Futures rise on global strength
With a light economic calendar Wednesday, earnings are in focus.
U.S. equity futures rose in early trade after Asian shares rallied overnight and as European shares were mixed. The focus Wednesday will likely be earnings as the economic calendar is rather light overnight.
In other news, China's Ministry of Commerce issued a statement saying that China's 2013 economic situation is still very severe and that the Ministry fears a rise in global trade protectionism.
Economists at HSBC believe that the Reserve Bank of Australia could begin raising rates by the end of the year, which is bullish for the Aussie dollar, Australian stocks, and global mining broadly.
The Congressional Budget Office sees the federal deficit falling 27% in 2013 to $616 billion from $845 billion in 2012. The CBO sees the debt-to-GDP ratio falling to 77% by 2023.
- S&P 500 futures rose 1.5 points to 1,507.40.
- The EUR/USD was lower at 1.3535.
- Spanish 10-year government bond yields fell to 5.36%.
- Italian 10-year government bond yields rose to 4.47%.
- Gold fell 0.17% to $1,670.60 per ounce.
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Asian shares were higher as the Nikkei Index had its best day since 2008. The Japanese Nikkei Index rose 3.77% and the Shanghai Composite Index rose 0.06% while the Hang Seng Index rose 0.47%. Also, the Korean Kospi fell 0.1% and Australian shares rose 0.78%.
European shares were mixed as peripheral shares traded lower in early trade. The Spanish Ibex Index fell 0.47%, led lower by financials, and the Italian FTSE MIB Index declined 0.92%, led lower by financials as well. Meanwhile, the German DAX fell 0.21%, the French CAC fell 0.43%, and U.K. shares rose 0.39%. It is important to note that European shares just took a leg down in the last 15 to 20 minutes.
Commodities were were mostly lower overnight on global growth fears following comments from the Chinese Ministry of Commerce. WTI crude futures fell 0.61% to $96.05 per barrel and Brent crude futures fell 0.19% to $116.32 per barrel and Natural Gas futures rose 1.35% to $3.45 per million BTU. Copper futures fell 0.65% to $374.55 per pound. Gold was lower and silver futures fell 0.63% to $31.68 per ounce.
Currency markets were in a clear risk-off mode as the euro weakened and the dollar gained overnight. The EUR/USD was lower at 1.3535 and the dollar gained slightly against the yen to 93.67. Overall, the rose 0.3% on strength against the euro, the Swiss franc, and the Canadian dollar. In addition, the AUD/USD fell sharply overnight by 0.84% to 1.0303 and the Aussie was broadly weak, falling sharply against the yen and the euro as well.
Stocks moving in the premarket included:
- Royal Bank of Scotland (RBS) shares traded 1.1% higher in London, and New York listed shares look set to follow suit as the company reached a settlement with regulators over the Libor scandal.
- Hewlett-Packard (HPQ) shares rose 2.95% premarket as the company's board is debating breaking up the company to extract value for shareholders.
- Chevron (CVX) shares fell 0.7% premarket as the company had to pay a $1 million fine for a refinery fire.
- BlackBerry (BBRY) shares fell 3.31% premarket after rising 6.93% Tuesday as the company gets set for the global launch of its new phones.
Notable companies expected to report earnings Wednesday include:
- CVS Caremark (CVS) is expected to report fourth quarter earnings per share of $1.10 vs. $0.89 a year ago.
- Green Mountain Coffee Roasters (GMCR) is expected to report first quarter EPS of $0.65 vs. $0.60 a year ago.
- Marathon Oil (MRO) is expected to report fourth quarter EPS of $0.67 vs. $0.78 a year ago.
- Time Warner (TWX) is expected to report fourth quarter EPS of $1.10 vs. $0.94 a year ago.
- Visa (V) is expected to report first quarter EPS of $1.79 vs. $1.49 a year ago.
On the economics calendar Wednesday, MBA purchase applications and the EIA petroleum status report are due out. Also, the Treasury is set to auction STRIPS and give its quarterly refunding announcement. Overnight, many reports that can move markets are due, with Australian employment data, the Bank of England and the European Central Bank rate decisions, and British industrial production all expected.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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