Morning Call: U.S. and European stocks fall on escalation of trade tensions; Sep E-mini S&Ps down -0.23%; Euro Stoxx 50 down -0.34%; Shanghai Composite closes up +2.05%.
Barchart.com - Fri Jul 20, 6:38AM CDT
Related Stocks
 ESU18 - S&P 500 E-Mini
SymLastChgPct
ESU182,940.45s+6.45+0.22%
DXY0095.665+0.090+0.09%
ZNU18118-275s-0-040-0.11%
GCQ181,204.5s-2.9-0.24%
SIU1814.305s-0.093-0.65%
HGU182.8070s+0.0035+0.12%
CLU1867.35s+0.92+1.38%
RBU182.1437s+0.0002+0.01%
YUMC32.61-0.24-0.73%
MSFT110.71-0.29-0.26%
ISRG542.91unchunch
COF91.48-0.15-0.16%
SWKS88.38-0.32-0.36%
GE12.19+0.09+0.74%
CE99.75-0.28-0.28%
EXPO48.47-0.21-0.43%
KDP23.93+0.04+0.17%
SMTC50.85-0.52-1.01%
PTCT39.73+0.03+0.08%
SKX26.69-0.06-0.22%
ZYNE7.43-0.14-1.85%
LOAN6.23+0.13+2.13%
FTD2.35-0.03-1.26%

Overnight Markets and News

Sep E-mini S&Ps (ESU18 -0.16%) this morning are down -0.23% and European stocks are down -0.34% on escalation of trade tensions after President Trump told CNBC this morning that he's "ready to go to" with $500 billion in new tariffs on Chinese goods. European automakers also tumbled after German Chancellor Merkel said the European Union is ready to retaliate against any U.S. auto tariffs. Asian stocks settled mostly higher: Japan -0.29%, Hong Kong +0.76%, China +2.05%, Taiwan +0.89%, Australia +0.37%, Singapore +0.62%, South Korea +0.35%, India +0.40% . China's Shanghai Composite fell to a 1-week low as the yuan sank to a new 1-year low against the dollar. However, Chinese stocks recovered and lifted most other Asian bourses as the Shanghai Stock Index reversed course and rallied to a 1-week high after a 21st Century Business Herald report said that Chinese mutual funds will be allowed to buy non-standard products. Japanese stocks closed lower after a stronger yen undercut exporter stocks.

The dollar index (DXY00 -0.10%) is down -0.07%. EUR/USD (^EURUSD +0.15%) is up +0.07%. USD/JPY (^USDJPY -0.06%) is down -0.03%.

Sep 10-year T-note prices (ZNU18 -0-015) are little changed, down -0.5 of a tick.

Japan Jun national CPI rose +0.7% y/y, weaker than expectations of +0.8% y/y. Jun national CPI ex fresh food rose +0.8.% y/y, right on expectations. Jun national CPI ex fresh food & energy rose +0.2% y/y, weaker than expectations of +0.4% y/y and the smallest pace of increase in 8 months.

German Jun PPI rose +0.3% m/m and +3.0% y/y, right on expectations with the +3.0% y/y gain the largest year-on-year increase in 9 months.

U.S. Stock Preview

Key U.S. news today includes: (1) St. Louis Fed President James Bullard (non-voter) speaks on the U.S. economy and monetary policy at the Glasgow Chamber of Commerce in Glasgow, KY, (2) USDA Jun Cattle on Feed.

Notable S&P 500 earnings reports today include: GE (consensus $0.18), Honeywell (2.01), Rockwell Collins (1.87), Citizens Financial (0.85), Stanley Black (2.02), Regions Financials (0.33), Suntrust Banks (1.31), Baker Hughes (0.14), VF Corp (0.33), Schlumberger (0.43), State St (2.01), Kansas City Southern (1.51).

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week: none.


Market Comments

Sep S&P 500 E-minis (ESU18 -0.16%) this morning are down -6.50 points (-0.23%). Thursday's closes: S&P 500 -0.40%, Dow Jones -0.53%, Nasdaq 100 -0.51%. The S&P 500 on Thursday closed lower on concern about an escalation of US/China trade tensions after U.S. economic adviser Kudlow blamed Chinese President Xi Jinping for stalled trade talks and China's response was that it is not afraid of a trade war. There was also weakness in mining stocks and commodity producers after the price of gold, silver and copper all fell to 1-year lows. Stocks found support on positive economic data with the unexpected decline in U.S. weekly jobless claims by -8,000 to a 48-1/2 year low of 207,000 and the +5.8 point increase in the U.S. Jul Philadelphia Fed business outlook index to 25.7 (stronger than expectations of +1.6 to 21.5).

Sep 10-year T-notes (ZNU18 -0-015) this morning are down -0.5 of a tick. Thursday's closes: TYU8 +7.50, FVU8 +4.50. Sep 10-year T-notes on Thursday recovered from a 3-week low and moved up to a 1-week high and closed higher. T-note prices were boosted by the decline in stocks, which boosted the safe-haven demand for T-notes, and by reduced inflation expectations after the 10-year T-note breakeven inflation rate fell to a 1-1/2 month low. A bearish factor was the stronger-than-expected U.S. economic data on weekly jobless claims and the July Philadelphia Fed business outlook survey.

The dollar index (DXY00 -0.10%) this morning is down -0.068 (-0.07%), EUR/USD (^EURUSD +0.15%) up +0.0008 (+0.07%) and USD/JPY (^USDJPY -0.06%) is down -0.03 (-0.03%). Thursday's closes: Dollar Index +0.074 (+0.08%), EUR/USD -0.0022 (-0.19%), USD/JPY -0.02 (-0.02%). The dollar index on Thursday climbed to a 1-year high and closed higher on the unexpected decline in U.S. weekly initial unemployment claims to a 48-1/2 year low, which is hawkish for Fed policy. There was also weakness in the yuan which fell to a 1-year low against the dollar. The dollar gave up most of its advance after President Trump said a strong dollar puts the U.S. at a "disadvantage."

Metals this morning are mixed with Aug gold (GCQ18 -0.03%) +0.1 (+0.01%), Sep silver (SIU18 -0.24%) -0.022 (-0.14%), and Sep copper (HGU18 +1.08%) +0.029 (+1.08%). Thursday's closes: Aug gold -3.90 (-0.32%), Sep silver -0.172 (-1.10%), Sep copper -0.0645 (-2.34%). Metals on Thursday sold off to 1-year lows on the rally in the dollar index to a 1-year high. There was also fund selling of industrial metals on concern that an escalation of trade tensions between the U.S. and China will curb economic growth that reduces demand for industrial metals.

Sep WTI crude oil prices (CLU18 -0.21%) this morning are down -21 cents (-0.31%) and Sep gasoline (RBU18 +0.37%) is +0.0060 (+0.30%). Thursday's closes: Sep crude +0.49 (+0.72%), Sep gasoline -0.24 (-0.12%). Sep crude oil and gasoline on Thursday settled mixed. Crude oil prices were boosted by reduced crude supplies after Saudi Arabia said its Aug crude oil exports will decline by -100,000 bpd. Crude oil prices were also boosted by comments from Saudi OPEC governor Adeeb Al-Aama who said claims that Saudi Arabia will oversupply the oil market are "without basis" and that it "does not try to push oil into the market beyond its customers' needs." Crude oil prices were undercut by the rally in the dollar index to a 1-year high and by the decline in the crack spread to a 1-week low, which reduces incentive for refiners to purchase crude oil to refine into gasoline.

Overnight U.S. Stock Movers

Yum China (YUMC -2.20%) was downgraded to 'Underperform' from 'Neutral' at Bank of America/Merrill Lynch with a price target of $34.

Microsoft (MSFT -0.68%) is up more than 3% in pre-market trading after it reported Q4 revenue of $30.09 billion, better than consensus of $29.22 billion.

Intuitive Surgical (ISRG -1.25%) climbed more than 4% in after-hours trading after it reported Q2 adjusted EPS of $2.76, higher than consensus of $2.49.

Capital One Financial (COF -1.77%) gained more than 1% in after-hours trading after it reported Q2 adjusted EPS of $3.22, well above consensus of $2.63.

Skyworks Solutions (SWKS +0.44%) rallied more than 4% in after-hours trading after it reported Q3 adjusted EPS of $1.64, higher than consensus of $1.60.

General Electric (GE -0.15%) climbed nearly 3% in pre-market trading after it reported Q2 revenue of $30.1 billion, higher than consensus of $29.38 billion.

Celanese (CE -0.88%) moved up nearly 5% in after-hours trading after it reported Q2 adjusted EPS of $2.90, well above consensus of $2.43, and then forecast full-year adjusted EPS of $10.50 to $10.75, stronger than consensus of $9.65.

Exponent (EXPO +0.20%) fell more than 2% in after-hours trading after it reported Q2 EPS of 34 cents, below consensus of 46 cents.

Keurig Dr Pepper (KDP -1.45%) may initially open higher this morning after Mondelez reported a 13.8% stake in the company.

Semtech (SMTC +0.10%) was rated a new 'Buy' at Stifel with a price target of $60.

PTC Therapeutics (PTCT +4.46%) jumped 9% in after-hours trading after it acquired Agilis in a cash and stock deal worth about $200 million.

Skechers (SKX +1.84%) sank more than 20% in after-hours trading after it reported Q2 EPS of 29 cents, weaker than consensus of 41 cents, and then forecast Q3 EPS to be between 50 cents and 55 cents, well below consensus of 68 cents.

Zynerba Pharmaceuticals (ZYNE +2.36%) fell more than 16% in after-hours trading after it announced that it intends to offer $30 million of its common stock in an underwritten public offering.

Manhattan Bridge Capital (LOAN +1.42%) slipped almost 5% in after-hours trading after it announced that it proposing to offer its common stock in an underwritten public offering, although no size was given.

FTD Cos (FTD +1.35%) dropped 6% in after-hours trading after President and CEO John Walden stepped down effective immediately after the company reported Q2 preliminary revenue of $299 million, much weaker than expectations of $321.5 million.