Futures Drop On China Fears, Easing Doubts As Chinese Stocks
U.S. equity futures declined in early pre-market trade Monday on
continued fears surrounding the Chinese economy. The People's Bank
of China issued a statement attempting to reassure markets of the
state of the Chinese economy while Goldman Sachs downgraded its
growth outlook for the Chinese economy. The Shanghai Composite
Index proceeded to fall 5.29 percent on the news.
In other news around the markets:
Goldman Sachs cut its second quarter growth forecast for China to
7.5 percent year-over-year growth vs. 7.8 percent previously and
cut 2013 growth to 7.4 percent from 7.8 percent. Goldman also cut
2014 growth forecasts to 7.7 percent from 8.4 percent. The PBOC
commented on the recent liquidity crunch in China (finally), saying
that liquidity is at a reasonable level and that credit growth must
be kept steady. The PBOC reiterated that it stands to ready to act
if needed. The Bank for International Settlements (
) made some strong comments on the risks of continued
non-traditional monetary policy. In its annual report, the BIS
urged central banks to pull back the reigns on policy and that
delivering more expansionary policy was becoming "increasingly
perilous." S&P 500 futures fell 12.30 points to 1,571.80. The
EUR/USD was lower at 1.3116. Spanish 10-year government bond yields
rose 13 basis points to 5.04 percent, crossing back above the 5
percent level for the first time in three months. Italian 10-year
government bond yields rose 9 basis points to 4.7 percent. Gold
fell 0.63 percent to $1,283.90 per ounce.
Asian shares all closed at or near the lows overnight after
opening higher following increased fears over the health of the
Chinese economy. The Japanese Nikkei 225 Index declined 1.26
percent and the Topix Index fell 0.89 percent. In Hong Kong, the
Hang Seng Index fell 2.22 percent while the Shanghai Composite
Index declined 5.29 percent in China. Also, the Korean Kospi fell
1.31 percent and Australian shares fell 1.47 percent.
European shares were also lower in early trade, taking cues from
Asia. The Spanish Ibex Index fell 1.07 percent and the Italian FTSE
MIB Index declined 0.74 percent. Meanwhile, the German DAX fell
0.89 percent and the French CAC 40 Index declined 0.96 percent
while U.K. shares lost 0.64 percent.
Commodities were taking it on the proverbial chin overnight as
lowered Chinese growth estimates weighed on prices. WTI Crude
futures fell 0.31 percent to $93.40 per barrel and Brent Crude
futures declined 0.23 percent to $100.68 per barrel. Copper futures
tumbled a whopping 3.18 percent to $300.15 per pound, the lowest in
over a year. Gold was lower and silver futures declined 1.62
percent to $19.64 per ounce.
Currency markets were on the move overnight as early yen
weakness was canceled out as the session went on. The EUR/USD was
lower at 1.3116 and the dollar fell against the yen by 0.03 percent
to 97.87 after touching 98.60 overnight. Overall, the Dollar Index
rose 0.28 percent on strength against the Canadian dollar, the
pound, the Swiss franc, and the euro.
Earnings Reported Yesterday
Key companies that reported earnings Friday include:
Darden Restaurants (NYSE:
) reported fourth quarter EPS of $1.01 vs. $1.04 expected on
revenue of $2.3 billion vs. $2.27 billion expected. The company
also raised its quarterly dividend to $0.55 per share from $0.50
per share. CarMax (NYSE:
) reported first quarter EPS of $0.64 vs. $0.58 expected on revenue
of $3.31 billion vs. $3.15 billion expected.
Stocks moving in the pre-market included:
Advanced Micro Devices (NYSE:
) shares gained 1.25 percent after rising over 3 percent Friday.
U.S. Steel (NYSE:
) shares declined 2.46 percent pre-market on Chinese fears. Cliff's
Natural Resources (NYSE:
) shares declined 1.4 percent pre-market on lower commodity prices
in the face of Chinese fears. Freeport-McMoRan Copper and Gold
) shares fell 1.31 percent pre-market as copper prices plunged.
Notable companies expected to report earnings Monday
) is expected to report a second quarter loss of $0.01 per share
vs. EPS of $0.03 a year ago. Sonic (NASDAQ:
) is expected to report third quarter EPS of $0.26 vs. $0.24 a year
On the economics calendar Monday, the Chicago Fed National
Activity Index and the Dallas Fed Manufacturing Index are due out
followed by the weekly 3- and 6-month bill auctions and speech from
Fed President Richard Fisher. Overnight, Italian retail sales and a
Spanish bill auction are expected.
Good luck and good trading.
Tune into Benzinga's PreMarket Info show with Dennis Dick and
For a recap of Friday's market action, read Benzinga's daily
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