Futures slide after Tuesday's gains
US markets are set to decline at the open as investors seek hints from the Fed about how long its stimulus program will last.
U.S. equity futures gave back some of Tuesday's gains in premarket trade Wednesday. Possibly driving the sell-off is the IMF cut of China's growth forecast to 7.75% from 8% previously just one day after China's Premier said the country was targeting 7% growth over the next decade.
In other news, the number of Germans claiming unemployment benefits jumped much more than expected in May, as 21,000 Germans claimed benefits for the first time vs. only 5,000 expected. The unemployment rate remained flat at 6.9%.
To quell bond market sell-offs and also as part of its easing program, the Bank of Japan bought 1.02 trillion yen (about $10 billion) worth of bonds overnight with maturities of one to five years and 10 years as well as inflation linked bonds.
Bank of Japan Governor Haruhiko Kuroda spoke overnight saying that the global economy is still reeling from the financial crisis. He did not comment on stimulus measures as expected, which could be a factor in the reversal in the yen overnight.
S&P 500 futures fell 6.4 points to 1,648.20.
The EUR/USD was higher at 1.2891.
Spanish 10-year government bond yields rose 3 basis points to 4.33%.
Italian 10-year government bond yields rose 5 basis points to 4.08%.
Gold rose 0.36% to $1,384.70 per ounce.
Asian shares were mixed overnight as Hong Kong shares showed outsized weakness. The Japanese Nikkei Index rose 0.1% and the Shanghai Composite Index gained 0.12% while the Hang Seng Index lost 1.61%. Also, the Korean Kospi rose 0.42% and Australian shares added 0.08%.
European shares were also mixed overnight after mixed economic data. The Spanish Ibex Index rose 1.77% and the Italian FTSE MIB Index fell 0.43%. Meanwhile, the German DAX rose 1.16% and the French CAC 40 gained 1.39% while U.K. shares declined 1.22%.
Commodities were lower overnight following the IMF cutting China's growth forecast overnight. WTI crude futures declined 0.44% to $94.59 per barrel and Brent crude futures fell 0.15% to $104.07 per barrel. Copper futures fell 0.8% to $328.85 per pound both on the China news and also following a report from PIMCO that was very negative on Australia's economy, specifically the mining sector. Gold was higher and silver futures fell 0.08% to $22.18 per ounce.
Currency markets were on the move overnight reversing some of Tuesday's moves as the yen strengthened. The EUR/USD was higher at 1.2891 and the dollar fell against the yen to 101.67. Overall, the Dollar Index fell 0.12% on weakness against the yen, the Swiss franc, the euro, and the pound.
Earnings reported Tuesday
Key companies that reported earnings Tuesday include:
Canadian Solar (CSIQ) reported a first quarter loss of $0.10 per share vs. a loss of $0.78 per share expected on revenue of $263.3 million vs. $197.0 million expected.
Guidewire Software (GWRE) reported first quarter earnings per share of $0.04 vs. $0.03 expected on revenue of $68.3 million vs. $63.5 million expected.
Tiffany and Co. (TIF) reported first quarter earnings per share of $0.70 vs. $0.52 expected on revenue of $895.5 million vs. $855.16 million expected.
Stocks moving in the premarket included:
Guidewire Software (GWRE) shares gained 6.91% premarket after its earnings release.
Michael Kors Holdings (KORS) shares rose 2.05% premarket ahead of its earnings release Wednesday.
Notable companies expected to report earnings Wednesday include:
The Bank of Montreal (BMO) is expected to report second quarter earnings per share of $1.50 vs. $1.44 a year ago.
Dollar General (DG) is expected to report first quarter earnings per share of $0.71 vs. $0.63 a year ago.
DSW Inc. (DSW) is expected to report first quarter earnings per share of $0.90 vs. $0.98 a year ago.
Michael Kors Holdings (KORS) is expected to report fourth quarter earnings per share of $0.39 vs. $0.22 a year ago.
The Fresh Market (TFM) is expected to report first quarter earnings per share of $0.44 vs. $0.40 a year ago.
On the economics calendar Wednesday, MBA purchase applications are due out as well as the Redbook in the U.S. Abroad, German CPI, Brazilian GDP, and the Canadian Interest Rate Decision are all expected. In addition, the Treasury is set to auction four- and 52-week bills and Boston Federal Reserve President Eric Rosengren is set to speak. Overnight, Spanish GDP, Eurozone Consumer Confidence, and an Italian bond auction could move markets.
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Investors are anxious to see if hiring can maintain its strong pace in the second half of the year.
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