Futures higher after sell-off
While German data are surprisingly weak, Chinese reports indicate the slowdown in growth had eased.
U.S. equity futures rose in early Wednesday trading following a strong sell-off on Wall Street Tuesday. German business confidence missed expectations, but new data on the Chinese economy seemed to confirm that China's economy has bottomed.
The IFO German business confidence survey, highly correlated with GDP growth, fell in the prior month, while HSBC China flash manufacturing PMI beat expectations.
Comments from Bank of England Governor Mervyn King both Tuesday and overnight indicate that the BoE stands ready to ease policy further should the economy not pick up soon. Although the U.K. economy technically emerged from recession last quarter, the boost from the Olympics skewed the data and underlying growth may not be as strong as headline data showed.
- Greek debt rose to 150.5% of GDP in the second quarter, up from 136.9% in the first quarter and well above the Troika target of 120% of GDP.
- Manufacturing PMI's released in both France and Germany showed a faster rate of contraction of the countries' manufacturing sectors in September.
- S&P 500 futures rose 3.1 points to 1,409.90.
- The EUR/USD was lower at 1.2932.
- Spanish 10-year government bond yields rose to 5.666%.
- Italian 10-year government bond yields rose to 4.896%.
- Gold bounced 0.05% to $1,710.20 per ounce.
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Commodities were stronger in early Wednesday trading following weakness Tuesday. WTI Crude futures rose 0.22% to $86.86 per barrel and Brent Crude futures rose 0.55% to $108.85 per barrel. Copper futures were stronger in early trade on the China data, rising 0.17% to $357.55 per pound. Gold was higher and silver futures rose 0.45% to $31.935 per ounce.
Currency markets continued to show dollar strength in overnight trade as the euro slumped and the yen could not rally. The EUR/USD was significantly lower and the dollar rose against the yen in overnight trade. Overall, the Dollar Index rose 0.13% on strength against the euro, the Swedish krone, and the Swiss franc. The Aussie dollar was notably strong overnight as inflation in the country rose faster than expected and Chinese data was stronger than expected.
- Dow Chemical (DOW) rose 0.88% premarket as the company announced new cost-cutting measures, including job cuts and plant closures.
- Norfolk Southern (NSC) shares fell 2.32% premarket following weak earnings as shipments of coal plummeted in the prior quarter.
- Apple (AAPL) shares rose 0.61% premarket following the announcement of the iPad 4 and iPad Mini.
- Microsoft (MSFT) shares rose 0.08% premarket as the company was charged by the EU with not complying with a 2009 settlement. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
- AT&T (T) is expected to report third quarter earnings per share of $0.60 vs. $0.61 a year ago.
- Boeing (BA) is expected to report third quarter earnings per share of $1.12 vs. $1.46 a year ago.
- Lockheed Martin (LMT) is expected to report third quarter earnings per share of $1.85 vs. $1.99 a year ago.
- O'Reily Automotive (ORLY) is expected to report third quarter earnings per share of $1.27 vs. $1.10 a year ago.
- Southern Copper (SCCO) is expected to report third quarter earnings per share of $0.59 vs. $0.78 a year ago.
- Wynn Resorts (WYNN) is expected to report third quarter earnings per share of $1.34 vs. $1.05 a year ago.
On the economic calendar Wednesday, the FOMC interest rate decision is due out, although economists expect no change in the Fed's policy. Also, MBA purchase applications and new home sales will give new data on the state of the housing market in the U.S. In addition, the U.S. PMI is due out and the EIA Petroleum Status Report is set to be released.
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