Benzinga Market Primer, Monday April 29

Futures Rise on Stimulus Hopes Despite Weak GDP

U.S. equity futures rose in early pre-market trade following gains in Europe on hopes of a rate cut from the European Central Bank this Thursday as markets shrugged off the weak GDP report from last Friday. The ECB is expected to cut the benchmark rate by 25 basis points to 0.5 percent and some economists also expect the ECB to cut the Marginal Lending Rate by 0.5 percent.

Top News

In other news around the markets:

• Eurozone consumer confidence improved slightly in April as the index rose to -22.0 from -23.5 in March, in line with estimates. Business confidence was slightly weaker than expected in April at 88.6 vs. 89.3 forecast.


• Italy successfully formed a government this weekend led by Prime Minister Letta. The regime should have staying power as the cabinet incorporates key leaders from two large parties including that of Silvio Berlusconi. The government is expected to face a no confidence vote this week before fully taking over.


• Moody's commented on Italy's finances now that it has formed a government two months after elections. Moody's said that it's still too early to tell if Italy will need a full ESM program and that the agency will review the new government's commitment to reforms when analyzing the country's debt ratings.


• S&P 500 futures rose 4.4 points to 1,576.50.


• The EUR/USD was higher at 1.3080.


• Spanish 10-year government bond yields fell 7 basis points to 4.21 percent.


• Italian 10-year government bond yields fell 8 basis points to 3.98 percent, below the dreaded 4 percent level.


• Gold futures rose 1.22 percent to $1,471.30 per ounce.

Asian Markets

Asian shares were quiet overnight as Chinese and Japanese markets were closed for holidays. The Hang Seng Index rose 0.15 percent and the Korean Kospi fell 0.2 percent while Australian shares rose 0.56 percent.

European Markets

European shares were mostly higher on stimulus hopes, sentiment from Italy over the formation of the new government, and news out of Greece that parliament passed a set of legislation enabling the country to receive the next bailout payment. The Spanish Ibex Index rose 1.29 percent and the Italian FTSE MIB Index rose 1.55 percent. Meanwhile, the German DAX rose 0.39 percent and the French CAC 40 rose 0.72 percent while U.K. shares gained 0.02 percent.

Commodities

Commodities were mixed overnight as metals futures rallied on central bank stimulus hopes. WTI Crude futures rose 0.41 percent to $93.38 per barrel and Brent Crude futures declined 0.03 percent to $103.13 per barrel. Copper futures rose 1.05 percent to $321.95 per pound. Gold was higher and silver futures gained 1.98 percent to $24.26 per ounce.

Currencies

Currency markets were in flux overnight as broad dollar weakness was a key theme. The EUR/USD was higher at 1.3080 and the dollar fell against the yen to 97.76, while the dollar was also weaker by 0.4 percent against the pound at 1.5535. Overall, the Dollar Index fell 0.4 percent on weakness against the pound, the euro, the Swiss franc, the yen, and the Canadian dollar.

Earnings Reported Yesterday

Key companies that reported earnings Friday include:

• American Electric Power AEP reported in-line first quarter EPS of $0.80 on in-line revenue of $3.8 billion.


• Chevron CVX reported first quarter EPS of $3.18 vs. $3.06 on revenue of $54.0 billion.


• D.R. Horton DHI reported second quarter EPS of $0.32 vs. $0.19 on revenue of $1.4 billion vs. $1.26 billion forecast. Management was also extremely bullish on the second half of the year on the conference call, a positive sign for the company and the broader housing market.


• Simon Property Group SPG reported first quarter EPS of $2.05 vs. $2.00.


• V.F. Corp. VFC reported first quarter EPS of $2.43 vs. $2.18 on revenue of $2.6 billion vs. $2.64 billion forecast.

Pre-Market Movers

Stocks moving in the pre-market included:

• J.C. Penney JCP shares added a further 1.18 percent pre-market after gaining over 11 percent Friday on news that George Soros has taken nearly an 8 percent stake in the company.


• Banco Santander SAN shares rose 1.4 percent pre-market as the company fired its CEO after poor performance in a weak economy.


• Newmont Mining NEM shares rose 1.58 percent as metals prices continued to rebound ahead of the company's earnings release.


• Disney DIS shares rose 0.65 percent pre-market ahead of the summer blockbuster season with pre-sales for Iron Man 3 appearing strong.

Earnings

Notable companies expected to report earnings Monday include:

• Buffalo Wild Wings BWLD is expected to report first quarter EPS of $0.99 vs. $0.98 a year ago.


• General Growth Properties GGP is expected to report first quarter EPS of $0.24 vs. $0.22 a year ago.


• Masco MAS is expected to report first quarter EPS of $0.14 vs. $0.05 a year ago.


• Newmont Mining NEM is expected to report first quarter EPS of $0.84 vs. $1.15 a year ago.


• Riverbed Technologies RVBD is expected to report first quarter EPS of $0.24 vs. $0.20 a year ago.

Economics

On the economics calendar Monday, personal income and outlays data follows last week's GDP report as well as Pending Home Sales and the Dallas Fed Manufacturing Index. Also, the Treasury will hold its weekly 3- and 6-month bill auction. Overnight, German retail sales, Spanish GDP, and German unemployment data are expected to be released.

Good luck and good trading.