Futures Dip As Kuroda Disappoints
U.S. equity futures fell in early pre-market trade after Bank of
Japan Governor Kuroda disappointed markets by not announcing a new
plan to extend the maturity of cheap, 0.1 percent loans it had been
making. The Bank did upgrade its forecast for the economy as
expected but simply restated its lending goals, sending markets
In other news around the markets:
Industrial production in the U.K. rose 0.1 percent in April vs. a
flat reading month-over-month despite dropping from March's 0.7
percent gain. On an annualized basis, industrial production has
fallen 0.6 percent vs. an expected drop of 0.7 percent and better
than the prior reading of -1.4 percent. Eurogroup Chief Jean Claude
Juncker left Greece this morning following discussions with the
government and made a rather optimistic assessment about the state
of the Greek economy. However, the failed auction of state owned
gas drilling rights Monday raises fears that the privatization
program, a key tenet to the long-term sustainability of Greece's
recovery, is failing. The German High Court has begun proceedings
in the case to try the legality of the OMT program launched by ECB
President Mario Draghi last summer. The court noted that success of
policies does not justify their constitutionality and that the
"ends of ECB policy don't justify the means." S&P 500 futures
fell 6.5 points to 1,635.60. The EUR/USD was higher at 1.3281.
Spanish 10-year government bond yields rose 1 basis point to 4.6
percent. Italian 10-year government bond yields rose 1 basis point
to 4.32 percent. Gold fell 1.04 percent to $1,371.60 per ounce.
Asian shares were mostly lower overnight following the
disappointment from the Bank of Japan. The Japanese Nikkei 225
Index fell 1.45 percent and the Topix Index declined 0.97 percent.
The Hang Seng Index fell 1.2 percent in Hong Kong and the Korean
Kospi fell 1.2 percent while Australian shares edged higher by 0.41
percent, boosted by an improving business sentiment indicator and
the devaluing Australian dollar.
European shares were in the red in early trade, following Asian
shares lower. The Spanish Ibex Index declined 1.00 percent and the
Italian FTSE. MIB Index fell 0.92 percent. Meanwhile, the German
DAX declined 0.96 percent and the French CAC 40 fell 0.86 percent
while U.K. shares shed 0.82 percent.
Commodities were lower overnight, following the broad risk-off
theme in markets. WTI Crude futures fell 0.13 percent to $95.65 per
barrel and Brent Crude futures fell 0.26 percent to $103.68 per
barrel. Copper futures lost 1.08 percent to $320.60 per pound. Gold
was lower and silver futures declined 1.46 percent to $21.61 per
Currency markets were on the move in stellar fashion overnight
as the yen strengthened rather violently and the Australian dollar
continued to tank. The EUR/USD was higher at 1.3281 and the dollar
declined against the yen by 1.57 percent to 97.21. Overall, the
Dollar Index fell 0.26 percent on weakness against the yen, the
Swiss franc, and the euro despite strength against the Canadian
dollar and the British pound.
Notably, the yen strengthened across the board with the dollar,
the euro, the pound, the Swiss franc, and the Australian dollar all
dropping more than 1 percent against the yen. The stand-out pairs
were the AUD/JPY, which fell 2.79 percent, and the GBP/JPY, which
declined 2.49 percent. The Australian dollar was more broadly weak
than against just the yen, dropping 1.37 percent against the U.S.
dollar also. To note, Dennis Gartman of the Gartman Letter went
long the AUD/JPY Monday morning.
Earnings Reported Yesterday
Key companies that reported earnings Monday include:
) reported fourth quarter EPS of $0.29 vs. $0.28 expected on
revenue of $52.2 million. Diamond Foods (NASDAQ:
) reported third quarter EPS of $0.05 vs. an expected loss per
share of $0.17 expected on revenue of $184.9 million vs. $175.8
million expected. The company also restated Q2 earnings and named a
new CFO. Lululemon Athletica (NASDAQ:
) reported first quarter EPS of $0.32 vs. $0.30 expected on revenue
of $345.8 million vs. $341.0 million. The company also announced
that Christine Day was stepping down from her CEO position and that
the company was to de-list its Canadian listed shares. Navistar
) reported a second quarter loss of $4.65 per share vs. an expected
loss of $1.20 per share on revenue of $2.53 billion.
Stocks moving in the pre-market included:
) shares declined 13.22 percent pre-market on the earnings as well
as the other corporate news. Navistar (NYSE:
) shares fell 4.66 percent pre-market after reporting a wider than
expected quarterly loss. General Mills (NYSE:
) shares rose 0.83 percent pre-market after the company raised
guidance slightly but still sees full year earnings coming in shy
of the street estimates by 1-2 cents. Diamond Foods (NASDAQ:
) shares climbed 3.19 percent pre-market after better earnings.
Notable companies expected to report earnings Tuesday
LDK Solar (NYSE:
) is expected to report a first quarter loss of $0.96 per share vs.
a loss of $1.46 per share a year ago. Oxford Industries (NYSE:
) is expected to report first quarter EPS of $0.78 vs. $1.12 a year
On the economics calendar Tuesday, the NFIB Small Business
Optimism Index is due out as well as the Redbook, weekly chain
store sales, and wholesale trade data. The Treasury is also set to
auction 4-week and 3-year note bills. Overnight, French Non-Farm
Payrolls, German inflation, and the British claimant count change
Good luck and good trading.
Tune into Benzinga's PreMarket Info show with Dennis Dick and
For a recap of yesterday's market action, read Benzinga's daily
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