Futures rise on European stimulus hopes
Wall Street seems poised to follow Europe higher ahead of more data, earnings.
U.S. equity futures rose in early premarket trade following gains in Europe on hopes of a rate cut from the European Central Bank this Thursday as markets shrugged off the weak GDP report from last Friday. The ECB is expected to cut the benchmark rate by 25 basis points to 0.5% and some economists also expect the ECB to cut the Marginal Lending Rate by 0.5%.
In other news around, eurozone consumer confidence improved slightly in April as the index rose to -22.0 from -23.5 in March, in line with estimates. Business confidence was slightly weaker than expected in April at 88.6 vs. 89.3 forecast.
Italy successfully formed a government this weekend led by Prime Minister Enrico Letta. The regime should have staying power as the cabinet includes key leaders from two large parties, including that of Silvio Berlusconi. The government is expected to face a no confidence vote this week before fully taking over.
Moody's commented on Italy's finances now that it has formed a government two months after elections. Moody's said that it's still too early to tell if Italy will seek bailout from the European Stability Mechanism and the ECB, and that the agency will review the new government's commitment to reforms when analyzing the country's debt ratings.
S&P 500 futures rose 4.4 points to 1,576.50.
The EUR/USD was higher at 1.3080.
Spanish 10-year government bond yields fell 7 basis points to 4.21%.
Italian 10-year government bond yields fell 8 basis points to 3.98%, below the dreaded 4% level.
Gold futures rose 1.22% to $1,471.30 per ounce.
Asian shares were quiet overnight as Chinese and Japanese markets were closed for holidays. The Hang Seng Index rose 0.15% and the Korean Kospi fell 0.2% while Australian shares rose 0.56%.
European shares were mostly higher on stimulus hopes, sentiment from Italy over the formation of the new government, and news out of Greece that parliament passed a set of legislation enabling the country to receive the next bailout payment. The Spanish Ibex Index rose 1.29% and the Italian FTSE MIB Index rose 1.55%. Meanwhile, the German DAX rose 0.39% and the French CAC 40 rose 0.72% while U.K. shares gained 0.02%.
Commodities were mixed overnight as metals futures rallied on central bank stimulus hopes. WTI crude futures rose 0.41% to $93.38 per barrel and Brent crude futures declined 0.03% to $103.13 per barrel. Copper futures rose 1.05% to $321.95 per pound. Gold was higher and silver futures gained 1.98% to $24.26 per ounce.
Currency markets were in flux overnight as broad dollar weakness was a key theme. The EUR/USD was higher at 1.3080 and the dollar fell against the yen to 97.76, while the dollar was also weaker by 0.4% against the pound at 1.5535. Overall, the Dollar Index fell 0.4% on weakness against the pound, the euro, the Swiss franc, the yen, and the Canadian dollar.
Earnings reported Friday
Key companies that reported earnings Friday include:
American Electric Power (AEP) reported in-line first quarter earnings per share of $0.80 on in-line revenue of $3.8 billion.
Chevron (CVX) reported first quarter EPS of $3.18 vs. $3.06 on revenue of $54.0 billion.
D.R. Horton (DHI) reported second quarter EPS of $0.32 vs. $0.19 on revenue of $1.4 billion vs. $1.26 billion forecast. Management was also extremely bullish on the second half of the year on the conference call, a positive sign for the company and the broader housing market.
Simon Property Group (SPG) reported first quarter EPS of $2.05 vs. $2.00.
V.F. Corp. (VFC) reported first quarter EPS of $2.43 vs. $2.18 on revenue of $2.6 billion vs. $2.64 billion forecast.
Stocks moving in the premarket included:
J.C. Penney (JCP) shares added a further 1.18% premarket after gaining over 11% Friday on news that George Soros has taken nearly an 8% stake in the company.
Banco Santander (SAN) shares rose 1.4% premarket as the company fired its CEO after poor performance in a weak economy.
Newmont Mining (NEM) shares rose 1.58% as metals prices continued to rebound ahead of the company's earnings release.
Disney (DIS) shares rose 0.65% premarket ahead of the summer blockbuster season with pre-sales for "Iron Man 3" appearing strong.
Notable companies expected to report earnings Monday include:
Buffalo Wild Wings (BWLD) is expected to report first quarter EPS of $0.99 vs. $0.98 a year ago.
General Growth Properties (GGP) is expected to report first quarter EPS of $0.24 vs. $0.22 a year ago.
Masco (MAS) is expected to report first quarter EPS of $0.14 vs. $0.05 a year ago.
Newmont Mining (NEM) is expected to report first quarter EPS of $0.84 vs. $1.15 a year ago.
Riverbed Technologies (RVBD) is expected to report first quarter EPS of $0.24 vs. $0.20 a year ago.
On the economics calendar Monday, personal income and outlays data follows last week's GDP report as well as pending home sales and the Dallas Fed manufacturing index. Also, the Treasury will hold its weekly three- and six-month bill auction. Overnight, German retail sales, Spanish GDP, and German unemployment data are expected to be released.
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