Equity futures in the US are pushing higher, following gains made in both Europe and Asia. The gains were seen after comments out of the Eurozone and China which showed that both regions are looking for ways to stimulate economic growth and positive earnings released by Best Buy. Best Buy is the biggest retailer of consumer electronics in the US and its stock rose more than 2 percent as earnings improved on increases in smart phone sales. Morgan Stanley and Citi Group helped financials with gains of nearly 1 percent but the main negative was seen with FaceBook, which dropped an additional 3.1 percent after the massive 11 percent decline that was posted yesterday. The S&P 500 is attempting to find a foothold above the 1300 level while the Dow is still seen trading above 12,500.
During the Asian session, the China Securities Journal released a story outlining the country’s governmental plans to increase funding levels and building approvals for construction and infrastructure development as a means for stimulating growth. This was the impetus for a relief rally in regional equity markets and this was matched later with comments from the German Finance Minister (Schaeuble) who said that the Eurozone leadership plans to use all available tools to ensure that Greece within the EMU, and that the main task for the Finance Ministry is to promote growth. While details were scarce, markets took this as an excuse to move back into long positions and stock prices managed to close higher on the session.
Best Buy was the biggest individual positive story of the day, and the improvement on analyst earnings estimates was indicative of a wider trend that has been seen in corporate filings for most of this year. With most of the companies in the S&P 500 surpassing analyst earnings estimates, the benchmark US index has seen gains of 4.6 percent so far in 2012, and this is even taking the large declines of the past two weeks into consideration.
Best Buy is the latest example of this trend, despite recent changes in the company’s managerial team and overall declines in stores open more than one year. The optimism spilled over into financials we well, as German Bunds dropped despite the rise in treasury markets in Spain. Ahead today, remain watchful of the US Existing Home Sales report, as well as the Interest Rate Decision from the Bank of Japan.
The EUR/USD continues to trade heavy on the longer term time frames but we are seeing something of a bounce off of the uptrend line on the monthly charts. While this is mildly encouraging, the upward momentum has been lackluster and we will need to see a break of at least 1.2950 before we can start to focus on upside targets. Support below is now seen in the 1.2660 area.
The Nikkei 225 is attempting to bounce out of the 8540 area but we still have a long way to go before a true upside correction can be claimed. The first level of resistance to watch is now seen at 8985, and a break here will suggest that the 4H downtrend is altering its course.