.16% to $112.63 per barrel. Copper futures declined 0.22% despite strength in the Chinese PMI report, with futures falling to $367.70 per barrel. Gold was lower and silver futures declined 1.85% to $31.84 per ounce.

Currency markets returned to seeing massive yen weakness Thursday as the yen declined and the Canadian dollar remained weak following the Bank of Canada decision Wednesday. The EUR/USD was slightly higher at 1.3329 and the dollar rose against the yen to 89.59. Overall, the Dollar Index rose 0.11% on strength against the yen, the Swiss franc, and the Canadian dollar. The USD/CAD remained above parity overnight after popping following the Bank of Canada stating that rate hikes were less imminent now as the housing market weakens.

Premarket movers
Stocks moving in the premarket included:
  • Apple (AAPL) Shares plunged 8.74% premarket following its earnings report.
  • Netflix (NFLX) shares soared more than 35% premarket as the company reported a profit when it was expected to report a loss in the quarter.
  • Broadcom (BRCM) shares fell 2.71% following the weak Apple earnings, as it is a key Apple supplier.
  • U.S. Airways (LCC) shares rose 0.13% premarket following a strong day as the company reported better than expected earnings and continued to perform well in a tough environment.
Notable companies expected to report earnings Thursday include:
  • 3M Co. (MMM) is expected to report fourth quarter earnings per share of $1.41 vs. $1.35 a year ago.
  • AT&T (T) is expected to report fourth quarter earnings per share of $0.47 vs. $0.42 a year ago.
  • Juniper Networks (JNPR) is expected to report fourth quarter earnings per share of $0.22 vs. $0.28 a year ago.
  • Microsoft (MSFT) is expected to report second quarter earnings per share of $0.75 vs. $0.78 a year ago. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
  • Starbucks (SBUX) is expected to report first quarter earnings per share of $0.57 vs. $0.50 a year ago.
On the economics calendar Thursday, jobless claims and the manufacturing PMI are due out. Also, leading indicators and the Kansas City manufacturing index are due out as well as the EIA petroleum and natural gas reports. In addition, the Treasury is set to auction 10-year TIPS. Overnight, the Bank of Japan minutes are set to be released, the German IFO business confidence survey is due out, and the latest British GDP report should move markets.

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Jan 24, 2013 11:38AM
Amusing reaction to Apple's better then expected earnings but lower forecast.  So Apple's now has $146 PS in cash and has a PE of less than 7 if you subtract out that cash and pays 2.3% dividend. That's a better deal than a US Treasury bill.
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