Futures slightly lower ahead of jobs report
Investors await the the important May nonfarm payroll data. The figures could suggest what will be the Fed's next move.
U.S. equity futures traded slightly lower ahead of the employment report Friday as Japanese shares continued to approach bear market territory. The Nikkei Index briefly traded in bear market territory, meaning the index declined 20% from the highs, before rebounding to close down only fractionally.
In other news, the Bundesbank cut its 2013 and 2014 growth forecasts and now sees 0.3% growth in 2013 and 1.5% growth in 2014 vs. 0.4% and 1.9% previously. The cut comes as the Bundesbank sees a drop in exports occurring in the second half of the year and sees second quarter growth remaining strong before "dropping off in the second half."
European Central Bank Governor Ewald Nowotny spoke this morning, saying that the bank is discussing a whole range of unconventional monetary policy measures, however, no action will be taken just yet. The comments reflect those of President Draghi from Thursday in his press conference.
Japan's Government Pension Allocation Fund hinted that it will buy more domestic stocks overnight as the world's largest pension fund plans to move out of domestic bonds and into domestic stocks. The fund has over $1 trillion in assets.
S&P 500 futures declined 1.4 points to 1,621.30.
The EUR/USD was lower at 1.3231.
Spanish 10-year government bond yields rose 2 basis points to 4.7%.
Italian 10-year government bond yields rose 2 basis points to 4.37%.
Gold fell 0.35% to $1,410.90 per ounce.
Asian shares were once again lower overnight as Japanese weakness continues to weigh on regional equities. The Japanese Nikkei Index dropped 0.21% while the broader Topix Index declined 1.29%. In China, the Shanghai Composite Index fell 1.33% and the Hang Seng Index declined 1.21% in Hong Kong. Also, the Korean Kospi fell 1.8% as the government downwardly revised its first quarter GDP growth and Australian shares shed 0.91%.
European shares were mostly higher in early trade save for German equities, which declined on the Bundesbank's revised outlook. The Spanish Ibex Index rose 0.18% and the Italian FTSE MIB Index gained 0.56%. Meanwhile, the German DAX fell 0.1% as the French CAC rose 0.33% and U.K. shares added 0.13%.
Commodities were mixed as energy futures continued their rise early Friday. WTI crude futures gained 038% to $95.12 per barrel and Brent crude futures rose 0.46% to $104.09 per barrel. Copper futures gained 0.21% to $332.60 per pound. Gold was lower and silver futures dropped 0.41% to $22.62 per ounce.
Currency markets reverted back to dollar strength except for against the yen overnight. The EUR/USD was lower at 1.3231 and the dollar fell 0.86% against the yen to 96.14. Overall, the Dollar Index fell 0.03% on weakness against the yen despite gains against the euro and the pound. Notably, the Australian dollar dropped more than 1% against the greenback and fell almost 2% against the yen.
Earnings reported Thursday
Key companies that reported earnings Thursday include:
Cooper Companies (COO) reported second quarter earnings per share of $1.52 vs. $1.38 expected on revenue of $384.00 million.
CIENA Corp. (CIEN) reported second quarter earnings per share of $0.02 vs. an expected loss of $0.01 per share on revenue of $507.7 million vs. $483.34 million expected.
Quiksilver (ZQK) reported a second quarter loss of $0.12 per share vs. expected earnings per share of $0.04 on revenue of $458.7 million vs. $505.4 million expected.
Mad Catz (MCZ) reported a fourth quarter loss of $0.04 per share vs. an expected profit of $0.04 per share.
J.M. Smucker (SJM) reported fourth quarter earnings per share of $1.29 vs. $1.15 expected on revenue of $1.34 billion, in line with expectations.
Titan Machinery (TITN) reported a first quarter loss of $0.02 per share, in line with expectations, as revenues were $441.7 million vs. $441.78 million expected.
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Stocks moving in the premarket included:
Quiksilver (ZQK) shares declined 10.04% on weak second quarter results.
Cooper Companies (COO) shares gained 2.54% premarket as the company beat earnings expectations and raised guidance.
AT&T (T) shares declined 0.34% premarket despite the company reaffirming its full year outlook after the close Thursday.
Notable companies expected to report earnings Friday include:
JinkoSolar Holdings (JKS) is expected to report a first quarter loss of $0.07 per share vs. a loss of $0.38 per share a year ago.
On the economics calendar Friday, the employment report is due out. Nonfarm payrolls are expected to have gained 165,000 in May, the same as in April, with private payrolls gaining 175,000. The unemployment rate is expected to remain flat at 7.5% after declining from 7.9% over the past three months.
Elsewhere, Canada's employment report is due out followed by Mexico's interest rate decision and the consumer credit report is set to be released at 3 p.m. ET. Friday night, Chinese trade data are due out.
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The number of job openings is up, but executives still feel uneasy about committing to new employees.
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