Futures flat after rate cut in Australia
Despite central banks' continued easing policy and earnings from 3 of Europe's largest banks beating expectation, US markets are set for a tepid open.
U.S. equity futures traded near flat following a surprise rate cut from the Reserve Bank of Australia, while three of Europe's largest banks reported better than expected earnings. However, futures awaited key earnings from U.S. companies for direction.
The Reserve Bank of Australia cut its key rate to 2.75% from 3.00%, citing below trend growth in 2013, peaking resource sector investment, and inflation lower than expected. The Board noted that the exchange rate of the Australian dollar has remained high despite worsening economic conditions and that the Board decided to use some of its "scope" it mentioned at the previous meeting to cut rates should the data demand a cut.
HSBC (HBC), Societe Generale, and Credit Agricole, three of Europe's largest banks, reported earnings overnight that beat expectations and boosted European markets.
Diageo (DEO) CEO Paul Walsh has stepped down and will be succeeded by COO Ivan Menezes as expected, although still comes as a blow to shareholders because Walsh was responsible for spearheading the new growth strategy of the company over the past decade.
S&P 500 futures rose 0.9 points to 1,614.30.
The EUR/USD was flat at 1.3077.
Spanish 10-year government bond yields fell 4 basis points to 4.07%.
Italian 10-year government bond yields fell 4 basis points to 3.88%.
Gold fell 0.48% to $1,461.00 per ounce.
Asian shares were mostly tepid save for the Japanese Nikkei Index, which opened for the first time following key events, including the European Central Bank rate cut and the stronger than expected U.S. nonfarm payrolls report. The Japanese Nikkei Index rose 3.55% while the Shanghai Composite Index gained 0.2% and the Hang Seng Index rose 0.58%. Also, the Korean Kospi fell 0.36% and Australian shares fell 0.24%.
European shares rose following the stronger than expected bank earnings from around the continent. The Spanish Ibex Index rose 0.61% and the Italian FTSE MIB Index rose 1.08%. Meanwhile, the German DAX gained 0.53% and the French CAC 40 rose 0.33% while U.K. shares added 0.27%.
Commodities were mostly lower overnight, reversing the previous few days of gains. WTI crude futures fell 0.48% to $95.70 per barrel and Brent crude futures declined 0.44% to $105.00 per barrel. Copper futures rose 0.14% to $331.50 per pound. Gold was lower and silver futures declined 0.79% to $23.77 per ounce.
Currency markets were rather quiet overnight save for the Australian dollar which plummeted following the unexpected RBA rate cut. The EUR/USD was flat at 1.3077 and the dollar fell against the yen to 99.21. Overall, the Dollar Index was flat on strength against the Swiss franc and weakness against the yen. Notably, the Australian dollar declined 0.84% against the greenback to 1.0168 while it lost 1.03% against the yen to 100.8010.
Earnings reported Monday
Key companies that reported earnings Monday include:
First Solar (FSLR) reported first quarter earnings per share (EPS) of $0.69 vs. $0.75 expected on revenue of $755.0 million vs. $752.26 million expected.
Norwegian Cruise Line Holdings (NCLH) reported first quarter EPS of $0.06 vs. $0.03 on revenue of $527.6 million vs. $523.8 million.
Scotts Miracle Grow (SMG) reported second quarter EPS of $1.60 vs. $2.00.
Medallion Financial Corp. (TAXI) reported first quarter EPS of $0.30 vs. $0.27.
Vornado Realty Trust (VNO) reported first quarter EPS of $1.14 vs. $1.89.
Stocks moving in the premarket included:
Diageo (DEO) shares fell 0.14% premarket following the management shake up.
HSBC (HBC) shares rose 2.19% premarket following its earnings beat this morning.
Cliff's Natural Resources (CLF) shares rose 3.28% premarket after gaining 5.52% Monday after an upgrade to outperform at FBR Capital.
Notable companies expected to report earnings Tuesday include:
Acadia Pharmaceuticals (ACAD) is expected to report a first quarter loss of $0.08 per share vs. a loss of $0.12 per share a year ago.
BMC Software (BMC) is expected to report first quarter EPS of $0.93 vs. $0.74 a day after the company signed a definitive pact to go private to a consortium of financial buyers.
Discovery Communications (DISCA) is expected to report first quarter EPS of $0.68 vs. $0.57 a year ago.
DirecTV (DTV) is expected to report first quarter EPS of $1.08 vs. $1.07 a year ago.
Molson Coors Brewing Co. (TAP) is expected to report first quarter EPS of $0.34 vs. $0.47 a year ago.
TripAdvisor (TRIP) is expected to report first quarter EPS of $0.46 vs. $0.38 a year ago.
On the economics calendar Tuesday, weekly chain store sales and the Redbook are due out, followed by consumer credit data. Also, the Treasury is set to auction four-week and three-year notes. Overnight, the Chinese Trade Balance and German Industrial Production Data are expected.
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