Futures lower as China's economy continues to bottom
Data show the country's manufacturing sector may be starting to recover.
U.S. equity futures fell in early Thursday trading despite data showing that China's manufacturing sector continued to bottom. The official PMI was released at 50.2 for October, slightly lower than estimates of 50.3 but above the previous reading of 49.8, showing a return to growth.
Also, the HSBC Markit China Manufacturing PMI was released at 49.5, better then expectations of a 49.1 reading, which was the same as September's reading, showing that China's manufacturing sector contracted at a slower rate in October.
The British manufacturing PMI was released at 47.5, below economists' estimates of 48.1 and below the previous reading of 48.4.
Australian commodity prices, a good measure of the strength of exports from the country and also of Chinese demand, fell 16% in September compared to a year ago, a larger rate of contraction than the 15.7% annualized rate of contraction seen in the month prior.
Barclays' (BCS) energy trading unit has been fined once again by regulators, this time for $470 million.
- S&P 500 futures fell 4.9 points to 1,401.90.
- The EUR/USD was lower at 1.2933.
- Spanish 10-year government bond yields were flat at 5.621%.
- Italian 10-year government bond yields were lower at 4.932%.
- Gold rose 0.19% to $1,722.30 per ounce.
Commodities were mostly higher in early Thursday trading with Brent crude futures bucking the trend. WTI Crude futures rose 0.1% to $86.33 per barrel and Brent Crude futures fell 0.17% to $108.51 per barrel. Yesterday, OPEC countries released production data, showing that Iranian oil output has fallen to the lowest rate since 1990, a sign that economic sanctions are hurting. Copper futures rose 0.54% to $353.65 despite weak economic data from Australia. Gold was higher and silver futures rose 0.41% to $32.45.
Currency markets were in risk-off mode as dollar strength reigned and the euro and the Aussie dollar sold off. The EUR/USD was lower at 1.2933 and the dollar rose against the yen to 79.78. Overall, the Dollar Index rose 0.18% on strength against the euro, the yen, the Canadian dollar and the Swiss franc. However, the greenback was weak against the British pound. Also, the Aussie dollar was broadly weak save for against the euro, for against which it gained 0.15%.
- Joy Global (JOY) shares rose 0.48% premarket as strength in China boosted the company's price.
- Valero (VLO) shares fell 0.48% in premarket trading despite data showing that energy inventories may have fallen in the past week, meaning there is more demand than anticipated.
- Home Depot (HD) shares fell 0.44% premarket after rising 2.23% Wednesday as investors hoped that people suffering from the effects of Sandy would have to shop at home improvement store to rebuild.
- LinkedIn (LNKD) shares rose 0.3% premarket ahead of its earnings release.
- Enterprise Products Partners (EPD) is expected to report third quarter earnings per share of $0.60 vs. $0.55 a year ago.
- HCA Holdings (HCA) is expected to report third quarter earnings per share of $0.79 vs. $0.60 a year ago.
- LinkedIn (LNKD) is expected to report third quarter earnings per share of $0.11 vs. $0.06 a year ago.
- Marathon Petroleum Corp. (MPC) is expected to report third quarter earnings per share of $3.24 vs. $3.16 a year ago.
- ON Semiconductor (ONNN) is expected to report third quarter earnings per share of $0.14 vs. $0.24 a year ago.
- Priceline Inc. (PCLN) is expected to report third quarter earnings per share of $11.81 vs. $9.95 a year ago.
- Starbucks (SBUX) is expected to report fourth quarter earnings per share of $0.45 vs. $0.37 a year ago.
On the economic calendar Thursday, lots of economic data is due out ahead of Friday's nonfarm payroll report. Challenger job cuts, ADP employment, initial jobless claims, and the ISM manufacturing Index will give light on the state of the employment market in the U.S.
Also, the ISM and the Markit U.S. PMI are due out along with construction spending and consumer confidence, which will all give insight into the state of the broad economy. Lastly, motor vehicle sales and chain store sales are expected. Investors will also get information on the state of monetary policy in the U.S. as the Federal Reserve's Eric Rosengren and Dennis Lockhart are scheduled to speak.
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