Futures higher as yen slides, ahead of Fed minutes
Japan announces easing policy, as investors await the FOMC meeting details.
U.S. equity futures rose in early premarket trade Wednesday as the markets continued to react to Japan's easing policies. Later, the minutes of the latest Federal Reserve policy meeting will be released and markets will be focused on any language related to the Fed's exit policy. Monday night, Chairman Bernanke hinted that any pullback in easing would start with hikes in the interest on excess reserves.
In other news, China's trade balance was less than expected in March as import growth far surpassed expectations and exports growth was slightly less than expected. The trade balance was reported as a deficit of $0.88 billion vs. an expected surplus of $15.15 billion, mostly due to imports growing 14.1% from a year ago, vs. expectations that imports would grow 6.0%.
Trading in Herbalife (HLF) and Skechers (SKX) shares were halted for over an hour Tuesday after the companies both announced that KPMG was resigning as their auditor. KPMG resigned after discovering that a senior partner responsible for the accounts was selling secrets to traders in an insider trading scandal.
Reserve Bank of Australia board member Christopher Kent said overnight that cooling inflation data open the door to more easing while Treasury Secretary Wayne Swan said that the Australian dollar remains strongly overvalued.
S&P 500 futures rose 4 points to 1,567.50.
The EUR/USD was was higher at 1.3097, the highest since mid-March.
Spanish 10-year government bond yields fell to 4.71% from 4.72%.
Italian 10-year government bond yields fell to 4.34% from 4.35%.
Gold fell 0.4% to $1,580.60 per ounce.
Asian shares were mostly higher overnight led by Japanese shares as the easing efforts of the Bank of Japan pushed investors into stocks. The Japanese Nikkei Index rose 0.73%, the highest close since August 2008, and the Shanghai Composite Index rose 0.02% while the Hang Seng Index rose 0.75%. Also, the Korean Kospi rose 0.77% and Australian shares slipped 0.18%.
European shares were sharply higher in early trade on hopes of additional easing measures. The Spanish Ibex Index gained 2.19% and the Italian FTSE MIB Index rose 1.4%. Meanwhile, the German DAX rose 1.36% and the French CAC added 1.28% while U.K. shares gained a mere 0.73%.
Commodities were lower overnight after sharp gains over the past two days following the weaker than expected Chinese trade balance and export data. WTI crude futures fell 0.2% to $94.04 per barrel and Brent crude futures fell 0.35% to $106.00. Copper futures slid 0.38% to $343.35 per pound on the weak Chinese export data and concerns from the Australian officials. Gold was lower and silver futures slid 0.65% to $27.75 per ounce.
Currency markets continued to see the yen sell off overnight as the markets continue to react to the BoJ's latest round of easing, a massive round at that. The EUR/USD was higher at 1.3097 as Japanese money flows into European bonds in search of yield and the dollar gained against the yen to 99.43 as the pair tries to make a run at the dreaded 100 level. Overall, the Dollar Index fell 0.04% on weakness against the euro, the Swiss franc, and the Canadian dollar despite the strength against the yen and the pound. Also, the Australian dollar rallied against the greenback and the yen.
Earnings reported Tuesday
Key companies that reported earnings Tuesday include:
PriceSmart (PSMT) reported second quarter earnings per share of $0.82 vs. $0.77 expected on revenue of $607.4 million vs. $609.67 million estimated.
Healthcare Services Group (HCSG) reported fourth quarter earnings per share of $0.22 vs. $0.19 expected on revenue of $273.9 million on estimates of $281.34 million.
Zep (ZEP) reported second quarter earnings per share of $0.12 vs. $0.11 forecasted on sales of $163.4 million vs. $167.06 million estimated.
Stocks moving in the premarket included:
PriceSmart shares rose 3.48% premarket following its earnings report.
J.C.Penney (JCP) shares rose 0.5% premarket following the sharp 12.22% drop Tuesday after the company announced that it had fired Ron Johnson as CEO after only 17 months.
Microsoft (MSFT) shares rose 0.14% premarket after rising 3.57% Tuesday on news that the company may be rolling out the newest Xbox earlier than expected, a technical breakout, and that the company is partnering with NBC Sports for streaming digital content. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
Notable companies expected to report earnings Wednesday include:
ADTRAN (ADTN) is expected to report first quarter earnings per share of $0.08 vs. $0.20 a year ago.
Bed Bath and Beyond (BBBY) is expected to report fourth quarter earnings per share of $1.68 vs. $1.48 a year ago.
Fastenal (FAST) is expected to report fourth quarter earnings per share of $0.37 s. $0.40 a year ago.
Family Dollar (FDO) is expected to report fourth quarter earnings per share of $1.23 vs. $1.15 a year ago.
JinkoSolar Holdings (JKS) is expected to report a fourth quarter loss of $0.80 per share vs. a loss of $2.58 a year ago.
Ruby Tuesday (RT) is expected to report fourth quarter earnings per share of $0.10 vs. $0.18 a year ago.
Constellation Brands (STZ) is expected to report fourth quarter earnings per share of $0.45 vs. $0.69 a year ago.
On the economics calendar Wednesday, MBA mortgage applications are due out followed by the Fed policy meeting minutes later. Also, Richard Fisher of the Dallas Fed is set to speak and the Treasury is set to auction 10-year notes. Overnight, Australian employment data and the ECB Monthly Report are both expected and should move markets.
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