Futures higher on Obama's reelection
With the president winning a second term, investors expect more easing from the Fed.
U.S. equity futures rose in early Wednesday trade as investors understood that a second term for President Barack Obama means continued easing from the Federal Reserve. President Obama won most of the key swing states, including Ohio, all but clinching the election. However, it could be a week or two until the final results are known.
In other news around the markets, Spanish industrial production dropped 7.0% year-over-year in September, the 13th consecutive month of decline and well below the rate of contraction seen in August of 2.5%.
Nouriel Roubini, noted economist with a generally pessimistic view of the global economy, spoke in Milan stating that the euro needs a gradual 20% decline to restore competitiveness. He also mentioned that the European Central Bank needs to launch full quantitative easing and that the current state of U.S. finances will not be repaired by the broken political system.
The German economic council expects German GDP growth of 0.8% in 2012 and the same rate of growth in 2013. The council also sees a trough in the economy in the fourth quarter of 2012.
- S&P 500 futures rose 4.5 points to 1,429.70 after falling more than seven points overnight.
- The EUR/USD was higher at 1.2851.
- Spanish 10-year government bond yields fell to 5.632%.
- Italian 10-year government bond yields fell to 4.878%.
- Gold rose 0.97% to $1,731.60 per ounce.
Commodities were mixed overnight as weakness in energy futures was offset by strength in metals. WTI crude futures dropped 0.29% to $88.45 per barrel and Brent crude futures fell 0.41% to $110.62 per barrel. Copper futures rose 0.34% overnight to $351.80 per pound, the second consecutive day of gains following the strong comments from the Royal Bank of Australia two days ago. Gold was higher and silver futures rose 0.78% to $32.29 per ounce.
Currency markets sold the dollar overnight as the greenback saw broad-based weakness. Traders believe that a second term for the president means that the Fed has more leeway to continue to QE3, which many see as dollar bearish. The EUR/USD was lower and the dollar was flat against the yen overnight. Overall, the Dollar Index fell 0.24% on weakness against the euro, the pound, the Canadian dollar, and the Swiss franc. The Aussie dollar was also strong overnight, rising against the greenback, the euro, and the yen, and showing a clear risk-on environment in currencies.
- Zillow (Z) shares rose 1.56% in the premarket following a more than 18% drop Tuesday after the company reported lackluster earnings and cut guidance.
- AOL (AOL) shares fell 0.11% premarket after rising more than 20% Tuesday on strong earnings.
- Las Vegas Sands (LVS) shares fell 0.13% premarket. The company was the largest corporate contributor to the republican party during the elections.
- Microsoft (MSFT) shares fell 0.13% despite rumors indicating that it could be set to compete with Sony (SNE) and Nintendo in the mobile gaming arena by releasing a portable XBOX gaming device. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
- CBS Corp. (CBS) is expected to report third quarter earnings per share of $0.61 vs. $0.50 a year ago.
- HollyFrontier Corp. (HFC) is expected to report third quarter earnings per share of $2.39 vs. $2.48 a year ago.
- Macy's (M) is expected to report third quarter earnings per share of $0.29 vs. $0.32 a year ago.
- Monster Beverage (MNST) is expected to report third quarter earnings per share of $0.55 vs. $0.44 a year ago.
- Qualcomm (QCOM) is expected to report fourth quarter earnings per share of $0.82 vs. $0.80 a year ago.
- Tenet Healthcare (THC) is expected to report third quarter earnings per share of $0.34 vs. $0.08 a year ago.
On the economic calendar Wednesday are MBA purchase applications and the EIA petroleum status report. Also, the Treasury is set to auction 10-year bonds. Overnight and early Thursday, the Bank of England and European Central Bank are set to release their respective interest rate decisions.
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