Morning Call: U.S. and European stocks climb as strength in crude prices boosts energy stocks; Sep E-mini S&Ps up +0.47%; Aug WTI crude oil up +1.14% as OPEC and its allies meet in Vienna.
Barchart.com - Fri Jun 22, 6:42AM CDT
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Overnight Markets and News

Sep E-mini S&Ps (ESU18 +0.43%) this morning are up +0.47% and European stocks are up +0.79%, led by strength in energy stocks with Aug WTI crude oil (CLQ18 +1.40%) up +1.14%. Crude oil prices rose on the outlook for a smaller-than-expected increase in OPEC crude production levels when OPEC and its allies meet in Vienna today. Saudi Arabia is pushing for a +600,000 bpd increase in output by OPEC and its allies, less than Russia's proposal for a +1.5 million bpd increase, in order to appease Iran and Venezuela. European stock also found support on an unexpected increase in the Eurozone Jun Markit composite PMI, which reduces economic concerns. Asian stocks settled mixed: Japan -0.78%, Hong Kong +0.15%, China +0.49%, Taiwan -0.38%, Australia -0.11%, Singapore -0.38%, South Korea +0.89%, India +0.73%. China's Shanghai Composite recovered from a fresh 2-year low and closed higher on reports of stock buying from state-sponsored funds.

The dollar index (DXY00 -0.10%) is down -0.27% at a 1-week low. EUR/USD (^EURUSD +0.34%) is up +0.33% at a 1-week high. USD/JPY (^USDJPY +0.18%) is up +0.15%.

Sep 10-year T-note prices (ZNU18 -0-035) are down -3.5 ticks as the rally in stocks curbs safe-haven demand for government debt.

The Eurozone Jun Markit composite PMI unexpectedly rose +0.7 to 54.8, stronger than expectations of -0.2 to 53.9.

The Eurozone Jun Markit manufacturing PMI fell -0.5 to 55.0, right on expectations and the slowest pace of expansion in 1-1/2 years.

The German Jun Markit/BME manufacturing PMI fell -1.0 to 55.9, weaker than expectations of -0.6 to 56.3 and the slowest pace of expansion in 1-1/2 years.

Japan May national CPI rose +0.7% y/y, stronger than expectations of +0.6% y/y. May national CPI ex fresh food rose +0.7% y/y, right on expectations. May national CPI ex fresh food & energy rose +0.3% y/y, right on expectations.

Japan May nationwide department store sales fell -2.0% y/y, the biggest decline in 1-1/2 years.

U.S. Stock Preview

Key U.S. news today includes: (1) Jun Markit manufacturing PMI (expected -0.3 to 56.1 May -0.1 to 56.4) and Jun Markit services PMI (expected -0.3 to 56.5, May +2.2 to 56.8), (2) USDA May Cold Storage, (3) USDA May Cattle on Feed, (4) OPEC meeting in Vienna.

Notable Russell 1000 earnings reports today include: Carmax (consensus $1.24).

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

Equity conferences this week: none.

Market Comments

Sep S&P 500 E-minis (ESU18 +0.43%) this morning are up +13.00 points (+0.47%). Thursday's closes: S&P 500 -0.63%, Dow Jones -0.80%, Nasdaq 100 -0.87%. The S&P 500 on Thursday closed lower on carry-over weakness from a slide in European stocks led by losses in automakers after Daimler AG cut its full-year earnings forecast, citing U.S.-China trade tensions that worsened the outlook for global trade and growth. There was also some weakness in technology stocks after the U.S. Supreme Court ruled that states can collect sales taxes from online retailers. Stocks were also undercut by the -14.5 point decline in the U.S. Jun Philadelphia Fed business outlook index to a 1-1/2 year low of 19.9, weaker than expectations of -5.4 to 29.0.

Sep 10-year T-notes (ZNU18 -0-035) this morning are down -3.5 ticks. Thursday's closes: TYU8 +8.0, FVU8 +5.00. Sep 10-year T-notes on Thursday closed higher on carry-over support from a rally in German 10-year bunds to a 3-week high and on weaker than expected U.S. economic data on Apr FHFA house prices and the Jun Philadelphia Fed business outlook index.

The dollar index (DXY00 -0.10%) this morning is down -0.252 (-0.27%) at a 1-week low, EUR/USD (^EURUSD +0.34%) is up +0.0038 (+0.33%) at a 1-week high and USD/JPY (^USDJPY +0.18%) is up +0.16 (+0.15%). Thursday's closes: Dollar Index -0.312 (-0.33%), EUR/USD +0.0032 (+0.28%), USD/JPY -0.37 (-0.34%). The dollar index on Thursday closed lower on the slump in stocks, which undercut USD/JPY on increased safe-haven demand for the yen. The dollar was also undercut by the slide in the U.S. Jun Philadelphia Fed business outlook index to a 1-1/2 year low of 19.9, which is dovish for Fed policy.

Metals this morning are higher with Aug gold (GCQ18 +0.04%) +0.7 (+0.06%), July silver (SIN18 +0.55%) +0.099 (+0.61%), and July copper (HGN18 +0.65%) +0.022 (+0.71%). Thursday's closes: Aug gold -4.00 (-0.31%), Jul silver +0.017 (+0.10%), Jul copper -1.90 (-0.62%). Metals on Thursday settled mixed with Aug gold at a 6-month low and Jul silver at a 1-1/2 month low. Metals prices were undercut by recent dollar strength that has prompted long liquidation from funds as long gold positions in ETFs fell to a 2-1/4 month low Wednesday. Metals prices were also undercut by concern the ongoing U.S.-China trade tensions will slow global economic growth that diminishes demand for industrial metals. Metals recovered from their worst levels after the dollar index retreated from a 11-1/4 month high and moved lower.

Aug WTI crude oil prices (CLQ18 +1.40%) this morning are up +75 cents (+1.14%) and Aug gasoline (RBQ18 +1.27%) is +0.0187 (+0.94%). Thursday's closes: Aug crude -0.17 (-0.26%), Aug gasoline -1.52 (-0.76). Aug crude oil and gasoline on Thursday closed lower with Aug gasoline at a 2-1/4 month low. Crude oil prices were undercut by expectations for OPEC and its allies to agree on a crude production increase at Friday's meeting in Vienna, and by the decline in the crack spread to a 1-1/2 month low, which reduces incentive for refiners to purchase crude to refine into gasoline. Crude prices recovered from their worst levels after the dollar index fell back from an 11-1/4 month high and moved lower.

Overnight U.S. Stock Movers

Dollar General (DG +0.68%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James with a price target of $115.

United Rentals (URI -5.26%) was upgraded to 'Buy' from 'Neutral' at UBS with a price target pf $196.

Ollies Bargain Outlet Holdings (OLLI +3.43%) was downgraded to 'Underperform' from 'Neutral' at Bank of America/Merrill Lynch with a price target of $68.

Red Hat (RHT -2.06%) tumbled 10% in after-hours trading after it lowered guidance on full-year revenue to $3.38 billion to $3.41 billion from a prior view of $3.43 billion to $3.46 billion.

Texas Instruments (@symbolPercentChange(TXN ))was rated a new 'Buy' at Loop Capital Markets with a price target of $135.

Alteryx (@symbolPercentChange(AYX ))was rated a new 'Outperform' at Oppenheimer with a price target of $48.

Bristol-Myers Squibb (BMY -0.57%) gained nearly 1% in after-hours trading after the FDA accepted the company's application for Opdivo plus low-dose Yervoy for the treatment on non-small cell lung cancer in patients with tumor mutational burden.

Semtech (SMTC +2.20%) was rated a new 'Buy' at Loop Capital Markets with a price target of $60.

G-III Apparel Group Ltd (GIII +0.56%) was rated a new 'Buy' at Needham & Co with a price target of $53.

Smart Global Holdings (SGH -1.70%) reported Q3 sales of $335.5 million, better than consensus of $331.4 million, and said it sees Q4 revenue of $360 million to $380 million, stronger than consensus of $348.6 million.

Tandem Diabetes Care (TNDM -1.79%) climbed more than 5% in after-hours trading after the FDA approved its t:slim X2 insulin pump with Basal-1Q technology.

Container Store Group (TCS +0.69%) slid almost 4% in after-hours trading after it filed to sell 32.5 million shares of common stock from holders including Green Equity Investors.