Futures lower on weak UK data
UK employment data came in weaker than expected as investors also begin to worry about the effects of central banks easing measures.
U.S. equity futures declined in the premarket following weaker than expected U.K. employment data, which showed the U.K. economy lost jobs unexpectedly in March. Also, concerns rose over the effects of the massive global quantitative easing, specifically in the U.S. and Japan following comments by a key Chinese banker.
China Investment Corp Chairman Jin Liqun said the CIC is worried that U.S. and Japanese easing effort are negatively distorting markets. Also, he said that China's banking system is healthy and robust and that Fitch's downgrade of local government debt is "conservative."
The U.K. Claimant Count for March fell 7,000 on expectations of a flat reading month-over-month, raising more fears that the U.K. economy will fail to escape a third recession since 2008. The unemployment rate, which economists predicted would remain flat, unexpectedly rose to 7.9% from 7.8%.
The Bank of England's Monetary Policy Committee's most recent meeting's minutes were released overnight, showing no change in the Bank of England's policy despite a deteriorating economic outlook. The MPC voted 6-3 to hold the size of QE constant and 9-0 against rate cuts, the same as the previous meetings. Governor Mervyn King was defeated for a third straight month in hopes of further stimulus. However many, economists believe that other MPC members are waiting for incoming Governor Mark Carney to increase easing efforts.
S&P 500 futures declined 7.2 points to 1,561.60.
The EUR/USD was flat at 1.3163.
Spanish 10-year government bond yields were higher at 4.73% from 4.72%.
Italian 10-year government bond yields fell to 4.31% from 4.32%.
Gold fell 0.68% to $1,378.00 per ounce as Cyprus' finance minister confirmed the nation may have to sell SOME of its gold reserves to fund its bail-in.
Asian shares were mixed overnight as the yen weakened despite Chinese officials raising fears about Japan's easing efforts. The Japanese Nikkei Index rose 1.22% while the Shanghai Composite Index fell 0.05% and the Hang Seng Index lost 0.47%. Also, the Korean Kospi rose 0.08% one day after the country announced a new $17.3 billion fiscal stimulus and Australian shares rose 1.08% on RBA easing hopes.
European shares are lower on growth fears after the IMF cut its growth outlook as well as on demand fears across the continent. The Spanish Ibex Index declined 0.81% and the Italian FTSE MIB Index fell 0.41%. Meanwhile, the German DAX declined 1.19% and the French CAC fell 0.85% while U.K. shares lost 0.53%.
Commodities were lower overnight sparked by news that Cyprus' finance minister confirmed the nation will be selling some of its gold reserves as well as global growth fears. WTI crude futures declined 0.79% to $88.22 per barrel and Brent crude futures fell 0.7% to $100.39 per barrel. Copper futures slid 2.03% to $323.75 per pound on both supply fears and also global growth fears leading to weakening demand. Gold was lower and silver futures declined 1.16% to $23.34 per ounce.
Currency markets were in flux overnight as the yen continued to weaken for the second consecutive day. The EUR/USD was lower at 1.3163 and the dollar gained against the yen to 98.10. Overall, the Dollar Index rose 0.34% on strength against the euro, the yen, the pound, the Canadian dollar, and the Swiss franc. Notably, the pound slid 0.66% against the dollar to 1.5261 and EUR/GBP rate gained 0.52%, also reflecting pound weakness.
Earnings reported Tuesday
Key companies that reported earnings Tuesday include:
BlackRock (BLK) reported first quarter earnings per share of $3.65 vs. $3.58 expected on revenue of $2.45 billion vs. $2.43 billion forecast.
CSX Corp. (CSX) reported first quarter earnings per share of $0.45 vs. $0.40 expected on revenue of $3.00 billion vs. $2.91 billion expected.
Goldman Sachs (GS) reported first quarter earnings per share of $4.29 vs. $3.84 expected on revenue of $10.09 billion vs. $9.6 billion expected.
Intel (INTC) reported first quarter earnings per share of $0.40 vs. $0.41 expected on revenue of $12.6 billion vs. $12.61 billion expected.
Johnson and Johnson (JNJ) reported first quarter earnings per share of $1.44 vs. $1.40 expected on revenue of $17.51 billion vs. $17.46 billion expected.
Coca-Cola (KO) reported first quarter earnings per share of $0.46 vs. $0.45 expected on revenue of $11.04 billion vs. $11.02 billion a year ago.
Yahoo! (YHOO) reported first quarter earnings per share of $0.38 vs. $0.24 expected on revenue of $1.07 billion vs. $1.1 billion expected.
Stocks moving in the premarket included:
Yahoo (YHOO) shares fell 4.83% following the company's earnings report.
U.S. Steel (X) shares declined 1.81% premarket as commodities sold off on global growth fears.
Alcoa (AA) shares declined in tandem with U.S. Steel premarket, falling 0.99% in early trade.
Notable companies expected to report earnings Wednesday include:
Abbott Labs (ABT) is expected to report first quarter earnings per share of $0.41 vs. $1.03 a year ago.
American Express (AXP) is expected to report first quarter earnings per share of $1.12 vs. $1.07 a year ago.
Bank of America (BAC) is expected to report first quarter earnings per share of $0.23 vs. $0.03 a year ago.
eBay (EBAY) is expected to report first quarter earnings per share of $0.62 vs. $0.55 a year ago.
PNC Financial (PNC) is expected to report first quarter earnings per share of $1.57 vs. $1.44 a year ago.
Sandisk (SNDK) is expected to report first quarter earnings per share of $0.77 vs. $0.63 a year ago.
On the economics calendar Wednesday, MBA mortgage applications and the Beige Book are expected. Also, Federal Reserve members Stein, Bullard and Rosengren are expected to speak. Overnight, British retail sales as well as British, French, and Spanish bond offerings should move markets.
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