Futures Flat Ahead of Employment Report
U.S. equity futures were flat in overnight trading ahead of the
much anticipated employment report, the last for 2012, as hawkish
Fed minutes made investors second guess the so-called QE Infinity
program of the Fed. However, as the Fed now has its rate guidance
and policy measures tied to economic data, a weak employment report
would boost hopes of more easing.
In other news around the markets:
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 percent. Italian 10-year government bond yields rose
to 4.25 percent. Gold fell 2.33 percent 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 percent and the Shanghai Composite Index rallied 0.35 percent
while the Hang Seng Index fell a slight 0.29 percent. In addition,
the Korean Kospi slipped 0.37 percent while Australian shares fell
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
percent but the Italian MIB Index fell 0.5 percent and Greek shares
slipped 0.21 percent. Meanwhile, the German DAX fell 0.26 percent
and the French CAC slipped 0.61 percent while U.K. shares were
lower by 0.13 percent.
Commodities were in clear risk-off mode following the Fed
minutes Thursday with metals declining substantially overnight. WTI
Crude futures fell 1.21 percent to $91.78 per barrel and Brent
Crude futures fell 1.23 percent to $110.73 per barrel. Copper
futures were the best performing of the major metals, only losing
0.69 percent to $369.20 per pound. Gold was lower and silver
futures dropped 4.65 percent.
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 percent 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 percent against the dollar and 0.88 percent 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 pre-market included:
Carnival Corporation (NYSE:
) shares fell 1.84 percent pre-market as the company announced the
departure of a key executive. Pfizer (NYSE:
) shares rose 0.46 percent pre-market as a new report shows that
the company surpassed rival Proctor & Gamble (NYSE:
) in market share. Newmont Mining (NYSE:
) shares fell 0.94 percent pre-market as gold prices slid and as
) analysts highlighted the bank as one potential buyer of
Australian miner Regis Resources, of which it already owns nearly
20 percent. 3M (NYSE:
) shares rose 0.35 percent following positive comments from
Notable companies expected to report earnings Friday
) is expected to report second quarter EPS of $0.97 vs. $1.40 a
On the economics calendar Friday, it's the first Friday of the
month and that means its Non-Farm Payrolls day. Markets are looking
for a reading of +150,000 jobs in December, slightly higher than
the +146,000 reading 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 am eastern. Lastly, Charles
Plosser, Janet Yellen and James Bullard, all of the Fed, are set to
speak at separate events throughout the course of the
Good luck and good trading.
Stock chart: (c) 2013 Benzinga.com. Benzinga does not provide
investment advice. All rights reserved.
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