Benzinga Market Primer: Friday, February 22
Futures Rise on German Business Confidence
U.S. equity futures rose in pre-market trading following the release of the German IFO Business Confidence Survey. The Survey showed that German business leaders were more confident about the future of the Eurozone economy than expected, with the index rising to 107.4, beating expectations of a reading of 105 and better than last month's 104.3.
In other news around the markets:The European Union has cut its growth forecasts for 2013, slashing estimates to a contraction of 0.3 percent from a previously projected growth of 0.1 percent. German growth forecasts were cut to 0.5 percent from 2 percent previously, French growth forecasts were cut to 0.1 percent from 1.2 percent, and U.K. growth forecasts were cut to 0.9 percent from 1.9 percent previously. The Bank of England and the People's bank of China have confirmed that they are in talks to set up 3-year swap lines aimed at financing trade and direct investment and supporting financial stability. German fourth quarter GDP was reported as contracting 0.6 percent in the fourth quarter, in line with expectations, and growing 0.1 percent on an annualized basis, also in line with expectations. S&P 500 futures rose 3.6 points to 1,504.80. The EUR/USD was was higher at 1.3208 following the German IFO data. Spanish 10-year government bond yields fell to 5.17 percent after Spain reported that its deficit widened to 10.2 percent in 2012. Italian 10-year government bond yields fell to 4.46 percent. Gold rose 0.03 percent to $1,579.30 per ounce.
Asian shares were mixed overnight as Chinese shares fell on fears that the property market is overheating, which could lead to the PBOC entering an earlier than anticipated tightening cycle. The Japanese Nikkei Index rose 0.68 percent and the Shanghai Composite Index fell 0.51 percent while the Hang Seng Index declined 0.54 percent. Notably, Chinese shares closed down almost 5 percent on the week. Also, the Korean Kospi gained 0.18 percent and Australian shares rose 0.76 percent.
European shares were higher following the strong IFO survey but have given back some gains following the EU growth forecast cut. The Spanish Ibex Index rose 0.96 percent and the Italian FTSE MIB Index rose 0.7 percent. Meanwhile, the German DAX gained 0.42 percent while the French CAC rose 1.11 percent and U.K. shares rallied 0.58 percent.
Commodities were slightly higher in early Friday trade after taking a beating all week across the commodity complex. WTI Crude futures rose 0.16 percent to $92.99 per barrel and Brent Crude futures rose 0.68 percent to $114.29 per barrel. Copper futures rose 0.15 percent to $357.55 per barrel. Gold was higher and silver futures rose 0.26 percent to $28.78 per ounce.
Currency markets were rather quiet overnight as the Australian dollar popped on a technical bounce. The EUR/USD was higher at 1.3208 and the dollar rose against the yen to 93.28 while the pound sterling gained back against the dollar to 1.5258. Overall, the Dollar Index fell 0.16 percent on weakness against the euro, the pound, and the Swiss franc despite strength against the yen and the Canadian dollar. Notably, the Australian dollar rose 0.69 percent against the greenback on a technical bounce to 1.0316 and rose even more against the yen.
Stocks moving in the pre-market included:Hewlett Packard (NYSE: HPQ ) shares rose 5.61 percent after the company reported better than expected earnings and disclosed no plans to break up the company. American International Group (NYSE: AIG ) shares rose 4.64 percent as the company also reported operating earnings that beat analyst estimates but the company still reported a loss due to claims resulting from Hurricane Sandy. Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) shares rose 1.28 percent pre-market and remain just shy of the stock's all-time high as investors see a wave of new acquisitions boosting Buffett's war chest. Caterpillar (NYSE: CAT ) shares rose 0.62 percent pre-market after declining 1.81 percent Thursday as the company warned that comparable sales in January slowed from a year ago.
Notable companies expected to report earnings Friday include:Abercrombie & Fitch (NYSE: ANF ) is expected to report fourth quarter EPS of $1.95 vs. $1.12 a year ago.
On the economics calendar Friday, Fed member Jerome Powell is set to speak. Also, the ECRI weekly index is expected and Canadian CPI is due out. Over the weekend, the Italian elections begin on Sunday and polls close Monday with the first exit polls coming in the afternoon following the closing of the polls. Momentum has been on the side of former Prime Minister Silvio Berlusconi retaking power, however there is a fear that the election could produce no majority and a stalemate similar to the one seen in Greece over the summer, only eight times larger.
Good luck and good trading.
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