Futures rise on earnings, German sentiment
Starbucks, other companies report better than expected results. Data out of Europe's biggest economy remain positive.
The IFO Business Climate Index rose to 104.2 in January from 102.4 in December, better than economists forecasts of 103. Further, the Expectations Index released alongside the main index, a measure of the outlook of business leaders in the near term, rose to 100.5 from 98 in December, besting estimates of 99.
In other news, ECB President Mario Draghi spoke at the World Economic Forum, saying that the banks's long-term refinancing operations and Outright Monetary Transactions helped to save the euro. He also said that the second half of this year should see accelerating economic momentum, that the OMT will remain in place as long as needed, and that pan-European deposit guarantees are some way out.
The Bank of Japan released its latest policy meeting minutes, revealing that it is taking on aggressive easing, and that it is not appropriate to be pessimistic on Japanese growth prospects. The minutes also revealed that the BoJ will act independently of the government, and that beating deflation, not devaluation, is its biggest task.
Thursday, German Prime Minister Angela Merkel became the latest leader to criticize Japan's currency policies, following central bankers such as the Bundesbank's Jens Weidmann and the Federal Reserve's James Bullard questioning the politicization of the exchange rate.
- S&P 500 futures rose 3.5 points to 1,495.30.
- The EUR/USD was was higher at 1.3432.
- Spanish 10-year government bond yields rose sharply to 5.163%.
- Italian 10-year government bond yields fell to 4.087%.
- Gold fell 0.07% to $1,668.80 per ounce.
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Asian shares were mixed overnight led by significant strength in Japan following the release of the Bank of Japan minutes. The Japanese Nikkei Index rose a monstrous 2.88% and is up 8.4% in the past month while the Shanghai Composite Index fell 0.49% and the Hang Seng Index fell 0.08%. Also, the Korean Kospi declined 0.91% and Australian shares rose 0.52% on hopes that the RBA will cut rates at its next meeting.
European shares were stronger overnight on the back of the strong IFO survey despite British GDP in the fourth quarter missing estimates. The Spanish Ibex Index rose 0.66% despite a strong move higher in bond yields and the Italian MIB Index gained 0.53%. Meanwhile, the German DAX rose 1.09% and the French CAC rose 0.74% while U.K. shares rose 0.19%.
Commodities were mixed overnight with oil rising and copper futures rallying nicely. WTI crude futures rose 0.39% to $96.32 per barrel and Brent crude futures rose 0.1% to $113.42 per barrel. Copper futures rose 0.45% to $369.30 on hopes of an RBA rate cut. Gold was lower and silver futures were flat at $31.73 per ounce.
Currency markets saw euro strength and yen weakness in overnight trading following the BoJ minutes and the IFO survey release. The EUR/USD was higher at 1.3426 and the dollar rose against the yen to 90.85 but was capped by reports of a large option barrier near 91.75. Overall, the Dollar Index fell 0.16% on weakness against the euro and the Swiss franc despite strength against the pound, the yen, and the Canadian dollar. Also, the AUD/USD traded like a roller coaster over the past 48 hours or so as the pair popped on Chinese Manufacturing Data above 1.05 only to retreat lower on increased hopes that the RBA will cut rates.
Stocks moving in the premarket included:
- Starbucks (SBUX) shares rose 2.35% premarket after the company reported stronger than expected earnings.
- Microsoft (MSFT) shares fell 1.38% premarket despite reporting earnings that beat estimates. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
- Nokia (NOK) shares fell 0.94% after declining over 8% Thursday following the company's earnings release as the company suspended its dividend to preserve cash.
- Berkshire Hathaway (BRK.A)(BRK.B) shares rose 0.3% premarket as the stock closed in on its 52-week high at $97.73.
Notable companies expected to report earnings Friday include:
- Halliburton (HAL) is expected to report fourth quarter earnings per share of $0.61 vs. $1.00 a year ago.
- Honeywell (HON) is expected to report fourth quarter EPS of $1.09 vs. $1.05 a year ago.
- Procter & Gamble (PG) is expected to report second quarter EPS of $1.11 vs. $1.10 a year ago.
- Weyerhaeuser (WY) is expected to report fourth quarter EPS of $0.20 vs. $0.14 a year ago.
- Kimberly Clark (KMB) is expected to report fourth quarter EPS of $1.35 vs. $1.28 a year ago.
On the economics calendar Friday, new home sales are the only relevant piece of data on the calendar ahead of the ECRI weekly index. In addition, Canadian CPI data is due out.
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Ahhh....Looking for a 0.50-0.75% gain on the DOW today, with good earnings and decent reports from Europe...Overnight Asia was mixed to down with Japan's Nikkei rising strongly..
Seeing a push towards 14,000 on the DOW and a solid close above 1,500 on the S&P.
Gold down some and stagnating temporarily..
Silver shifting around slightly...
With oil begrudeingly about 96.5 up some.
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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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