Morning Call For Friday, March 2

OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 -0.45%) this morning are down -0.50% and European stocks are down -1.57% at a 2-week low. Stocks are falling on concern economic growth and global trade may suffer because of the planned U.S. tariffs on foreign metal imports. European Commission President Juncker said Europe will respond "firmly" to any new duties. An unexpected decline in German Jan retail sales also pressured European stocks. The slump in equities has fueled safe-haven demand for government debt as the 10-year T-note yield fell to a 3-week low of 2.79% and the German 10-year bund yield dropped to a 5-week low of 0.607%. Asian stocks settled lower: Japan -2.50%, Hong Kong -1.48%, China -0.59%, Taiwan -0.81%, Australia -0.74%, Singapore -0.99%, South Korea -1.44%, India closed for holiday. Asian stocks tumbled due to trade concerns as the Nikkei Stock Index fell to a 2-week low. A surge in the yen to a 1-1/4 year high against the dollar also undercut Japanese stocks after BOJ Governor Kuroda said the BOJ will start thinking about how to exit QE around 2019.

The dollar index (DXY00 -0.44%) is down -0.38%. EUR/USD (^EURUSD) is up +0.33%. USD/JPY (^USDJPY) is down -0.76% at a 1-1/4 year low after BOJ Governor said the BOJ may exit its stimulus program next year.

Jun 10-year T-note prices (ZNM18 -0.05%) are down -0.5 of a tick.

BOJ Governor Kuroda said "members of the policy board and I think that prices will move to reach our 2% target in around 2019" so the BOJ will start thinking about how to exit its monetary stimulus program around the fiscal year starting in Apr 2019.

The Japan Jan jobless rate fell -0.3 to a 24-3/4 year low of 2.4%, better than expectations of no change at 2.8%. The Jan job-to-applicant ratio was unch at 1.59, weaker than expectations of +0.01 to 1.60.

Eurozone Jan PPI of +0.4% m/m and +1.5% y/y was slightly weaker than expectations of +0.4% m/m and +1.6% y/y with the +1/5% y/y gain the smallest year-on-year increase in 14 months.

German Jan retail sales unexpectedly fell -0.7% m/m, weaker than expectations of +0.7% m/m.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) revised-Feb University of Michigan U.S. consumer sentiment index (expected -0.4 to 99.5, prelim-Feb +4.2 to 99.9).

Notable Russell 1000 earnings reports today include: Foot Locker (consensus $1.29).

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

Equity conferences this week: none.

OVERNIGHT U.S. STOCK MOVERS

WalMart (WMT -1.03%) was downgraded to 'Perform' from 'Outperform' at Oppenheimer due to gross margin headwinds and cost pressures.

ICU Medical (ICUI -3.52%) rose 4% in after-hours trading after it reported Q4 adjusted EPS of $2.98, well above consensus of $1.04, and then said it sees full-year adjusted EPS of $6.60 to 7.30, higher than consensus of $6.49.

Splunk (SPLK +0.47%) rallied 6% in after-hours trading after it reported Q4 revenue of $419.7 million, better than consensus of $390.7 million, and said it sees Q1 revenue of $295 million to $297 million, higher than consensus of $294.8 million.

Nektar Therapeutics (NKTR -2.32%) climbed almost 4% in after-hours trading after it reported a Q4 loss per share of -21cents, narrower than consensus of -36 cents.;

Microchip Technology (MCHP +0.10%) rose 5% in after-hours trading after it bought Microsemi for $8.35 billion. Microsemi MSCC=}) also rallied 5% on the news.

Nordstrom (JWN -1.62%) lost nearly 4% in after-hours trading after it reported Q4 gross margin of +35.6%, below consensus of +36.0%.

Ambarella (AMBA -5.01%) gained 4% in after-hours trading after it reported Q4 adjusted EPS of 45 cents, above consensus of 37 cents.

The Gap (GPS +0.38%) climbed nearly 9% in after-hours trading after it reported Q4 adjusted EPS of 61 cents, better than consensus of 59 cents, and forecast full-year EPS of $2.55 to $2.70, above consensus of $2.41.

Pure Storage (PSTG +0.51%) slumped 9% in after-hours trading after it said it sees Q1 adjusted gross margins 63.5%-66.5%, the midpoint below consensus of 65.7%.

Intrexon (XON -0.92%) jumped 7% in after-hours trading after it reported Q4 revenue of $77.0 million, well above consensus of $48.2 million.

American Outdoor Brands (AOBC +4.56%) sank 16% in after-hours trading after it reported Q3 net sales of $157.4 million, weaker than consensus of $172.4 million, and said it sees full-year adjusted EPS of 31 cents to 33 cents, well below consensus of 60 cents.

Babcock & Wilcox Enterprises (BW -4.25%) plunged over 15% in after-hours trading after it reported Q4 revenue of $408.1 million, weaker than consensus of $431.7 million.

Southwestern Energy ({=SWN =}) rose almost 5% in after-hours trading after it reported Q4 adjusted EPS of 12 cents, higher than consensus of 9 cents.

OPKO Health (OPK -6.19%) tumbled almost 13% in after-hours trading after it reported a Q4 loss of -38 cents a share, a much wider loss than consensus of -8 cents a share.

MARKET COMMENTS

Mar S&P 500 E-mini stock futures (ESH18 -0.45%) this morning are down -13.50 points (-0.50%). Thursday's closes: S&P 500 -1.33%, Dow Jones -1.68%, Nasdaq -1.52%. The S&P 500 on Thursday fell to a 2-week low and closed lower on trade concerns after President Trump said that he will impose a 25% tariff on steel imports and a 10% tariff on aluminum imports, which risked the possibility of starting a trade war. There was also weakness in energy stocks after crude oil prices fell -1.95% to a 2-week low. Stocks found support from the unexpected decline in U.S. weekly jobless claims by -10,000 to a 48-year low of 210,000, and the unexpected +1.7-point increase in the U.S. Feb ISM manufacturing index to a 13-3/4 year high of 60.8, stronger than expectations of -0.4 to 58.7.

Jun 10-year T-note prices (ZNM18 -0.05%) this morning are down -0.5 of a tick. Thursday's closes: TYM8 +18.00, FVM8 +12.25. Jun 10-year T-notes on Thursday rallied to a 2-1/2 week high and closed higher on President Trump's announcement of tariffs on steel and aluminum, which risked starting a trade war that could result in weaker U.S. and global economic growth. T-notes were also supported by carry-over support from a rally in German bunds to a 1-month high, by comments from Fed Chair Powell who said he sees no signs the U.S. economy is overheating, and by increased safe-haven demand with the slide in stocks.

The dollar index (DXY00 -0.44%) this morning is down -0.339 (-0.38%). EUR/USD (^EURUSD) is up +0.0041 (+0.33%) and USD/JPY (^USDJPY) is down -0.81 (-0.76%) at a 1-1/4 year low. Thursday's closes: Dollar Index -0.289 (-0.32%), EUR/USD +0.0073 (+0.60%), USD/JPY -0.44 (-0.41%). The dollar index on Thursday retreated from a 1-1/2 month high and closed lower on the slump in stocks, which boosted safe-haven demand for the yen and sent USD/JPY down to a 1-week low. The dollar was also undercut by the decline in the 10-year T-note yield to 3-week low, which reduces the dollar's interest rate differentials. The dollar was boosted by the stronger-than-expected U.S. economic data on weekly jobless claims and the Feb ISM manufacturing index, which was hawkish for Fed policy.

Apr crude oil (CLJ18 -0.46%) this morning is down -34 cents (-0.56%) and Apr gasoline (RBJ18 -1.09%) is -0.0230 (-1.21%). Thursday's closes: Apr WTI crude -0.65 (-1.05%), Apr gasoline -0.0282 (-1.47%). Apr crude oil and gasoline on Thursday fell to 2-week lows and closed lower on negative carry-over from Wednesday's EIA data that showed a +0.1% increase in U.S. crude production to a record high of 10.283 million bpd and the fall in the crack spread to a 1-week low, which reduces the incentive for refiners to purchase crude oil to refine into gasoline.

Metals prices this morning are higher with Apr gold (GCJ18 +1.39%) +17.9 (+1.37%), May silver (SIK18 +1.10%) +0.179 (+1.10%), and May copper (HGK18 +0.26%) +0.007 (+0.22%). Thursday's closes: Apr gold -12.7 (-0.96%), May silver -0.131(-0.80%), May copper -0.0095 (-0.30%). Metals on Thursday closed lower with Apr gold at a 2-month low, May silver at a 2-1/2 month low and May copper at a 2-week low. Metals prices were undercut by the early rally in the dollar index to a 1-1/2 month high and by the stronger-than-expected U.S. economic data on weekly jobless claims and Feb ISM manufacturing, which was hawkish for Fed policy. Metals recovered from their worst levels after Fed Chair Powell said he sees no signs the U.S. economy is overheating, which may keep the Fed on a gradual pace of monetary tightening.