Overnight Markets And News

Jun E-mini S&Ps (ESM18 +0.53%) this morning are up +0.58% and European stocks are up +0.02% at a 2-1/2 month high as global government bond yields soften. Also, technology stocks recovered from their 3-day steep decline led by a +3 gain in SAP SE after Europe's biggest software company raised its sales outlook for the year to 25.3 billion euros from 25.1 billion euros. In addition, strength in energy stocks is giving the overall market a boost with Jun WTI crude oil (CLM18 +0.26%) up +0.71%. Gains in European stocks were limited after the German Apr IFO business confidence fell more than expected to a 1-1/4 year low. Asian stocks settled mixed: Japan +0.86%, Hong Kong +1.26%, China +1.99%, Taiwan -1.10%, Australia +0.60%, Singapore +0.14%, South Korea -0.64%, India +0.48%. China's Shanghai Composite climbed to a 1-week high on signs the government may ease its tightening campaign to boost domestic growth. In a statement released by state media following a Politburo meeting led by Chinese President Xi Jinping, the government mentioned the need to boost domestic demand for the first time since 2015 and dropped a reference to deleveraging on concern trade and debt risks could hit economic growth. Japanese stocks moved higher, led by a rally in exporters after USD/JPY climbed to a 2-1/4 month high, which boosts exporters' earnings prospects.

The dollar index (DXY00 -0.07%) is down -0.03%. EUR/USD (^EURUSD +0.05%) is up +0.02%. USD/JPY (^USDJPY+0.10%) is up +0.12% at a 2-1/4 month high.

Jun 10-year T-note prices (ZNM18 +0-005) are unchanged.

The German Apr IFO business climate fell -1.2 to a 1-1/4 year low of 102.1, weaker than expectations of -0.4 to 102.8.

UK Mar public sector net borrowing unexpectedly fell -0.3 billion pounds, weaker than expectations of +1.3 billion pounds.

U.S. Stock Preview

Key U.S. news today includes: (1) Feb FHFA house price index (expected +0.6% m/m, Jan +0.8% m/m), (2) Feb S&P CoreLogic composite-20 home price index (expected +0.68% m/m and +6.35% y/y, Jan +0.75% m/m and +6.4% y/y), (3) Mar new home sales (expected +1.9% to 630,000, Feb -0.6% to 618,000), (4) Apr Richmond Fed manufacturing index (expected +1 to 16, Mar -13 to 15), (5) Conference Board Apr U.S. consumer confidence (expected -1.7 to 126.0, Mar -2.3 to 127.7), (6) Treasury auctions $32 billion of 2-year T-notes.

Notable S&P 500 earnings reports today include: Caterpillar (consensus $2.10), Xerox (0.73), PulteGroup (0.45), Harley-Davidson (1.02), Fifth Third Bancorp (0.48), Coca-Cola (0.46), Travelers (2.67), Verizon (1.11), Lockheed Martin (3.40), 3M (2.50), NextEra Energy (1.82), Freeport-McMoRan (0.56), PACCAR (1.31), Texas Instruments (1.10), Equity Residential (0.77), Chubb (2.25), Navient (0.41), Boston Properties (1.50), Amgen (3.21), Wynn Resorts (2.94), Capital One (2.32), Robert Half (0.74).

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

Equity conferences this week: American Academy of Neurology Meeting on Mon-Fri, Capital Link Singapore Maritime Forum on Tue.

Market Comments

June S&P 500 E-minis (ESM18 +0.53%) this morning are up +15.50 points (+0.58%). Monday's closes: S&P 500 +0.01%, Dow Jones -0.06%, Nasdaq -0.28%. The S&P 500 on Monday closed little changed. Stocks were supported by hopes that the U.S. and China can resolve their trade differences after U.S. Treasury Secretary Mnuchin said he's "cautiously optimistic" about reaching an agreement on trade with China. Stocks were also supported by the +1.1% increase in U.S. Mar existing home sales to 5.60 million, stronger than expectations of +0.2% to 5.55 million. Stocks were undercut by weakness in technology stocks as Apple fell for a fourth session to a 2-1/4 month low. Stocks were also undercut by higher interest rates as the 10-year T-note yield rose to a 4-1/4 year high of 2.99%.

June 10-year T-notes (ZNM18 +0-005) this morning are unch. Monday's closes: TYM8 -7.00, FVM8 -3.50. Jun 10-year T-notes on Monday fell to a contract low and the 10-year T-note yield rose to a 4-1/4 year high of 2.99%. T-note prices were undercut by supply pressures as the Treasury auctions $113 billion of T-notes and floating rate notes this week and by comments from San Francisco Fed President Williams said it "makes sense" to keep raising interest rates through next year given improvement in the economy. T-note prices were also undercut by increased inflation expectations as the 10-year T-note breakeven inflation rate rose to a new 3-1/2 year high.

The dollar index (DXY00 -0.07%) this morning is down -0.026 (-0.03%). EUR/USD (^EURUSD +0.05%) is up +0.0003 (+0.02%). USD/JPY (^USDJPY +0.10%) is up +0.13 (+0.12%) at a new 2-1/4 month high. Monday's closes: Dollar Index +0.630 (+0.70%), EUR/USD -0.0079 (-0.64%), USD/JPY +1.05 (+0.98%). The dollar index on Monday climbed to a 3-month high and closed higher on the jump in the 10-year T-note yield to a 4-1/4 year high, which improves the dollar's interest rate differentials. There was also weakness in EUR/USD which fell to a 1-1/2 month low after the Eurozone Apr Markit manufacturing PMI fell -0.6 to a 14-month low of 56.0, which is dovish for ECB monetary policy. USD/JPY rallied to a 2-1/4 month high after BOJ Governor Kuroda said "the Bank of Japan must continue very strong accommodative monetary policy for some time."

Metals prices this morning are higher with Jun gold (GCM18 +0.29%) +3.2 (+0.24%), May silver (SIK18 +0.14%) +0.013 (+0.08%), and May copper (HGK18 +1.67%) +0.048 (+1.54%). Monday's closes: Jun gold -14.30 (-1.07%), May silver -0.576 (-3.36%), May copper -0.0245 (-0.78%). Metals on Monday closed lower with Jun gold at a 2-week low. Metals price were undercut by the rally in the dollar index to a 3-month high and by reduced geopolitical risks that reduced the safe-haven demand for precious metals after North Korean leader Kim Jong Un said his country would suspend tests of atomic bombs and intercontinental ballistic missiles.

Jun WTI crude oil prices (CLM18 +0.26%) this morning are up +49 cents (+0.71%) and Jun gasoline (RBM18 +0.02%) is +0.0059 (+0.28%). Monday's closes: Jun crude +0.24 (+0.35%), Jun gasoline +0.271 (+1.29%). Jun crude oil and gasoline on Monday closed higher on Middle East tensions after Houthi rebels in Yemen launched missiles against Saudi Arabia, and by the increase in the crack spread to a 7-month high, which gives incentive to refiners to increase their crude purchases to refine the crude into gasoline. Crude oil prices were undercut by the rise in the dollar index to a 3-month high.

Overnight U.S. Stock Movers

Alphabet (GOOGL -0.33%) rose +0.5% in after-hours trading after it reported Q1 sales of $24.9 billion, better than consensus of $24.3 billion.

Cardinal Health (CAH +0.24%) was upgraded to 'Outperform' from 'Market Perform' at Leerink Partners LLC.

Whirlpool (WHR +0.64%) slid 2% in after-hours trading after it reported Q1 net sales of $4.91 billion, below consensus of $4.95 billion.

Incyte (INCY -0.42%) dropped 5% in after-hours trading after an FDA advisory committee voted 5-10 against approving a 4mg dose of Incyte's Olumiant for rheumatoid arthritis from a 2 mg dose and asked for more clinical data on blood-clotting safety risks.

O'Reilly Automotive (ORLY +0.50%) was rated a new 'Outperform' at Wells Fargo Securities with a price target of $260.

CAI International (CAI -1.61%) was rated a new 'Buy' at Compass Point Research & Trading LLC with a price target of $36.

TD Ameritrade Holding (AMTD -0.05%) lost almost 2% in after-hours trading after it reported Q1 adjusted EPS of 73 cents, weaker than consensus of 74 cents.

Tivity Health (TVTY -1.50%) sold-off over 18% in after-hours trading after it reported Q1 revenue of $149.9 million, weaker than consensus of $154.4 million.

Carvana (CVNA +2.01%) dropped 6% in after-hours trading after it filed to sell 6 million shares of its common stock via Wells Fargo, Citigroup and Deutsche Bank Securities.

Sanmina (SANM +0.36%) rallied 15% in after-hours trading after it reported Q2 sales of $1.68 billion, better than consensus of $1.64 billion, and then forecast Q3 adjusted EPS of 53 cents to 61 cents, the midpoint above consensus of 55 cents.

Cadence Design Systems (CDNS -0.76%) jumped over 11% in after-hours trading after it reported Q1 adjusted EPS of 44 cents, higher than consensus of 37 cents, and then forecast full-year adjusted EPS of $1,57 to $1.65, stronger than consensus of $1.56.

Trimble (TRMB -1.20%) rose nearly 5% in after-hours trading after it acquired Viewpoint from Bain Capital in a deal valued at $1.2 billion.

Epizyme (EPZM -3.47%) plunged over 20% in after-hours trading when the FDA issued a partial clinical hold on the trial of Epizyme's Tazemetostat after a safety report of a pediatric patient who developed a secondary lymphoma while taking the drug.

Bed Bath & Beyond (BBBY +1.28%) was rated a new 'Underperform' at Wells Fargo Securities with a price target of $16.