#PreMarket Primer: Friday, December, 6: US GDP Could Be A Facade

On Thursday, the Commerce Department released GDP data which showed that from July to September, the US economy expanded by 3.6 percent. The figure, much higher than the expected 2.8 percent estimate, was likely fueled by increasing stockpiles. The data showed that businesses boosted their inventories to their highest levels in 15 years, which will likely translate into softer GDP in the fourth quarter as inventory growth will likely decline. Many saw the GDP figure as an incomplete picture of the US' economic health, saying that softer domestic demand was masked by the high number.

Top News

• The European Central Bank elected to maintain its current interest rate of 0.25 percent at its policy meeting on Thursday. Following the meeting, bank President Mario Draghi said the ECB was working to find a way to ensure that its policy changes trickle down to the households and businesses that need them most. Draghi also reiterated that the bank was “ready and able to act” if inflation within the bloc continues to drop.
• In a statement to parliament, UK Treasury chief George Osborne said he saw the UK's economy growing quickly and government borrowing decreasing over the next few years. Osborne underscored the importance of maintaining its austerity programs as the UK grows in order to shrink the government's debts and keep public finances safe.
• Although China doesn't plan to revise its newly declared air defense zone, many think the nation could soften some of its regulations in order to diffuse tension surrounding the decision. The US has backed down from its originally disapproving stance under the understanding that China will not police the area in a way that is dangerous to pilots or passengers.
• Standard & Poor's cut its rating for Qantas Airways to BB+, one level below investment grade, shortly following the airline's announcement of record losses and 1,000 job cuts. The carriers stock price plummeted to its lowest level since July 2012 following the announcement.

Asian Markets

Asian markets were mostly lower to end the week, the Shanghai composite lost 0.44 percent and the South Korean KOSPI was down 0.22 percent. The Japanese NIKKEI and Hong Kong's Hang Seng index were among the few indexes that gained with the NIKKEI up 0.81 percent and the Hang Seng index up 0.13 percent.

European Markets

European markets were mostly higher, the UK's FTSE gained 0.32 percent and the eurozone's STOXX 600 was up 0.36 percent. The German DAX rose 0.54 percent and France's CAC 40 was up 0.36 percent.

Commodities

Energy futures were mixed on Friday, Brent futures were up 0.41 percent and WTI futures lost 0.07 percent. Gold lost 0.31 percent and silver was down 0.61 percent. Industrial metals were mixed with aluminum down 0.79 percent and copper up 0.12 percent.

Currencies

The euro lost 0.06 percent to the dollar but the pound gained 0.12 percent against the greenback. The dollar was up 0.35 percent against the yen and 0.07 percent against the Australian dollar.

Earnings

Notable earnings released on Thursday included:

• Kroger Company KR reported third quarter EPS of $0.53 on revenue of $22.50 billion, compared to last year's EPS of $0.46 on revenue of $21.81 billion.
• UTI Worldwide Inc. UTIW reported a third quarter loss of $0.09 per share on revenue of $1.15 billion, compared to last year's EPS of $0.16 on revenue of $1.13 billion.
• Dollar General Corporation DG reported third quarter EPS of $0.72 on revenue of $4.38 billion, compared to last year's EPS of $0.63 on revenue of $3.96 billion.

Pre-Market Movers

Stocks moving in the Premarket included:

• PPL Corp PPL gained 1.26 percent in premarket trade after falling 1.82 percent on Thursday
• General Motors Co GM gained 1.05 percent in premarket trade after fising 0.98 percent on Thursday
• Dollar General DG gained 0.84 percent in premarket trade after jumping 6.10 percent on Thursday
• Gap Inc. GAP lost 0.60 percent in premarket trade after falling 1.30 percent over the past week.

Earnings

Notable earnings expected on Friday include:

• American Eagle Outfitters, Inc. AEO is expected to report third quarter EPS of $0.19 on revenue of $846.75 million, compared to last year's EPS of $0.41 on revenue of $901.37 million.
• Big Lots, Inc. BIG is expected to report a third quarter loss of $0.08 on revenue of $1.17 billion, compared to last year's loss of $0.10 on revenue of $1.13 billion.
• Bank of Nova Scotia BNS is expected to report fourth quarter EPS of $1.31 on revenue of $5.37 billion, compared to last year's EPS of $1.21 on revenue of $4.94 billion.

Economics

US nonfarm payrolls data will be the star of the show on Friday as investors look for fresh clues about the heath of the US economy and the Federal Reserve's taper time line. Other notable releases include the US unemployment rate, German factory orders and the French trade balance.

For a recap of Thursday's market action, click here.

<p>Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin <a> http://optionshouse.benzinga.com/pre-market-show/ />here</a>.</p>