Benzinga Market Primer: Thursday, June 20: PMI Day

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Futures Drop On China Growth Fears, Dollar Gains

U.S. equity futures declined in early pre-market trade following a weak initial reading of manufacturing in China. The Flash HSBC Manufacturing PMI for June declined to 48.3 from 49.2 in May, with every internal figure showing negative signs for the Chinese economy. Markets were already weak following the FOMC rate and policy decision and the weak China data further weighed.

Top News

In other news around the markets:

The Chinese overnight lending market continued to see stress overnight as the overnight SHIBOR rate rose to an average 12.5 percent from an average 7.87 percent Wednesday and the 7-day rate rose to an average 10.96 percent vs. an average 8.26 percent yesterday. China now not only faces a slowing economy but a massive liquidity and cash-shortage crisis across its country which could lead to bank runs. The Eurozone Manufacturing PMI posted a slight beat of expectations this morning, rising to 48.7 from 48.3 on an expected reading of 48.6. Strength was seen in France while Germany's PMI unexpectedly dropped to 48.7 vs. 49.4 previously on an expected rise to 49.8. Meanwhile, the Services PMI was better than expected at 48.6 with both countries showing improvement. British retail sales were stronger than expected in May, with retail sales rising 2.1 percent from the prior month vs. an expected gain of 0.8 percent. Core retail sales also grew 2.1 percent, again beating expectations. S&P 500 futures dropped 9.3 points to 1,614.40. The EUR/USD was lower at 1.3212. Spanish 10-year government bond yields rose 16 basis points to 4.69 percent following a very weak bond auction. Italian 10-year government bond yields rose 18 basis points to 4.43 percent. Gold plummeted 4.54 percent to $1,311.60 per ounce.

Asian Markets

Asian shares saw sharp declines overnight that began at the open, as markets played catch-up to the U.S. post-Bernanke sell-off and continued lower on the weaker than expected China PMI data. The Japanese Nikkei 225 Index declined 1.74 percent while the Topix Index fell 1.33 percent. In Hong Kong, the Hang Seng Index fell 2.88 percent while the Shanghai Composite Index shed 2.76 percent in China. Also, the Korean Kospi fell 2.00 percent and Australian shares lost 2.12 percent.

European Markets

European shares tracked Asian markets lower and continued to trade lower following the weaker than expected German manufacturing data. The Spanish Ibex Index fell 1.49 percent and the Italian FTSE MIB Index declined 1.15 percent. Meanwhile, the German DAX fell 1.82 percent and the French CAC 40 declined 1.88 percent while U.K. shares shed 1.91 percent.

Commodities

Commodities were torched overnight as the Fed cut its growth forecasts and then as China's PMI was weak. WTI Crude futures dropped 2.11 percent to $96.17 per barrel and Brent Crude futures fell 1.9 percent to $104.10 per barrel. Copper futures dropped 2.03 percent to $308.75, approaching a new 52-week low. Gold was much lower and silver futures were absolutely pummeled, declining 6.3 percent to $20.26 per ounce.

Currencies

Currency markets showed broad dollar strength overnight as Bernanke's comments put confidence under the dollar. The EUR/USD was was lower at 1.3212 and the dollar gained against the yen by 1.66 percent to 98.05. Overall, the Dollar Index rose 0.58 percent on strength against the yen, the euro, the Canadian dollar, the Swiss franc and the pound. Also, the Australian dollar was broadly weak as a proxy for China, touching a new 3-year low against the U.S. dollar.

Earnings Reported Yesterday

Key companies that reported earnings Wednesday include:

FedEx (NYSE: FDX ) reported fourth quarter EPS of $2.13 vs. $1.97 expected on revenue of $11.4 billion vs. $11.44 billion expected. However, guidance for FY2014 was slightly below forecasts. Actuant (NYSE: ATU ) reported third quarter EPS of $0.62 vs. $0.66 expected on revenue of $344.21 million. Also, the company announced the divestiture of a business segment. Finisar (NASDAQ: FNSR ) reported fourth quarter EPS of $0.20 vs. $0.17 expected on revenue of $243.4 million vs. $242.95 million expected. Micron Technology (NASDAQ: MU ) reported third quarter EPS of $0.04 vs. $0.02 expected on revenue of $2.3 billion vs. $2.25 billion expected. Red Hat (NYSE: RHT ) reported first quarter EPS of $0.32 vs. $0.31 expected on revenue of $363.0 million vs. $359.77 million expected.

Pre-Market Movers

Stocks moving in the pre-market included:

SandRidge Energy (NYSE: SD ) shares rose 4.33 percent as the company announced a new CEO. Micron Technology (NASDAQ: MU ) shares declined 1.65 percent pre-market despite the better earnings. Finisar (NASDAQ: FNSR ) shares rose 8.95 percent pre-market as the company reported better earnings and gave revenue guidance. Red Hat (NYSE: RHT ) shares climbed 3.42 percent pre-market after the company reported better first quarter results.

Earnings

Notable companies expected to report earnings Thursday include:

Oracle (NASDAQ: ORCL ) is expected to report fourth quarter EPS of $0.87 vs. $0.82 a year ago. Pier 1 Imports (NYSE: PIR ) is expected to report first quarter EPS of $0.19 vs. $0.16 a year ago. Kroger (NYSE: KR ) is expected to report first quarter EPS of $0.88 vs. $0.78 a year ago. Rite Aid (NYSE: RAD ) is expected to report first quarter EPS of $0.09 vs. a loss of $0.03 per share a year ago.

Economics

On the economics calendar Thursday, initial jobless claims are due out followed by the Flash Markit U.S. Manufacturing PMI, existing home sales, Philly Fed survey, and leading indicators. The Treasury is set to auction 30-year TIPS as well. Overnight, Bank of Japan Governor Kuroda speaks.

Good luck and good trading.

Tune into Benzinga's PreMarket Info show with Dennis Dick and Joel Elconin here .

For a recap of yesterday's market action, read Benzinga's daily market wrap here .

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Bonds , Commodities , Futures , International

Referenced Stocks: ATU , FDX , FNSR , KR , ORCL

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