U.S. equity futures traded slightly lower ahead of the Employment Situation Report early Friday as Japanese shares continued to approach bear market territory. The Nikkei Index briefly traded in bear market territory, meaning the index declined 20 percent from the highs, before rebounding to close down only fractionally.
Top News
In other news around the markets:
- The Bundesbank cut its 2013 and 2014 growth forecasts overnight and now sees 0.3 percent growth in 2013 and 1.5 percent growth in 2014 vs. 0.4 percent and 1.9 percent previously. The cut comes as the Bundesbank sees a drop in exports occurring in the second half of the year and sees Q2 growth remaining strong before "dropping off in the second half."
- European Central Bank Governor Ewald Nowotny spoke this morning saying that the bank is discussing a whole range of unconventional monetary policy measures, however no action will be taken just yet. The comments reflect those of President Draghi from Thursday in his press conference.
- Japan's Government Pension Allocation Fund hinted that it will buy more domestic stocks overnight as the world's largest pension fund plans to move out of domestic bonds and into domestic stocks. The fund has over $1 trillion in assets.
- S&P 500 futures declined 1.4 points to 1,621.30.
- The EUR/USD was lower at 1.3231.
- Spanish 10-year government bond yields rose 2 basis points to 4.7 percent.
- Italian 10-year government bond yields rose 2 basis points to 4.37 percent.
- Gold fell 0.35 percent to $1,410.90 per ounce.
Asian shares were once again lower overnight as Japanese weakness continues to weigh on regional equities. The Japanese Nikkei Index dropped 0.21 percent while the broader Topix Index declined 1.29 percent. In China, the Shanghai Composite Index fell 1.33 percent and the Hang Seng Index declined 1.21 percent in Hong Kong. Also, the Korean Kospi fell 1.8 percent as the government downwardly revised its first quarter GDP growth and Australian shares shed 0.91 percent.
European Markets
European shares were mostly higher in early trade save for German equities which declined on the Bundesbank's revised outlook. The Spanish Ibex Index rose 0.18 percent and the Italian FTSE MIB Index gained 0.56 percent. Meanwhile, the German DAX fell 0.1 percent as the French CAC rose 0.33 percent and U.K. shares added 0.13 percent.
Commodities
Commodities were mixed as energy futures continued their rise early Friday. WTI Crude futures gained 038 percent to $95.12 per barrel and Brent Crude futures rose 0.46 percent to $104.09 per barrel. Copper futures gained 0.21 percent to $332.60 per pound. Gold was lower and silver futures dropped 0.41 percent to $22.62 per ounce.
Currencies
Currency markets reverted back to dollar strength except for against the yen overnight. The EUR/USD was lower at 1.3231 and the dollar fell 0.86 percent against the yen to 96.14. Overall, the Dollar Index fell 0.03 percent on weakness against the yen despite gains against the euro and the pound. Notably, the Australian dollar dropped more than 1 percent against the greenback and fell almost 2 percent against the yen.
Earnings Reported Yesterday
Key companies that reported earnings Thursday include:
- Cooper Companies reported second quarter EPS of $1.52 vs. $1.38 expected on revenue of $384.00 million.
- CIENA Corp. (CIEN) reported second quarter EPS of $0.02 vs. an expected loss of $0.01 per share on revenue of $507.7 million vs. $483.34 million expected.
- Quiksilver (ZQK) reported a second quarter loss of $0.12 per share vs. expected EPS of $0.04 on revenue of $458.7 million vs. $505.4 million expected.
- Mad Catz ( MCZ) reported a fourth quarter loss of $0.04 per share vs. an expected profit of $0.04 per share.
- J.M. Smucker (NYSE: SJM) reported fourth quarter EPS of $1.29 vs. $1.15 expected on revenue of $1.34 billion, in line with expectations.
- Titan Machinery (NASDAQ: TITN) reported a first quarter loss of $0.02 per share, in line with expectations, as revenues were $441.7 million vs. $441.78 million expected.
Stocks moving in the pre-market included:
- Quiksilver (NYSE: ZQK) shares declined 10.04 percent on weak second quarter results.
- Cooper Companies (NYSE: COO) shares gained 2.54 percent pre-market as the company beat earnings expectations and raised guidance.
- AT&T (NYSE: T) shares declined 0.34 percent pre-market despite the company reaffirming its full year outlook after the close Thursday.
- TiVo (NASDAQ: TIVO) shares rose 2.55 percent pre-market on reports that the company has settled a DVR dispute with Google (NASDAQ: GOOG), however the company would not make an official statement on the matter.
Notable companies expected to report earnings Friday include:
- JinkoSolar Holdings (NYSE: JKS) is expected to report a first quarter loss of $0.07 per share vs. a loss of $0.38 per share a year ago.
On the economics calendar Friday, the Employment Situation Report is due out. Non-Farm Payrolls are expected to have gained 165 thousand in May, the same as in April, with private payrolls gaining 175 thousand. The unemployment rate is expected to remain flat at 7.5 percent after declining from 7.9 percent over the past three months.
Elsewhere, Canada's employment report is due out followed by Mexico's interest rate decision and the consumer credit report is set to be released at 3 pm eastern. Friday night, Chinese trade data is due out.
BY Matthew Kanterman