Benzinga Market Primer: Wednesday, May 15

Futures Lower on Weak European Growth Data

U.S. equity futures traded lower in early pre-market trade following a weaker than expected GDP report from the eurozone for the first quarter. GDP growth rose to -0.2 percent on a quarterly basis from -0.6 percent but missed forecasts of a 0.1 percent contraction. Weakness was notably seen in Germany, France, and Italy in the report, with the annualized rate of growth for Germany dropping to -1.4 percent vs. 0.2 percent growth forecast.

Top News

In other news around the markets:

• The U.K. had fewer people claim unemployment benefits in April than expected, a positive sign for the labor market as the unemployment rate fell. The Claimant Count Change in the U.K. was released at -7.3 thousand people vs. a forecast of -3.0 thousand as the unemployment rate unexpectedly declined 0.1 percent to 7.8 percent. However, most of the drop was due to people leaving the labor force.


• The Bank of England issued an upbeat forecast for the U.K. economy in its latest Inflation Report, the last of Governor Mervyn King's tenure at the BoE. The Bank forecasts that the U.K. will grow 0.5 percent in the second quarter with growth accelerating to 1.7 percent in the second quarter of 2014 and 2.2 percent in the same period of 2015. Notably, the Bank mentioned that it sees the effects of the financial crisis easing, finally.


• Wal-Mart WMT has refused to sign a new safety pact for its suppliers in Bangladesh but has announced that it will increase inspections in the country in the wake of the disaster that left numerous workers dead and more injured.


• S&P 500 futures fell 3.7 points to 1,644.30.


• The EUR/USD was lower at 1.2887.


• Spanish 10-year government bond yields rose 2 basis points to 4.37 percent.


• Italian 10-year government bond yields rose 5 basis points to 4.06 percent.


• Gold fell 0.95 percent to $1,410.90 per ounce.

Asian Markets

Asian shares were mostly higher overnight save for Australia following mixed trading on Wall Street as the Nikkei crossed the 15,000 level for the first time since 2008 as the yen continued to devalue. The Japanese Nikkei gained 2.29 percent and the Shanghai Composite Index rose 1.96 percent while the Hang Seng Index added 0.5 percent. Also, the Korean Kospi rose 0.12 percent while Australian shares declined 0.56 percent.

European Markets

European shares were mixed in early trade following the weaker than expected GDP data from the eurozone and the Bank of England's Quarterly Inflation Report. The Spanish Ibex Index rose 0.55 percent and the Italian FTSE MIB Index declined 0.02 percent. Meanwhile, the German DAX fell 0.1 percent and the French CAC 40 declined 0.23 percent while U.K. shares shed 0.21 percent.

Commodities

Commodities were weaker overnight as the dollar continued to strengthen following the eurozone GDP data. WTI Crude futures fell sharply by 0.72 percent to $93.53 and Brent Crude futures declined 0.32 percent to $102.27. Copper futures shed 1.09 percent to $325.20 per pound on continued fears that the Australian mining boom has peaked. Gold was lower and silver futures fell 1.9 percent to $22.94 per ounce.

Currencies

Currency markets were in flux overnight as the dollar reigned, especially against the euro. The EUR/USD was lower at 1.2886 and the dollar rose against the yen to 102.44 after failing to hold above 102.50. Overall, the Dollar Index rose 0.28 percent on strength against the euro, the Swiss franc, the Canadian dollar, and the yen.

Earnings Reported Yesterday

Key companies that reported earnings Tuesday include:

• Valspar Corp. VAL reported second quarter EPS of $0.91 vs. $0.91 expected on revenue of $1.03 billion vs. $1.05 billion expected.


• VOXX International VOXX reported fourth quarter EPS of $0.43 vs. $0.19 expected.

Pre-Market Movers

Stocks moving in the pre-market included:

• The Gap Inc. shares rose 1.2 percent pre-market after Stephen Mandel's Lone Pine reported an increased stake in the company and the stock was raised to Buy vs. Neutral at Citi.


• Apple AAPL shares declined 0.42 percent pre-market after falling 2.39 percent Tuesday following reports that France wants to place a tax on smartphones and tablets.


• Sony SNE shares gave back 1.49 percent of the gains from Tuesday pre-market following reports that Dan Loeb wants to restructure the company to boost value.

Earnings

Notable companies expected to report earnings Wednesday include:

• Arctic Cat ACAT is expected report a fourth quarter loss of $0.40 vs. a loss of $0.49 a year ago.


• Cisco CSCO is expected to report third quarter EPS of $0.49 vs. $0.48 a year ago.


• Deere and Co. DE is expected to report second quarter EPS of $2.72 vs. $2.61 a year ago.


• Macy's M is expected to report first quarter EPS of $0.53 vs. $0.43 a year ago.


• Sketchers SKX is expected to report first quarter EPS of $0.19 vs. a loss of $0.07 per share a year ago.

Economics

On the economics calendar Wednesday, MBA Purchase Applications, producer prices, and the Empire State Manufacturing Index are due out. Also, TIC flows, industrial production, the NAHB Housing Price Index, and E-Commerce Retail Sales are expected. Overnight, Japanese GDP, Chinese FDI data, and French Non-Farm Payrolls are due out.

Good luck and good trading.

Click here to view Benzinga's Market Wrap for Tuesday, May 14.