Futures gain after Japan's Nikkei rallies
US stocks are poised to open higher Monday following a solid rebound in Japan's benchmark index and despite weak Chinese data.
U.S. equity futures rose in early premarket trade after Japanese stocks bounced back from a bear market overnight. The benchmark Nikkei 225 Index rose almost 5% overnight following better-than-expected economic data that points to a recovery being fueled by the nontraditional stimulus measures of the new regime of Prime Minister Abe.
In other news around the markets, China reported over the weekend that its trade balance for May rose to $20.4 billion from $18.16 billion in April versus expectations of a reading of $20 billion. An unexpected drop in imports masked slower-than-expected export growth in the month.
China also reported weaker-than-expected inflation, lending, industrial production,and fixed asset investment data this weekend, while retail sales growth outpaced expectations and vehicle sales growth slowed.
Japan's final reading for first-quarter GDP rose to 1% quarterly growth from the prior estimate of 0.9% compared with expectations of a flat reading. On an annualized basis, the economy has grown 4.1%, better than expectations of 3.5% growth.
- Japan's seasonally adjusted current account surplus jumped unexpectedly in April to $8.64 billion vs. $3.85 billion expected and better than April's $3.47 billion in a sign that the yen's devaluation is successfully boosting exports and leading to a recovery.
- S&P 500 futures rose 6.6 points to 1,645.20.
- The EUR/USD was marginally lower at 1.3214.
- Spanish 10-year government bond yields fell 3 basis points to 4.52%.
- Italian 10-year government bond yields fell 3 basis points to 4.16%.
- Gold fell 0.37% to $1,377.90 per ounce.
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Asian shares were mixed overnight as Japanese equities rallied sharply despite lackluster Chinese economic data. The Japanese Nikkei 225 Index closed higher by 4.94%, the largest one-day gain since March, and the Topix Index rose 5.21%. Also, the Korean Kospi gained 0.46%, while Australian shares declined 0.91%.
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European shares were mixed in early trade led by German equities, which returned to the green over the past month. The Spanish Ibex Index rose 0.1%, and the Italian FTSE MIB Index fell 0.16%. Meanwhile, the German DAX rose 0.8%, and the French CAC 40 dropped 0.02% as U.K. shares rose 0.02%.
Commodities were mostly lower overnight following the renewed round of dollar strength led by declines in the yen and also on the weak China data over the weekend. WTI crude futures fell 0.29% to $95.75 per barrel, and Brent crude futures declined 0.25% to $104.50 per barrel. Copper futures dropped 1.16% to $323.05 per ounce. Gold was lower, and silver futures fell 1.23% to $21.48 per ounce.
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Currency markets had one theme overnight, yen weakness, as the dollar gained over 1% against the Japanese currency. The EUR/USD was marginally lower at 1.3214, and the dollar gained against the yen to 98.70. Overall, the Dollar Index rose 0.26% on strength against the yen, the British pound, the Swiss franc and slightly against the euro. Notably, the Aussie dollar continued its string of declines, falling 0.76% against the U.S. dollar to 0.9425 after having made a fresh low of 0.9397.
Earnings reported Friday
Key companies that reported results include:
- JinkoSolar Holdings (JKS) reported a first-quarter loss of 56 cents per share vs. a loss of $1.66 per share expected on revenue of $187.3 million vs. $168.25 million expected.
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- Cliffs Natural Resources (CLF) shares slipped 0.45% as the natural resources company declined weak data from China.
- 3M (MMM) shares gained 0.8%, extending Friday's 2.25% gain after Jefferies boosted its price target on the stock to $128 from $120 and maintained it as a "buy."
- Salesforce.com (CRM) shares gained 0.48%, recouping some of the losses seen after announcing the acquisition of ExactTarget (ET) for $2.5 billion in cash. Analysts were out in defense of the stock following the drop early last week.
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Monday earnings reports
Notable companies expected to report earnings include:
- Annie's (BNNY) is expected to report fourth-quarter EPS of 28 cents vs. 24 cents.
- Diamond Foods (DMND) is expected to report a third-quarter loss of 17 cents per share vs. a loss of 22 cents per share a year ago.
- Lululemon Athletica (LULU) is expected to report first-quarter EPS of 30 cents vs. 32 cents a year ago.
- Navistar (NAV) is expected to report a second-quarter loss of $1.20 per share vs. EPS of 67 cents a year ago.
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On the calendar Monday, Canadian housing starts and the U.S. CB Employment Trends Index are due out, followed by the TD Ameritrade Investor Movement Index. Also, the Fed's James Bullard is set to speak, and the Treasury will hold its weekly 3- and 6-month bill auctions. Overnight, the Bank of Japan will update the markets on its current stimulus programs in its interest rate decision and accompanying policy statement.
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big topics in englad today: how the CIA spied on people from the UK as much as anyone else, and yet the UK has NO recoruse. i note too how CHEAP is is in the UK now to buy food, raw or cooked. it's back to the prices of the 60's!
i just had a sit down lunch for 2.25 pounds. that's about $2.70. and it was FAR better than any McDonnalds dollar menu deal.
the world slides backwards now.....
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Do it once a year. This allows the best-performing asset classes to take off and run.
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