Day Traders Diary
9/4/14U.S. equity futures trade modestly higher amid upbeat action overseas. The S&P 500 futures hover five points above fair value following a night filled with central bank commentary. In Asia, the Bank of Japan maintained its policy stance, which was also the approach employed by the Bank of England. However, the European Central Bank bucked the trend and lowered its interest rate corridor. The central bank cut its main refinance rate to 0.05% from 0.15%, lowered its deposit facility rate to -0.2% from -0.1%, and cut the marginal lending rate to 0.3% from 0.4%.
The ECB decision caused a retreat in the euro, sending the single currency into the 1.3050 area from 1.3130 versus the dollar. The announcement gave a boost to European equities and a short-lived bump to U.S. equity futures.
Domestically, participants are due for a full slate of economic data. The ADP Employment Change report (Briefing.com consensus 220K) will be released at 8:15 ET, while weekly initial claims (consensus 300K), July Trade Balance (consensus -$42.00 billion), and Q2 productivity (consensus 2.6%)/unit labor costs (expected 0.5%) will all be released at 8:30 ET. Finally, the ISM Services report for August (consensus 57.8) will cross the wires at 10:00 ET.
Treasuries hold modest losses with the 10-yr yield up one basis point at 2.41%.
In U.S. corporate news of note:
Ciena (CIEN 18.20, -2.26): -11.1% after its cautious revenue guidance overshadowed its bottom-line beat.
Joy Global (JOY 60.26, -1.94): -3.1% after missing estimates and lowering its guidance for the full year.
Verifone (PAY 35.40, +0.86): +2.5% after beating expectations and issuing mixed guidance.
Reviewing overnight developments:
Asian markets ended on a mostly lower note. Hong Kong's Hang Seng -0.1%, Japan's Nikkei -0.3%, and China's Shanghai Composite +0.8%.
In economic data:
South Korea's GDP was revised down to 0.5% quarter-over-quarter from 0.6% (expected 0.6%)
Australia's trade deficit narrowed to AUD1.36 billion from AUD1.56 billion (expected deficit of AUD1.51 billion) as exports grew 1.0% month-over-month, while imports were unchanged. Separately, Retail Sales increased 0.4% month-over-month (expected 0.4%; last 0.6%)
The Bank of Japan voted unanimously to maintain the current policy course, keeping its key rate between 0.0% and 0.1%. However, the central bank lowered its assessment of the housing sector.
Major European indices trade higher across the board. Germany's DAX +0.2%, Great Britain's FTSE +0.3%, and France's CAC +1.0%. Elsewhere, Italy's MIB +1.1% and Spain's IBEX +0.9%
Economic data was limited:
Eurozone Retail PMI slipped to 45.8 from 47.6
Germany's Factory Orders rose 4.6% month-over-month (expected 1.5%; last -3.2%)
French Unemployment Rate ticked up to 10.2% from 10.1%
The Bank of England kept its key interest rate and purchasing program at their respective 0.5% and GBP375 billion.
The European Central Bank cut its main refinance rate to 0.05% from 0.15%, lowered its deposit facility rate to -0.2% from -0.1%, and cut the marginal lending rate to 0.3% from 0.4%.
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