Benzinga Market Primer: Monday, August 5: Futures Flat On Relaxed China Fears, Emerging Market Rebound

Futures Flat On Relaxed China Fears, Emerging Market Rebound

U.S. equity futures were flat in early pre-market trade as services data out of China showed that the economy continued to chug along at low levels in July. Also, easing fears over imminent Federal Reserve tapering led to rebounds in emerging markets.

Top News

In other news around the markets:

• China's official non-manufacturing PMI rose to 54.1 from 53.9 in July from June while the HSBC China Services PMI was flat at 51.3 in July. Although the services sector is smaller than the manufacturing sector in China, it is growing and should become larger as China shifts more towards a consumption driven economy.


• A new Reuters poll of primary dealers now sees a 50 percent chance that the Fed will taper in September, down from about 65 percent in early July, in the wake of the weaker than expected non-farm payrolls report.


• Spain's services sector continued to recover as the Services PMI rose to 48.5 from 47.8 in June, the highest reading in 26 months. Economists surveyed by Reuters were looking for a reading of 48.0.


• S&P 500 futures fell 0.4 points to 1,703.60.


• The EUR/USD was higher at 1.3288.


• Spanish 10-year government bond yields fell 2 basis points to 4.56 percent.


• Italian 10-year government bond yields fell 3 basis points to 4.25 percent.


• Gold rose 0.23 percent to $1,313.50 per ounce.

Asian Markets

Asian shares were mixed overnight despite the largely better China data after the IMF issued a warning to Japan over its fiscal position. The Japanese Nikkei 225 Index fell 1.44 percent and the Topix Index declined 0.96 percent. In Hong Kong, the Hang Seng Index rose 0.16 percent and the Shanghai Composite Index gained 1.04 percent. Also, the Korean Kospi fell 0.37 percent and Australian shares declined 0.11 percent.

European Markets

European shares were higher in early trade heading into the services PMIs for Germany, France and the broad eurozone. The Spanish Ibex Index rose 0.35 percent and the Italian FTSE MIB Index gained 0.31 percent. Meanwhile, the German DAX rose 0.2 percent and the French CAC 40 Index gained 0.17 percent while U.K. shares added 0.5 percent.

Commodities

Commodities were mixed overnight as oil gained following the China data. WTI Crude futures rose 0.35 percent to $107.31 per barrel and Brent Crude futures gained 0.24 percent to $109.21 per barrel. Copper futures fell 0.36 percent to $316.10 per pound. Gold was higher and silver futures fell 0.16 percent to $19.88 per ounce.

Currencies

Currency markets were on the move overnight as the yen gained following the IMF warning and the dollar weakened broadly. The EUR/USD was higher at 1.3288 and the dollar fell against the yen to 98.42. Overall, the Dollar Index fell 0.11 percent on weakness against the yen, the Canadian dollar, the euro, the pound, and the Swiss franc.

Earnings Reported Yesterday

Key companies that reported earnings Friday include:

• Chevron CVX reported second quarter EPS of $2.77 vs. $2.98 expected on revenue of $55.3 billion vs. $56.01 billion expected.


• Alpha Natural Resources ANR reported a second quarter loss of $0.59 per share, in line, on revenue of $1.34 billion vs. $1.24 billion expected.


• Cablevision CVC reported second quarter EPS of $0.11 vs. $0.04 expected on revenue of $1.57 billion vs. $1.58 billion expected.


• Eaton Corp. ETN reported second quarter EPS of $1.09 vs. $1.11 expected on revenue of $5.6 billion vs. $5.77 billion expected.

Earnings

Notable companies expected to report earnings Monday include:

• Kindred Healthcare KND is expected to report second quarter EPS of $0.33 vs. $0.41 a year ago on revenue of $1.47 billion vs. $1.54 billion a year ago.


• Rockwood Holdings ROC is expected to report second quarter EPS of $0.76 vs. $1.24 a year ago on revenue of $955.94 million vs. $905.6 million a year ago.


• Hologix HOLX is expected to report third quarter EPS of $0.37 vs. $0.35 a year ago on revenue of $626.48 million vs. $470.23 million a year ago.


• Black Hills Corp. BKH is expected to report second quarter EPS of $0.42 vs. $0.34 a year ago on revenue of $285.94 million vs. $242.4 million a year ago.


• Jamba JMBA is expected to report second quarter EPS of $0.37 vs. $0.25 a year ago on revenue of $70.17 million vs. $66.04 million a year ago.

Economics

On the economics calendar Monday, the Gallup US Consumer Spending Survey is set to be releases ahead of the ISM Non-Manufacturing Index and the weekly 3- and 6-month bond auctions. Also, Richard Fisher of the Dallas Fed is set to speak. Overnight, the RBA rate decision, the Italian GDP report, and the German factory orders are all expected.

Good luck and good trading.

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

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