Futures higher on strong Chinese services data
Optimism was boosted by better than expected data out of China, but investors await the private sector jobs report.
U.S. equity futures rallied in early premarket trade following stronger than expected data on China's services sector.
The official non-manufacturing PMI in China rose to 55.6 in March from 54.5 in February and the HSBC China non-manufacturing PMI rose to 54.3 in March from 52.1 in February. All in all, better data out of China is creating a slight risk-on environment in equities.
In other news, the Bank of Japan began its first policy meeting under its new leadership, and Governor Kuroda is expected to launch new rounds of easing. Policy choices include abolishing the bank note rule, combining the asset purchase programs, and purchasing longer-dated Japanese Government Bonds in its programs.
Eurozone inflation slowed to 1.7% in March from 1.8% in February and was in line with expectations. The cooling inflation does give the European Central Bank room to ease tomorrow should it want to do so.
Reserve Bank of Australia chief Clenn Stevens was appointed to an additional three-year term at the bank following his successful time in his previous term.
S&P 500 futures rose 2.7 points to 1,567.10.
The EUR/USD was slightly higher at 1.2831.
Spanish 10-year government bond yields fell to 4.9% from 4.94%.
Italian 10-year government bond yields fell to 4.59% from 4.62%.
Gold fell 0.53% to $1,570.30 per ounce.
Asian shares were mixed overnight as Japanese shares popped on hopes of additional easing coming from the BoJ meeting. The Japanese Nikkei Index rose 2.99% and the Shanghai Composite Index fell 0.11% while the Hang Send Index fell 0.14%. Also, the Korean Kospi fell 0.15% and Australian shares declined 0.56%.
European shares were mostly lower in early trade following the inflation data that showed a continued slowdown in the economy. The Spanish Ibex Index declined 0.38% and the Italian FTSE MIB Index fell 0.54%. Meanwhile, the German DAX declined 0.13% and the French CAC slipped 0.38% while U.K. shares fell 0.31%.
Commodities were significantly lower across the board overnight after Credit Suisse issued a note slashing its price forecasts for nearly all commodities on supply factors. WTI crude futures slipped 0.39% to $96.90 per barrel and Brent crude futures declined 0.43% to $110.29 per barrel. Copper futures slid 0.44% to $336.05 per pound. Gold was lower and silver futures dropped 0.73% to $27.10 per ounce.
Currency markets were rather quiet overnight once again as the yen resumed its sell-off and the Australian dollar continued to strengthen. The EUR/USD was slightly higher at 1.2831 and the dollar rose against the yen to 93.62. Overall, the Dollar Index slipped 0.02% on weakness against the euro, the pound, the Canadian dollar, and the Swiss franc. The Australian dollar was also notably strong in overnight trade, rising 0.25% against the greenback to 1.0476 and 0.43% to 98.0580 against the yen.
Stocks moving in the premarket included:
Cliffs Natural Resources (CLF) shares rose 1.21% premarket after analysts at J.P. Morgan released a note on the company indicating that the stock price could double in the next year. They rate CLF "outperform."
General Mills (GIS) shares fell 0.84% premarket in the wake of its downgrade at Morgan Stanley on Monday.
IBM (IBM) shares slipped 0.63% premarket after the company won a new contract to build cloud computing systems for the Thai government owned telecom company CAT.
Caterpillar (CAT) shares fell 0.59% on fears that sales in China will slow as the manufacturing sector stagnates and also on fears that commodity prices are set to drop.
Notable companies expected to report earnings Wednesday include:
ConAgra Foods (CAG) is expected to report third quarter earnings per share of $0.57 vs. $0.51 a year ago.
Monsanto (MON) is expected to report second quarter EPS of $2.58 vs. $2.28 a year ago.
On the economics calendar Wednesday, the ADP employment report is due out and should give a good preview of Friday's nonfarm payroll report. The ISM non-manufacturing index is also expected. In addition, MBA purchase applications are expected and speeches from Fed members John Williams and James Bullard. Overnight, the Bank of Japan decision is expected as well as eurozone and British services PMIs and the Bank of Englans and ECB interest rate decisions should all move markets.
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