Futures Slips Post-FOMC
U.S. equity futures slipped in early Thursday trade after the
FOMC decided to increase the size of QE3 to $85 billion of
monthly purchases, up from $40 billion originally. In addition,
the FOMC dropped its target date guidance for interest rates and
adopted a threshold-based methodology, where the Fed will not
raise rates until employment improves further and inflation
In other news around the markets:
- Eurozone finance ministers reached a deal to create a
banking union and house a banking regulator within the
- Despite recent moves in the bond markets, Moody's says that
the increased political turmoil in Italy is not credit
negative, so long as Italy can construct a government quickly
in elections in April.
- Germany's IFO, the economic think tank, forecasts that
German GDP contracted 0.3 percent in the fourth quarter,
showing that even Europe's healthiest nation cannot escape the
debt crisis and the recession driven by austerity.
- S&P 500 futures fell 2.8 points to 1,424.4.
- The EUR/USD was lower at 1.3042.
- Spanish 10-year government bond yields rose to 5.396
- Italian 10-year government bond yields rose to 4.649
- Gold fell 1.25 percent to $1,696.50.
Asian shares were mixed overnight as Japanese shares rose and
Chinese shares lagged. The Japanese Nikkei Index rose 1.68
percent overnight while the Shanghai Composite Index fell 1.02
percent and the Hang Seng Index fell 0.26 percent. Also, the
Korean Kospi rose 1.38 percent while Australian shares slipped
European shares were mostly lower in early trade as concerns
over the true reach and effectiveness of the banking union arose.
The Spanish Ibex Index fell 0.07 percent while the Italian MIB
Index rose slightly by 0.02 percent. Meanwhile, the German DAX
fell 0.66 percent, the French CAC dropped 0.36 percent, and U.K.
shares fell 0.28 percent.
Commodities were weaker in overnight trade, reversing the
run-up seen in commodities markets before the FOMC decision. WTI
Crude futures fell 0.62 percent to $86.23 per barrel and Brent
Crude futures fell 0.29 percent to $109.18 per barrel. Copper
futures fell 1.04 percent, following the weakness in Australia
and fears over the RBA being unwilling to devalue the Aussie
dollar to boost exports. Gold was lower and silver futures fell
2.97 percent to $32.78.
Currency markets were in clear risk-off mode as the dollar
reigned and most other currencies slipped, including the yen. The
EUR/USD was lower at 1.3042 and the dollar rose against the yen
to 83.39. Overall, the Dollar Index rose 0.21 percent on strength
against the pound, the euro, the yen and the Swedish krone. Also,
the Aussie dollar slipped and the Swiss franc was rather flat as
the Swiss National Bank did not change its current policy
Stocks moving in the pre-market included:
- Yum! Brands (NYSE:
) shares rose 1.05 percent ahead of key data late Thursday out
- Berkshire Hathaway (NYSE: BRK-B) shares rose 0.07 percent
pre-market after gaining 2.35 percent Wednesday as the company
announced that a large, long-time owner had sold back class A
shares to the company for slightly more than $1.2 billion.
Also, the company increased the amount it is willing to pay per
share in its existing buyback.
- Time Warner (NYSE:
) shares fell 0.34 percent pre-market as the company launched
its iOS streaming app and also as the stock retreated from a
new 52-week high.
- Dendreon (NASDAQ:
) shares fell 0.39 percent after rising over 4 percent
Wednesday on takeover chatter.
Notable companies expected to report earnings Thursday
- Adobe Systems (NASDAQ:
) is expected to report fourth quarter EPS of $0.57 vs. $0.67 a
- Pier 1 Imports (NYSE:
) is expected to report third quarter EPS of $0.24 vs. $0.21 a
On the economics calendar Thursday, weekly jobless claims, PPI
inflation, and retail sales are due out at 8:30 am eastern. Also,
business inventories data is expected. In addition, the Treasury
is set to auction 30-year bonds. Overnight, the Preliminary HSBC
Chinese Manufacturing PMI is due out and the Preliminary Eurozone
Manufacturing PMI for December is expected as well.
Good luck and good trading.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.