Futures Rise on Stimulus Hopes Despite Weak GDP
U.S. equity futures rose in early pre-market trade following
gains in Europe on hopes of a rate cut from the European Central
Bank this Thursday as markets shrugged off the weak GDP report from
last Friday. The ECB is expected to cut the benchmark rate by 25
basis points to 0.5 percent and some economists also expect the ECB
to cut the Marginal Lending Rate by 0.5 percent.
In other news around the markets:
Eurozone consumer confidence improved slightly in April as the
index rose to -22.0 from -23.5 in March, in line with estimates.
Business confidence was slightly weaker than expected in April at
88.6 vs. 89.3 forecast. Italy successfully formed a government this
weekend led by Prime Minister Letta. The regime should have staying
power as the cabinet incorporates key leaders from two large
parties including that of Silvio Berlusconi. The government is
expected to face a no confidence vote this week before fully taking
over. Moody's commented on Italy's finances now that it has formed
a government two months after elections. Moody's said that it's
still too early to tell if Italy will need a full ESM program and
that the agency will review the new government's commitment to
reforms when analyzing the country's debt ratings. S&P 500
futures rose 4.4 points to 1,576.50. The EUR/USD was higher at
1.3080. Spanish 10-year government bond yields fell 7 basis points
to 4.21 percent. Italian 10-year government bond yields fell 8
basis points to 3.98 percent, below the dreaded 4 percent level.
Gold futures rose 1.22 percent to $1,471.30 per ounce.
Asian shares were quiet overnight as Chinese and Japanese
markets were closed for holidays. The Hang Seng Index rose 0.15
percent and the Korean Kospi fell 0.2 percent while Australian
shares rose 0.56 percent.
European shares were mostly higher on stimulus hopes, sentiment
from Italy over the formation of the new government, and news out
of Greece that parliament passed a set of legislation enabling the
country to receive the next bailout payment. The Spanish Ibex Index
rose 1.29 percent and the Italian FTSE MIB Index rose 1.55 percent.
Meanwhile, the German DAX rose 0.39 percent and the French CAC 40
rose 0.72 percent while U.K. shares gained 0.02 percent.
Commodities were mixed overnight as metals futures rallied on
central bank stimulus hopes. WTI Crude futures rose 0.41 percent to
$93.38 per barrel and Brent Crude futures declined 0.03 percent to
$103.13 per barrel. Copper futures rose 1.05 percent to $321.95 per
pound. Gold was higher and silver futures gained 1.98 percent to
$24.26 per ounce.
Currency markets were in flux overnight as broad dollar weakness
was a key theme. The EUR/USD was higher at 1.3080 and the dollar
fell against the yen to 97.76, while the dollar was also weaker by
0.4 percent against the pound at 1.5535. Overall, the Dollar Index
fell 0.4 percent on weakness against the pound, the euro, the Swiss
franc, the yen, and the Canadian dollar.
Earnings Reported Yesterday
Key companies that reported earnings Friday include:
American Electric Power (NYSE:
) reported in-line first quarter EPS of $0.80 on in-line revenue of
$3.8 billion. Chevron (NYSE:
) reported first quarter EPS of $3.18 vs. $3.06 on revenue of $54.0
billion. D.R. Horton (NYSE:
) reported second quarter EPS of $0.32 vs. $0.19 on revenue of $1.4
billion vs. $1.26 billion forecast. Management was also extremely
bullish on the second half of the year on the conference call, a
positive sign for the company and the broader housing market. Simon
Property Group (NYSE:
) reported first quarter EPS of $2.05 vs. $2.00. V.F. Corp. (NYSE:
) reported first quarter EPS of $2.43 vs. $2.18 on revenue of $2.6
billion vs. $2.64 billion forecast.
Stocks moving in the pre-market included:
J.C. Penney (NYSE:
) shares added a further 1.18 percent pre-market after gaining over
11 percent Friday on news that George Soros has taken nearly an 8
percent stake in the company. Banco Santander (NYSE:
) shares rose 1.4 percent pre-market as the company fired its CEO
after poor performance in a weak economy. Newmont Mining (NYSE:
) shares rose 1.58 percent as metals prices continued to rebound
ahead of the company's earnings release. Disney (NYSE:
) shares rose 0.65 percent pre-market ahead of the summer
blockbuster season with pre-sales for Iron Man 3 appearing strong.
Notable companies expected to report earnings Monday
Buffalo Wild Wings (NASDAQ:
) is expected to report first quarter EPS of $0.99 vs. $0.98 a year
ago. General Growth Properties (NYSE:
) is expected to report first quarter EPS of $0.24 vs. $0.22 a year
ago. Masco (NYSE:
) is expected to report first quarter EPS of $0.14 vs. $0.05 a year
ago. Newmont Mining (NYSE:
) is expected to report first quarter EPS of $0.84 vs. $1.15 a year
ago. Riverbed Technologies (NASDAQ:
) is expected to report first quarter EPS of $0.24 vs. $0.20 a year
On the economics calendar Monday, personal income and outlays
data follows last week's GDP report as well as Pending Home Sales
and the Dallas Fed Manufacturing Index. Also, the Treasury will
hold its weekly 3- and 6-month bill auction. Overnight, German
retail sales, Spanish GDP, and German unemployment data are
expected to be released.
Good luck and good trading.
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