Futures flat ahead of employment report
With the Fed's stimulus now tied to job market recovery, investors are more keenly awaiting nonfarm payrolls.
In other news, Treasury Secretary Timothy Geithner is to step down soon before the debt-ceiling debate is to be had and before the debate over spending cuts gets heard in Congress. Geithner is the last remaining original member of President Obama's economic team.
The European Services PMI rose in December to 47.8 from 46.8 in November and in line with the flash estimate from mid-month. Better than expected data in Spain and Italy were off-set by weaker than expected data in Germany and France in the pan-European index.
Ernst and Young published a report overnight highlighting that they believe there is a high probability that Italy will ask for a bailout in 2013, with the upcoming elections acting as a catalyst towards a bailout.
- S&P 500 futures were flat at 1,453.70.
- The EUR/USD was lower at 1.3008.
- Spanish 10-year government bond yields rose to 5.033%.
- Italian 10-year government bond yields rose to 4.25%.
- Gold fell 2.33% to $1,635.70.
Asian shares were mixed overnight as Japanese and Chinese markets reopened for the first trading day of the new year following a prolonged holiday break. The Japanese Nikkei Index rose 2.82% and the Shanghai Composite Index rallied 0.35% while the Hang Seng Index fell a slight 0.29%. In addition, the Korean Kospi slipped 0.37% while Australian shares fell 0.36%.
European shares were mostly lower overnight as the Fed threats of less easing weighed on risk sentiment despite service PMI data showing signs of bottoming. The Spanish Ibex Index did rise 0.15% but the Italian MIB Index fell 0.5% and Greek shares slipped 0.21%. Meanwhile, the German DAX fell 0.26% and the French CAC slipped 0.61% while U.K. shares were lower by 0.13%.
Commodities were in clear risk-off mode following the Fed minutes Thursday with metals declining substantially overnight. WTI crude futures fell 1.21% to $91.78 per barrel and Brent crude futures fell 1.23% to $110.73 per barrel. Copper futures were the best performing of the major metals, only losing 0.69% to $369.20 per pound. Gold was lower and silver futures dropped 4.65%.
Currency markets were also in a clear risk-off mode with the EUR/USD sitting on a proverbial knife's edge. The EUR/USD was lower at 1.3008 and the dollar rose against the yen to 88.23. Overall, the Dollar Index gained 0.49% on strength against the euro, the pound, the yen and the Canadian dollar. Notably, the the yen was extremely weak against nearly all other major currencies, losing 1.13% against the dollar and 0.88% against the euro. As the chart below shows, the EUR/USD is very close to breaking down further towards 1.28.
Stocks moving in the premarket included:
- Carnival (CCL) shares fell 1.84% premarket after the company announced the departure of a key executive.
- Pfizer (PFE) shares rose 0.46% premarket following a new report that shows the company surpassed rival Proctor & Gamble (PG) in market share.
- Newmont Mining (NEM) shares fell 0.94% premarket as gold prices slid and as Citi analysts highlighted the bank as one potential buyer of Australian miner Regis Resources, of which it already owns nearly 20%.
- 3M (MMM) shares rose 0.35% following positive comments from Jeffries Thursday.
Notable companies expected to report earnings Friday include:
- Mosaic (MOS) is expected to report second quarter earning per share of $0.97 vs. $1.40 a year ago.
On the economics calendar Friday, December nonfarm payrolls is due out. The economy is expected to have added 150,000 jobs in December, slightly higher than the 146,000 added in November but not significantly more statistically. Canadian payrolls data is also due out as well as the ECRI Weekly indicator and the ISM non-manufacturing index. Energy markets will also watch the crude oil and gasoline inventories data released at 11:00 a.m. ET. Lastly, Charles Plosser, Janet Yellen and James Bullard of the Fed, are set to speak at separate events throughout the course of the afternoon.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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