Futures Drop As Nikkei Tumbles Into Bear Market Territory
U.S. equity futures tumbled in early pre-market trade after the
Japanese Nikkei Index fell 6.35 percent into bear market territory.
The USD/JPY, meanwhile, plunged below 95 and traded near 94.30.
In other news around the markets:
The World Bank cut its global growth forecast for 2013 from 2.4
percent to 2.2 percent in January and cut its 2014 growth forecast
from 3.1 percent to 3.0 percent. They also cut the 2013 growth
forecast for China from 8.4 percent to 7.7 percent and the Eurozone
from a contraction of 0.1 percent to a contraction of 0.6 percent
while boosting Japan from 0.8 percent growth to 1.4 percent. They
noted that the global economy remains "hesitant and uneven."
Australia's employment change for May was better than expected as
the economy added 1.1 thousand jobs vs. the expected decline of 10
thousand. The unemployment rate also fell from 5.6 percent to 5.5
percent. Japanese citizens continued to park money on shore in the
past week, despite the multi-months decline in the yen. Japan
foreign buying of stocks and bonds both fell for the third
consecutive week, which added more fuel to the already in place
sell-off in the Nikkei and the yen. S&P 500 futures fell 7.3
points to 1,602.60. The EUR/USD was slightly lower at 1.3328.
Spanish 10-year government bond yields rose 6 basis points to 4.69
percent. Italian 10-year government bond yields rose 6 basis points
to 4.44 percent. Gold fell 0.44 percent to $1,385.90.
Asian shares were mostly lower overnight, pulled down by the
Nikkei, as Chinese shares re-opened and played catch-up. The
Japanese Nikkei 225 Index declined 6.35 percent and the Topix Index
fell 4.78 percent. In China, the Shanghai Composite Index dropped
3.39 percent while in Hong Kong, the Hang Seng Index fell 2.19
percent. Also, the Korean Kospi Index declined 1.42 percent and
Australian shares shed 0.61 percent.
European shares tumbled as the Asian weakness spilled over. The
Spanish Ibex Index fell 1.53 percent and the Italian FTSE MIB Index
declined 0.65 percent. Meanwhile, the German DAX fell 1.92 percent
and the French CAC 40 Index declined 1.17 percent while U.K. shares
dropped 1.28 percent.
Commodities were weak overnight as global growth fears remained
strong following the cut in growth forecasts by the World Bank. WTI
Crude futures fell 0.52 percent to $95.38 per barrel and Brent
Crude futures declined 0.49 percent to $102.98 per barrel. Copper
futures fell 1.1 percent to $319.00 per pound, just 4.5 percent
above the May low. Gold was lower and silver futures declined 0.35
percent to $21.72 per ounce.
Currency markets were on the move again as yen strength
continued to be a catalyst for dollar weakness. The EUR/USD was
slightly lower at 133.28 and the dollar fell 1.78 percent against
the yen 94.30. Overall, the Dollar Index fell 0.21 percent on
weakness against the yen and the Canadian dollar. Notably, the
AUD/JPY fell below the key 90 level and the EUR/JPY looks set to
test the 125 level for the first time since the beginning of
Earnings Reported Yesterday
Key companies that reported earnings Wednesday include:
PVH Corp. (NYSE:
) reported first quarter EPS of $1.91 vs. $1.35 a year ago on
revenue of $1.91 billion, in line. The company also guided higher
than expected for the second quarter and reaffirmed full year
guidance. H&R Block (NYSE:
) reported fourth quarter EPS of $2.54 vs. $2.61 a year ago on
revenue of $2.2 billion vs. $2.28 billion. Five Below (NASDAQ:
) reported first quarter EPS of $0.05 vs. $0.04 on revenue of $95.6
million vs. $94.23 million expected. The company also revised its
second quarter guidance.
Stocks moving in the pre-market included:
) shares rose 23.32 percent pre-market, off of the overnight highs
though, as the company announced that it will sell its Canadian
operations for about $4 billion after taxes ad will use the
proceeds to pay down debt and buy back stock. PVH Corp. (NYSE:
) shares rose 8.11 percent pre-market after reporting earnings and
guidance. J.C. Penney (NYSE:
) shares declined 1.24 percent pre-market as investors have been
taking increasingly bearish bets on the stock in the options
markets. Five Below (NASDAQ:
) shares rose nearly 4 percent pre-market after the company boosted
Notable companies expected to report earnings Thursday
Restoration Hardware (NYSE:
) is expected to report first quarter EPS of $0.04 on revenue of
On the economics calendar Thursday, retail sales and the weekly
jobless claims report are due out followed by business inventories
and a 3-year bond auction. Overnight, the Eurozone employment
report is due out.
Good luck and good trading.
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