Futures dip as Kuroda disappoints

US markets set to decline at the open following global stocks lower after the BOJ did not offer new measures to calm its bond market.

By Benzinga Jun 11, 2013 8:30AM

zurbar age fotostockBy Matthew Kanterman


U.S. equity futures fell in early premarket trade after Bank of Japan Governor Haruhiko Kuroda disappointed markets by not announcing new measures to clam the bond market and extend the maturity of cheap, 0.1% loans it had been making. While the BOJ raised its forecast for the economy, it simply restated its lending goals, sending markets lower.


In other news, industrial production in the U.K. rose 0.1% in April vs. a flat reading month-over-month despite. April's gain, however, was much lower than March's 0.7% gain. On an annualized basis, industrial production has fallen 0.6% vs. an expected drop of 0.7% and better than the prior reading of -1.4%.


Eurogroup Chief Jean Claude Juncker left Greece this morning following discussions with the government. Juncker made a rather optimistic assessment about the state of the Greek economy. However, the failed auction of state owned gas drilling rights Monday raises fears that the privatization program, a key tenet to the long-term sustainability of Greece's recovery, is failing.


The German High Court has begun proceedings in the case to review the legality of the Outright Monetary Transactions program launched by European Central Bank President Mario Draghi last summer. The court noted that success of policies does not justify their constitutionality and that the "ends of ECB policy don't justify the means."

  • S&P 500 futures fell 6.5 points to 1,635.60.

  • The EUR/USD was higher at 1.3281.

  • Spanish 10-year government bond yields rose 1 basis point to 4.6%.

  • Italian 10-year government bond yields rose 1 basis point to 4.32%.

  • Gold fell 1.04% to $1,371.60 per ounce.

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Asian markets

Asian shares were mostly lower overnight following the disappointment from the Bank of Japan. The Japanese Nikkei 225 Index fell 1.45% and the Topix Index declined 0.97%. The Hang Seng Index fell 1.2% in Hong Kong and the Korean Kospi fell 1.2% while Australian shares edged higher by 0.41%, boosted by an improving business sentiment indicator and the devaluing Australian dollar.


European markets

European shares were in the red in early trade, following Asian shares lower. The Spanish Ibex Index declined 1.00% and the Italian FTSE. MIB Index fell 0.92%. Meanwhile, the German DAX declined 0.96% and the French CAC 40 fell 0.86% while U.K. shares shed 0.82%.


Commodities

Commodities were lower overnight, following the broad risk-off theme in markets. WTI crude futures fell 0.13% to $95.65 per barrel and Brent crude futures fell 0.26% to $103.68 per barrel. Cooper futures lost 1.08% to $320.60 per pound. Gold was lower and silver futures declined 1.46% to $21.61 per ounce.


Currencies

Currency markets were on the move in stellar fashion overnight as the yen strengthened rather violently and the Australian dollar continued to tank. The EUR/USD was higher at 1.3281 and the dollar declined against the yen by 1.57% to 97.21. Overall, the Dollar Index fell 0.26% on weakness against the yen, the Swiss franc, and the euro despite strength against the Canadian dollar and the British pound.


Notably, the yen strengthened across the board with the dollar, the euro, the pound, the Swiss franc, and the Australian dollar all dropping more than 1% against the yen. The stand-out pairs were the AUD/JPY, which fell 2.79%, and the GBP/JPY, which declined 2.49%. The Australian dollar was more broadly weak than against just the yen, dropping 1.37% against the U.S. dollar also. To note, Dennis Gartman of the Gartman Letter went long the AUD/JPY Monday morning.


Earnings reported Monday

Key companies that reported earnings Monday include:

  • Annie's (BNNY) reported fourth quarter earnings per share of $0.29 vs. $0.28 expected on revenue of $52.2 million.

  • Diamond Foods (DMND) reported third quarter EPS of $0.05 vs. an expected loss per share of $0.17 expected on revenue of $184.9 million vs. $175.8 million expected. The company also restated second quarter earnings and named a new CFO.

  • Lululemon Athletica (LULU) reported first quarter EPS of $0.32 vs. $0.30 expected on revenue of $345.8 million vs. $341.0 million. The company also announced that Christine Day was stepping down from her CEO position and that the company was to de-list its Canadian listed shares.

  • Navistar (NAV) reported a second quarter loss of $4.65 per share vs. an expected loss of $1.20 per share on revenue of $2.53 billion.

Premarket movers

Stocks moving in the premarket included:

  • Lululemon (LULU) shares declined 13.22% premarket on the earnings as well as the other corporate news.

  • Navistar (NAV) shares fell 4.66% premarket after reporting a wider than expected quarterly loss.

  • General Mills (GIS) shares rose 0.83% premarket after the company raised guidance slightly but still sees full year earnings coming in shy of the street estimates by 1-2 cents.

  • Diamond Foods (DMND) shares climbed 3.19% premarket after better earnings.

Earnings

Notable companies expected to report earnings Tuesday include:

  • LDK Solar (LDK) is expected to report a first quarter loss of $0.96 per share vs. a loss of $1.46 per share a year ago.

  • Oxford Industries (OXM) is expected to report first quarter EPS of $0.78 vs. $1.12 a year ago.

Economics

On the economics calendar Tuesday, the NFIB small business optimism index is due out as well as the Redbook, weekly chain store sales, and wholesale trade data. The Treasury is also set to auction 4-week and 3-year note bills. Overnight, French nonfarm payrolls, German inflation, and the British claimant count change are expected.


More from Benzinga

1Comment
Jun 11, 2013 8:52AM
avatar
Japan continues to try to print it's way out of debt and into prosperity... 

25  years of Obamanomics on display...   Tax, Print, Borrow and Spend.   The lunacy will stop with a complete meltdown.  The average Japanese citizen would be wise to buy specie...  

What next a tax on bank deposits?


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