Morning Call: Global stocks and commodities fall on ramped up trade tensions; Sep E-mini S&Ps down -0.26%; Sep COMEX copper down -2.92% at a 1-year low.
Barchart.com - Thu Jul 19, 6:43AM CDT
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Overnight Markets and News

Sep E-mini S&Ps (ESU18 -0.27%) this morning are down -0.26% and European stocks are down -0.22% as global stocks and commodities fall on signs that world trade tensions are not going away anytime soon. China's foreign ministry said that China isn't afraid of a trade war after U.S. economic advisor Kudlow blamed Chinese President Xi Jinping for stalled trade talks, while the EU was said to prepare a new list of American goods to hit with new tariffs, which shows the global trade spat may be escalating. A sell-off in metals is undercutting miners and metal producing stocks with Aug COMEX gold (GCQ18 -0.94%) down -1.01% and Sep COMEX copper (HGU18 -2.68%) down -2.92%, both at 1-year lows. Asian stocks settled mostly lower: Japan -0.13%, Hong Kong -0.38%, China -0.53%, Taiwan -0.07%, Australia +0.28%, Singapore +1.14%, South Korea -0.19%, India -0.06%. China's Shanghai Composite fell to a 1-week low as the yuan tumbled to a 1-year low against the dollar on signs the PBOC is comfortable with the yuan's depreciation. Japanese stocks closed lower on signs that trade tensions may be starting to undercut global trade after Jun trade data showed Japanese exports and imports both rose less than expected.

The dollar index (DXY00 +0.44%) is up +0.49% at a 3-week high after the Fed's Beige Book, released Wednesday afternoon, showed that the U.S. economy was still expanding. EUR/USD (^EURUSD -0.36%) is down -0.40% at a 2-1/2 week low. USD/JPY (^USDJPY +0.13%)is up +0.16%. GBP/USD (^GBPUSD -0.58%) is down -0.70% at a 10-1/4 month low after an unexpected decline in UK Jun retail sales reduced the prospects of a BOE rate hike.

Sep 10-year T-note prices (ZNU18 -0-035) are down -5 ticks at a 3-week low on the prospects for further Fed rate hikes after Wednesday's upbeat Fed Beige Book.

UK Jun retail sales ex auto fuel unexpectedly fell -0.6% m/m, weaker than expectations of +0.1% m/m. Jun retail sales including auto fuel fell -0.5% m/m, weaker than expectations of +0.2% m/m.

The Japan Jun trade balance was in surplus by +721.4 billion yen, wider than expectations of +531.2 billion yen. Jun exports rose +5.7% y/y, weaker than expectations of +7.0% y/y. Jun imports rose +2.5% y/y, weaker than expectations of +5.3% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +6,000 to 220,000, previous -18,000 to 214,000) and continuing claims (expected -10,000 to 1.729 million, previous -3,000 to 1.739 million), (2) Jul Philadelphia Fed business outlook survey (expected +1.6 to 21.5, Jun -14.5 to 19.9), (3) USDA weekly Export Sales, (4) Jun leading indicators (expected +0.4%, May +0.2%), (5) Treasury auctions $13 billion of 10-year TIPS.

Notable S&P 500 earnings reports today include: Microsoft (consensus $1.08), Capital One (2.62), Cintas (1.67), Union Pacific (1.95), Bank of NY Mellon (1.02), Fifth Third Bancorp (0.57), KeyCorp (0.42), Nucor (2.09), Genuine Parts (1.58), Danaher (1.09), BB&T (1.01), Travelers (2.41).

U.S. IPO's scheduled to price today: Replimune Group (REPL).

Equity conferences during the remainder of this week: none.


Market Comments

Sep S&P 500 E-minis (ESU18 -0.27%) this morning are down -7.25 points (-0.26%). Wednesday's closes: S&P 500 +0.22%, Dow Jones +0.32%, Nasdaq 100 -0.19%. The S&P 500 on Wednesday rallied to a fresh 5-1/2 month high and closed higher on upbeat comments from Fed Chair Powell who said, "we do see the labor market continuing to strengthen" and no issues are "flashing red" in financial markets. In addition, Kansas City Fed President George said the economy is in "excellent" shape and firing on all cylinders. On the weaker side, U.S. Jun housing starts fell -12.3% to a 9-month low of 1.173 million, weaker than expectations of -2.2% to 1.320 million, and Jun building permits unexpectedly fell -2.2% to a 9-month low of 1.273 million, weaker than expectations of +2.2% to 1.330 million.

Sep 10-year T-notes (ZNU18 -0-035) this morning are down -5 ticks at a 3-week low. Wednesday's closes: TYU8 -2.00, FVU8 -0.75. Sep 10-year T-notes closed lower on reduced safe-haven demand for T-notes after the S&P 500 rallied to a new 5-1/2 month high. T-notes were also undercut by comments from Kansas City Fed President George who said the economy is in "excellent" shape and firing on all cylinders, which is hawkish for Fed policy. T-note prices found support on the fall in U.S. Jun housing starts and building permits to 9-month lows and the decline in inflation expectations after the 10-year T-note breakeven inflation rate fell to a 1-1/2 month low.

The dollar index (DXY00 +0.44%) this morning is up +0.469 (+0.49%) at a 3-week high, EUR/USD (^EURUSD -0.36%) is down =0.0047 (-0.40%) at a 2-1/2 week low and USD/JPY (^USDJPY +0.13%) is up +0.18 (+0.16%). Wednesday's closes: Dollar Index +0.135 (+0.14%), EUR/USD -0.0022 (-0.19%), USD/JPY -0.02 (-0.02%). The dollar index on Wednesday rose to a 2-week high and closed higher on positive economic news after Kansas City Fed President George said the economy is in "excellent" shape and firing on all cylinders and after the Fed's Beige Book reported that 10 of 12 Fed districts saw "moderate or modest growth."

Metals this morning are weaker with Aug gold (GCQ18 -0.94%) -12.4 (-1.01%) at a 1-year low, Sep silver (SIU18 -1.89%) -0.314 (-2.02%) at a 1-year low, and Sep copper (HGU18 -2.68%) -0.081 (-2.92%) at a 1-year low. Wednesday's closes: Aug gold +0.60 (+0.05%), Sep silver -0.043 (-0.28%), Sep copper +0.0130 (+0.47%). Metals prices on Wednesday settled mixed with Sep silver at a 1-year low. Metals prices were undercut by the rally in the dollar index to a 2-week high and the weaker-than-expected U.S. Jun housing starts and building permits reports that fell to 9-month lows, which is negative for copper demand. Industrial metals prices were boosted by upbeat comments on the economy from Fed Chair Powell and Kansas City Fed President George and by the rally in the S&P 500 to a 5-1/2 month high, which shows confidence in the economic outlook that may lead to increased industrial metals demand.

Aug WTI crude oil prices (CLQ18 -0.83%) this morning are down -80 cents (-1.16%) and Aug gasoline (RBQ18 -0.94%) is down -2.17 (-1.06%). Wednesday's closes: Aug crude +0.68 (+1.00%), Aug gasoline +1.83 (+0.90%). Aug crude oil and gasoline on Wednesday closed higher on the -3.165 million bbl decline in EIA gasoline inventories (vs expectations of -750,000 bbl) and the -860,000 bbl decline in crude supplies at Cushing to a 3-1/2 year low. Crude oil prices were undercut by the rally in the dollar index to a 2-week high and by the unexpected +5.84 million bbl increase in EIA crude inventories versus expectations for a -4.0 million bbl decline.

Overnight U.S. Stock Movers

eBay (EBAY +0.37%) is down more than 6% in pre-market trading after it cut its full-year net revenue estimate to $10.75 billion to $10.85 billion from a prior view of $10.9 billion to $11.1 billion, weaker than consensus of $10.95 billion.

Clorox (CLX -4.07%) was rated a new 'Sell' at UBS with a price target of $110.

Goldman Sachs (GS +0.10%) was upgraded to 'Strong Buy' from 'Market Outperform' at Vining Sparks with a price target of $285.

International Business Machines (IBM +0.72%) is up 3% in pre-market trading after it reported Q2 adjusted EPS of $3.08, higher than consensus of $3.04.

American Express (AXP +1.81%) fell 3% in after-hours trading after it reported Q2 revenue of $10.00 billion, below consensus of $10.07 billion and said Q2 consolidated expenses rose 7% y/y to $7.1 billion.

PTC (PTC -0.39%) dropped 4% in after-hours trading after it forecast Q4 revenue of $318 million to $323 million, well below consensus of $327.3 million.

Alcoa (AA -0.12%) fell 2% in after-hours trading after it cut its full-year adjusted Ebitda estimate to $3.0 billion-$3.2 billion from a prior view of $3.5 billion-$3.7 billion, citing tariffs that are causing "significant" headwind to earnings.

Century Aluminum (CENX +0.88%) slid nearly 3% in after-hours trading on negative carry-over from the action by Alcoa to cut its full-year earnings estimate.

Lions Gate Entertainment (@symbolPercentChange(LGF/B)) rose 2% in after-hours trading after it was upgraded to a 'Buy' from 'Hold' at SunTrust Robinson Humphrey with a price target of $27.

Resources Connection (RECN +0.29%) fell nearly 4% in after-hours trading after it reported Q4 EPS of 12 cents, well below consensus of 28 cents.

Noodles & Co (NDLS -2.07%) rallied more than 5% in after-hours trading after it reported Q2 revenue of $117.4 million, better than consensus of $114.3 million, and the raised its full-year revenue forecast to $450 million to $455 million, the midpoint above consensus of $451 million.

Datawatch (DWCH -3.00%) jumped 15% in after-hours trading after it reported Q3 revenue of $12.9 million, better than consensus of $11.8 million.

Sportsman's Warehouse Holdings (SPWH -2.97%) lost 2% in after-hours trading after holders offered 2.8 million shares of the company's stock via D.A. Davidson.