Overnight Markets and News

Jun E-mini S&Ps this morning (ESM18 -0.27%) are down -0.15% and European stocks are down -0.15% on growth concerns amid higher interest rates. German Q1 GDP grew at a slower than expected pace and Eurozone Mar industrial production rose less than expected, while weakness in government debt markets continued for a second day. The 10-year German bund yield rose to a 2-week high of 0.631% on negative carry-over from Monday's hawkish comments from ECB Board member Villeroy de Galhau who said he expects an increase in interest rates next year after bond purchases end this year. Losses were contained on strength in energy stocks with Jun WTI crude oil (CLM18 +0.83%) up +0.92%, just below the recent 3-1/2 year high. The markets will watch for comments on trade talks today between U.S. Treasury Secretary Mnuchin and Chinese Vice Premier Liu He in Washington. Asian stocks settled mostly lower: Japan -0.21%, Hong Kong -1.23%, China +0.57%, Taiwan -0.71%, Australia -0.61%, Singapore -0.62%, South Korea -0.87%, India -0.04%. China's Shanghai Composite bucked the weakness in Asian markets and rose to a 1-month high on signs of strength in manufacturing activity after China Apr industrial production rose +7.0% y/y, the largest increase in 10-months.

The dollar index (DXY00 +0.40%) is up +0.22% as an increase in the 10-year T-note yield to a 2-week high of 3.01% boosts the dollar's interest rate differentials. EUR/USD (^EURUSD -0.30%) is down -0.21%. USD/JPY (^USDJPY +0.25%) is up +0.21%.

Jun 10-year T-note prices (ZNM18 -0-065) are down -5 ticks at a 2-week low.

Eurozone Mar industrial production rose +0.5% m/m, weaker than expectations of +0.7% m/m.

The German May ZEW expectations of economic growth was unch at -8.2, right on expectations.

German Q1 GDP rose +0.3% q/q and +2.3% y/y, weaker than expectations of +0.4% q/q and +2.4% y/y.

China Apr industrial production rose +7.0% y/y, stronger than expectations of +6.4% y/y and the largest increase in 10-months.

China Apr retail sales rose +9.4% y/y, weaker than expectations of +10.0% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) Dallas Fed President Robert Kaplan (non-voter) discusses the outlook for the energy market and the economy to the Council on Foreign Relations, (2) May Empire manufacturing survey general business conditions (expected -0.8 to 15.0, Apr -6.7 to 15.8), (3) Apr retail sales (expected +0.3% and +0.5% ex autos, Mar +0.6% and +0.2% ex autos), (4) Mar business inventories (expected +0.1%, Feb +0.6%), (5) May NAHB housing market index (expected unch at 69, Apr -1 to 69), (6) Richard Clarida, nominated to be Fed vice chairman, and Michelle Bowman, nominated to be Fed governor, appear for their confirmation hearings before the Senate Banking Committee, (7) San Francisco Fed President John Williams (voter) speaks to the Economic Club of Minnesota.

Notable Russell 2000 earnings reports today include: Home Depot (consensus $2.05), PetIQ (0.05), Roadrunner Transportation, WageWorks (0.42), National Vision Holdings (0.39), AZZ (0.53), Oncocyte Corp (-0.11).

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

Equity conferences this week: MUFG Securities Houston Energy Tour on Mon, MoffettNathanson Media & Communications Summit on Mon-Tue, Bank of America Merrill Lynch Transportation Conference on Tue, Bank of America Merrill Lynch Global Mining Metals & Steel Conference on Tue, Barclays Insurance Forum on Tue, Evercore ISI Global Auto Conference on Tue, Barclays Americas Select Franchise Conference on Tue-Wed, Citi Global Energy & Utilities Conference on Tue-Wed, Goldman Sachs Basic Materials Conference on Tue-Wed, Needham Emerging Tech Conference on Tue-Wed, Tudor, Pickering, Holt & Co. Hotter N Hell Energy Conference on Tue-Wed, Bank of America Merrill Lynch Health Care Conference on Tue-Thu, JP Morgan Global Technology, Media and Communications Conference on Tue-Thu, Stephens Energy Executive Summit on Wed, BMO Capital Markets Farm to Market Conference on Wed-Thu, Capital Link Closed-End Funds and Global ETFs Forum on Thu.

Market Comments

June S&P 500 E-minis (ESM18 -0.27%) this morning are down -4.00 points (-0.15%). Monday's closes: S&P 500 +0.09%, Dow Jones +0.27%, Nasdaq +0.17%. The S&P 500 on Monday rallied to a 1-3/4 month high and closed higher on optimism that the U.S. and China might be able to resolve their trade differences after President Trump tweeted that he and Chinese President Xi Jinping are working together to give China's ZTE Corporation, which had been cut off from doing business with its U.S. suppliers, "a way to get back into business fast." Stocks were also supported by comments from Cleveland Fed President Mester said "the global economy overall is healthy" and the outlook is pretty positive."

June 10-year T-notes (ZNM18 -0-065) this morning are down -5 ticks at a 2-week low. Monday's closes: TYM8 -5.00, FVM8 -1.50. Jun 10-year T-notes on Monday closed lower on negative carry-over from a slide in 10-year German bund prices to a 2-week low and on reduced safe-haven demand with the rally in the S&P 500 to a 1-3/4 month high.

The dollar index (DXY00 +0.40%) this morning is up +0.200 (+0.22%). EUR/USD (^EURUSD -0.30%) is down -0.0025 (-0.21%). USD/JPY (^USDJPY +0.25%) is up +0.23 (+0.21%). Monday's closes: Dollar Index +0.050 (+0.05%), EUR/USD -0.0016 (-0.13%), USD/JPY +0.27 (+0.25%). The dollar index on Monday recovered from a 1-1/2 week low and closed higher on the increase in T-note yields, which improves the dollar's interest rate differentials, and on upbeat comments from Cleveland Fed President Mester saying that "the global economy overall is healthy" and the outlook is pretty positive.

Metals prices this morning are mixed with Jun gold (GCM18 -0.87%) -9.5 (-0.72%), Jul silver (SIN18 -1.50%) -0.220 (-1.32%), and Jul copper (HGN18 -0.34%) +0.005 (+0.16%). Monday's closes: Jun gold -2.50 (-0.19%), Jul silver -0.107 (-0.64%), Jul copper -0.0185 (-0.59%). Metals on Monday closed lower on the rally in the S&P 500 to a 1-3/4 month high, which reduced the safe-haven demand for precious metals. Copper prices were undercut by increased copper supplies after LME copper inventories jumped by +8,900 MT.

Jun WTI crude oil prices (CLM18 +0.83%) this morning are up +65 cents (+0.92%) and Jun gasoline (RBM18 +0.40%) is +0.0116 (+0.53%). Monday's closes: Jun crude +0.26 (+0.37%), Jun gasoline +0.0114 (+0.52%). Jun crude oil and gasoline on Monday closed higher with Jun gasoline at a 3-1/2 year nearest-futures high. Crude oil prices were supported by instability in the Middle East that could lead to disruption of crude exports from the region, and on the increase in the crack spread to a 7-3/4 month high, which provides incentive for refiners to boost crude purchases to refine the crude into gasoline.

Overnight U.S. Stock Movers

Home Depot (HD +0.40%) is down more than 2% in pre-market trading after it said Q1 comparable sales rose +4.2%, weaker than consensus of +5.6%, and reported Q1 revenue of $24.9 billion, below consensus of $25.2 billion.

Spotify Technology SA (SPOT +2.04%) was rated a new 'Sell' at Loop Capital Markets with a price target of $120.

Altair Engineering (ALTR -0.57%) climbed 3% in after-hours trading after it boosted its 2018 revenue forecast to $369 million-$373 million from a Mar 21 estimate of $362 million-$366 million.

KLA-Tencor (KLAC +1.49%) was rated a new 'Outperform' at Cowen with a price target of $140.

Agilent Technologies (A -0.35%) dropped over 7% in after-hours trading after it forecast Q3 revenue of $1.19 billion to $1.21 billion, the midpoint below consensus of $1.21 billion.

Advanced Energy (AEIS +0.68%) was rated a new 'Outperform' at Cowen with a price target of 78$.

Mimecast Ltd (MIME -2.06%) climbed nearly 6% in after-hours trading after it forecast full-year adjusted Ebitda of $49.0 million to $51.0 million, better than consensus of $37.6 million.

MKS Instruments (MKSI +1.10%) was rated a new 'Outperform' at Cowen with a price target of 135$.

Atlantica Yield (AY -0.25%) may open to the downside this morning after it reported late Monday Q1 revenue of $225.3 million, weaker than consensus of $228.5 million.

Myers Industries (MYE -2.86%) tumbled over 8% in after-hours trading after it announced that it had commenced an underwritten public offering of 3.75 million shares of its common stock.

Hollysys (HOLI +1.19%) may open to the downside this morning after it reported late Monday that it sees full-year revenue of $500 million to $530 million, the midpoint below consensus of $521.7 million.

GrafTech (EAF +0.80%) was rated a new 'Buy' at Citigroup with a price target of 22$.

Switch (SWCH +0.91%) fell over 8% in after-hours trading after it reported Q1 adjusted Ebitda of $46.9 million, weaker than consensus of $49.5 million.

Vipshop Holdings Ltd (VIPS -0.13%) sank nearly 18% in after-hours trading after it forecast Q2 revenue of 20.5 billion yuan to 21.3 billion yuan, weaker than consensus of 21.37 billion yuan.

Pfenex (PFNX -10.29%) rallied over 16% in after-hours trading after it announced positive top-line study results of its PF708 drug on osteoporosis patients and said it is on track to submit a new drug application in Q3.

Restoration Robotics (HAIR +14.06%) tumbled nearly 12% in after-hours trading after it reported Q1 revenue of $5.0 million, below consensus of $5.9 million.