The US equity markets are under pressure in early action following the strong advances we have seen as of late, ahead of reports on consumer confidence and an inside look into to the August monetary policy meeting by the Federal Reserve. Treasuries are higher in morning trading amid the declines in stocks, and following a decline in US home prices. In equity news, Universal Display Corp announced that it has entered into a technology license agreement with Japan's Panasonic Idemitsu OLED Lighting Co, while Dollar General Corp reported better-than-expected 2Q results and raised its revenue outlook. Overseas, Asian stocks finished mostly higher following some upbeat news out of the US and Europe yesterday, while the equity markets in Europe are mixed in afternoon action, as UK stocks are rallying in their return from a holiday.
As of 8:56 a.m. ET, the September S&P 500 Index Globex future is 11 points below fair value, the Nasdaq 100 Index is 20 points below fair value, and the DJIA is 89 points below fair value. WTI crude oil is $0.55 lower at $86.72 per barrel, and the Bloomberg gold spot price is up $37.60 at $1,826.00 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is up 0.5% to 74.03.
Display and lighting company Universal Display Corp. (PANL $51) is higher after announcing that it has entered into a technology license agreement with Japan's Panasonic Idemitsu OLED Lighting Co, a joint venture between Panasonic Electric Works Co and Idemitsu Kosan Co. (IDKOY $25). Under the terms of the deal, PANL granted license rights under various patents to the joint venture and will receive running royalties, with a portion of the royalties repaid.
Dollar General Corp. (DG $34) reported 2Q EPS ex-items of $0.52, above the $0.48 consensus estimate of analysts surveyed by Reuters, with revenues increasing 11.2% year-over-year (y/y) to $3.6 billion, compared to the $3.5 billion that the Street had forecasted. 2Q same-store sales-sales at stores open at least a year-grew 5.9% y/y at the discount retailer. The company said it benefitted from increased customer traffic and average transaction amount, while consumables sales continued to outpace non-consumables, with the most significant growth related to changes in and further expansion of its candy and snacks, packaged foods, and perishable offerings businesses. DG raised its full-year revenue outlook.
Home prices decline, consumer confidence and Fed meeting minutes due out later
Just before the opening bell, the 20-city composite S&P/Case-Shiller Home Price Index showed a decline in home prices of 4.52% y/y in June, compared to the 4.60% drop that economists surveyed by Bloomberg had expected. Month-over-month (m/m), home prices were 0.06% lower, compared to forecasts, which called for a flat reading.
Treasuries are higher in morning action following the data, with the yield on the 2-year note down 1 bp to 0.19%, the yield on the 10-year note decreasing 7 bp to 2.19%, and the 30-year bond rate 6 bps lower at 3.53%.
Later this morning, the US economic calendar will yield the release of the Consumer Confidence Index, forecasted to deteriorate from 59.5 in July to 52.0 for August. However, the highlight of the day will likely come in afternoon action, with the release of the minutes from the August Federal Open Market Committee (FOMC) meeting at 2:00 p.m. ET. The Fed downgraded its assessment of the economy at the meeting, and surprisingly gave a timeframe for keeping the fed funds rate at an exceptionally low level, noting that economic conditions will likely warrant low rates at least through mid-2013, causing three members to dissent. Meanwhile, on Friday, Fed Chairman Ben Bernanke failed to signal at the Fed's annual gathering in Jackson Hole, Wyoming that further stimulus from the Central Bank was on the way, disappointing some. The discussion around the dissents, as well as the merits and costs of the tools at the Fed's disposal, are likely to garner close scrutiny in today's release.
Europe mixed as UK stocks rally and Italy's bond auction yields lower rates
The equity markets in Europe are mixed in afternoon action, with UK stocks moving solidly higher, catching up to yesterday's solid advance as the markets were closed on Monday for a holiday. Meanwhile, Greek stocks are under some pressure on the heels of the sharp rally yesterday that came on the news that two of the nation's banks agreed to merge to try to combat the sovereign debt crisis and slowing economic growth. Also, German and French equity markets are under some pressure following a report that showed eurozone economic confidence fell the most since December 2008, per Bloomberg, as the ongoing concerns about the region's debt crisis and signs of slowing economic growth hampered sentiment. The eurozone Economic Confidence Index fell from 103.0 in July to 98.3 for August, compared to the drop to 100.2 that economists expected. The disappointing data is overshadowing a bond auction in Italy, which showed the yield on 10-year notes declined to 5.22%, compared to 5.77% that the nation had to pay in a similar auction in July. The eased pressure on yields comes in the wake of the bond purchasing initiative that the European Central Bank began in early August.
The UK FTSE 100 Index is rising 1.8% and Switzerland's Swiss Market Index is unchanged, while France's CAC-40 Index is declining 0.2%, Germany's DAX Index is decreasing 0.9%, Italy's FTSE MIB Index is dropping 0.7%, and Greece's Athex Composite Index is falling 3.0%.
Asia boosted by solid gains in the US and Europe
Stocks in Asia finished mostly higher on the heals of the respectable gains in the US and Europe yesterday, following a bank merger in Greece and a stronger-than-forecasted read on consumer spending, which eased eurozone debt contagion and recession concerns. Japan's Nikkei 225 Index rose 1.2%, despite some mixed economic data, which showed the nation's household spending came in better than expected and retail sales rose more than projected, while the jobless rate unexpectedly increased and small business confidence declined. Meanwhile, Hong Kong's Hang Seng Index gained 1.7%, and South Korea's Kospi Index advanced 0.8%. Elsewhere, India's BSE Sensex 30 Index gained 1.6% following the release of the country's 2Q GDP, which showed a smaller-than-anticipated deceleration to a rate of 7.7% growth, after posting 7.8% expansion in 1Q, and compared to the 7.6% pace of output that was forecasted. However, Australia's S&P/ASX 200 Index inched 0.1% higher, paring an early advance following a solid decline in shares of Telstra (TLSYY $16) after a competition regulator expressed objection to the company's proposed split, and as a report showed the nation's building approvals rose a smaller rate than expected. Finally, China's Shanghai Composite Index declined 0.4%, despite a report that showed the Chinese Leading Index increased.
No comments:
Post a Comment