Morning Call: Global stocks recover; Sep E-mini S&Ps up +0.29%; EU agrees on migration reforms; EUR/USD up +0.71%; Shanghai Composite closes up +2.17%. - Fri Jun 29, 6:40AM CDT
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 ESU18 - S&P 500 E-Mini

Overnight Markets and News

Sep E-mini S&Ps (ESU18 +0.35%) this morning are up +0.29% and European stocks are up +1.05% as global stocks rebound from this week's declines. European markets and EUR/USD received a boost after EU leaders agreed on a migration package as members agreed to increase border security, set up holding centers to handle asylum seekers, and to speed up the process of determining whether people have the right to asylum. The deal eases a standoff between Italy and the rest of the EU. Also, strength in the German economy lifted equity prices after German unemployment fell for the 12th consecutive month in June. Stock prices fell back from their best levels after Axios reported that U.S. President Trump said he wants to withdraw the U.S. from the World Trade Organization. Asian stocks settled mostly higher: Japan +0.15%, Hong Kong +1.81%, China +2.17%, Taiwan +1.71%, Australia -0.33%, Singapore +0.34%, South Korea +0.47%, India +1.10%. Chinese stocks rose, and the yuan strengthened for the first time this week after the PBOC said it will use comprehensive policy tools to keep economic developments steady and stabilize market expectations. Japanese stocks moved higher on stronger-than-expected Japanese economic data on May industrial production and a decline in Japan's jobless rate to a 25-1/2 year low. Japanese exporters also moved higher after USD/JPY climbed to a 2-week high.

The dollar index (DXY00 -0.61%) is down -0.51%. EUR/USD (^EURUSD +0.72%) is up +0.71%. USD/JPY (^USDJPY +0.14%) is up +0.14% at a 2-week high.

Sep 10-year T-note prices (ZNU18 +0-010) are up +0.5 of a tick.

Eurozone Jun CPI rose +2.0% y/y, right on expectations and matched Feb 2017 as the biggest increase in 5-1/2 years. Jun core CPI rose +1.0% y/y, right on expectations.

German Jun unemployment fell -15,000 to 2.342 million, stronger than expectations of -8,000. The Jun unemployment rate was unch at a record low of 5.2% (data from 1990), right on expectations.

The Japan May jobless rate unexpectedly fell -0.3 to a 25-1/2 year low of 2.2%, better than expectations of no change at 2.5%. The May job-to-applicant ratio rose +0.01 to a 44-1/3 year high of 1.60, stronger than expectations of no change at 1.59.

Japan May industrial production fell -0.2% m/m, stronger than expectations of -1.0% m/m.

U.S. Stock Preview

Key U.S. news today includes: (1) May personal spending (expected +0.4%, Apr +0.6%) and May personal income (expected +0.4%, Apr +0.3%), (2) May PCE deflator (expected +0.2% m/m and +2.2% y/y, Apr +0.2% m/m and +2.0% y/y) and May core PCE deflator (expected +0.2% m/m and +1.9% y/y, Apr +0.2% m/m and +1.8% y/y), (3) Jun Chicago PMI (expected -2.7 to 60.0, May +5.1 to 62.7), (4) revised-Jun University of Michigan U.S. consumer sentiment index (expected -0.3 to 99.0, prelim-Jun +1.3 to 99.3), (5) USDA Q2 quarterly stocks and U.S. planted acreage.

Notable Russell 1000 earnings reports today include: Constellation Brands (consensus $2.43).

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

Equity conferences this week: GSMA Mobile World Congress Shanghai on Fri.

Market Comments

Sep S&P 500 E-minis (ESU18 +0.35%) this morning are up +8.00 points (+0.29%). Thursday's closes: S&P 500 +0.62%, Dow Jones +0.41%, Nasdaq 100 +0.89%. The S&P 500 on Thursday recovered from a 1-month low and closed higher on strength in technology stocks after President Trump dialed back his plan for restricting Chinese investment in the U.S. There was also strength in energy stocks due to the +0.95% rally in crude oil prices. Stocks were undercut by the downward revision in U.S. Q1 GDP to 2.0% from 2.2% (q/q annualized), the +9,000 increase in U.S. weekly jobless claims (vs expectations of +2,000), and some continued uncertainty about what the U.S. will announce on Friday regarding foreign investment restrictions in U.S. technology.

Sep 10-year T-notes (ZNU18 +0-010) this morning are up +0.5 of a tick. Thursday's closes: TYU8 -6.50, FVU8 -3.75. Sep T-notes on Thursday fell back from a 4-week high and closed lower on reduced safe-haven demand after the S&P 500 recovered from a 1-month low and closed higher. T-note prices were also undercut by the surge in crude oil prices to a new 3-1/2 year high, which boosted inflation expectations.

The dollar index (DXY00 -0.61%) this morning is down -0.483 (-0.51%), EUR/USD (^EURUSD +0.72%) is up +0.0082 (+0.71%) and USD/JPY (^USDJPY +0.14%) is up +0.15 (+0.14%). Thursday's closes: Dollar Index +0.118 (+0.12%), EUR/USD +0.0015 (+0.13%), USD/JPY +0.23 (+0.21%). The dollar index on Thursday closed higher on the increase in T-note yields, which boosted the dollar's interest rate differentials. There was also weakness in the Chinese yuan which dropped to a 7-1/4 month low against the dollar after ongoing U.S.-China trade tensions sent the Shanghai Stock Index down to a fresh 2-year low.

Metals this morning are higher with Aug gold (GCQ18 +0.09%) +0.9 (+0.07%), July silver (SIN18 +0.28%) +0.049 (+0.31%), and July copper (HGN18 +0.22%) +0.006 (+0.19%). Thursday's closes: Aug gold -5.10 (-0.41%), Jul silver -0.200 (-1.24%), Jul copper -0.310 (-1.04%). Metals on Thursday sold off with Aug gold and Jul silver at 6-1/2 month lows and Jul copper at a 6-3/4 month nearest-futures low. Metals prices were undercut by continued fund selling of gold as long gold positions in ETF's dropped to a 2-3/4 month low Wednesday, and by the ongoing trade tensions that threaten to derail the global economy and demand for industrial metals.

Aug WTI crude oil prices (CLQ18 -0.15%) this morning are down -20 cents (-0.27%) and Aug gasoline (RBQ18 +0.87%) is +0.0199 (+0.95%) at a 3-1/2 week high. Thursday's closes: Aug crude +0.69 (+0.95%), Aug gasoline -0.48 (-0.23%). Aug crude oil and gasoline on Thursday settled mixed with Aug crude at a new 3-1/2 year nearest-futures high. Crude oil prices were boosted by a weaker dollar and positive carryover from Wednesday's EIA data that showed a -9.89 million bbl plunge in EIA crude inventories to a 5-month low and a -2.713 million bbl decline in crude supplies at Cushing, the delivery point of WTI futures. Crude oil prices were undercut as the crack spread slid to a 4-1/4 month low, which reduces the incentive for refiners to purchase crude oil to refine into gasoline.

Overnight U.S. Stock Movers

KB Home (KBH +1.68%) was upgraded to 'Buy' from 'Underperform' at Bank of America/Merrill Lynch with a price target of $37.

JPMorgan Chase (JPM +1.64%) gained more than 1% in after-hours trading after it said it will increase its quarterly dividend to 80 cents a share from 56 cents a share, well above consensus of 68 cents a share, and then said it will buy back up to $20.7 billion of its stock between July 1, 2018 and June 30,2019.

SYNNEX (SNX -0.75%) fell 4% in after-hours trading after it forecast Q3 adjusted EPS of $2.42 to $2.52, the midpoint well below consensus of $2.57.

Nike (NKE +0.49%) rose almost 6% in after-hours trading after it reported Q4 EPS of 69 cents, higher than consensus of 64 cents.

Ryder System (R -0.33%) was rated a new 'Buy' at Mizuho Securities with a price target of $85.

Citigroup (C +2.17%) gained 2% in after-hours trading after it said it will boost its quarterly dividend to 45 cents a share from 32 cents, better than estimates of 41 cents, and then said it plans to buy back up to $17.6 billion of its stock.

Wells Fargo (WFC +0.66%) climbed almost 3% in after-hours trading after it boosted its quarterly dividend to 43 cents a share from the current 39 cents a share, and then said it will buy back up to $24.5 billion of its stock.

Allison Transmission Holdings (ALSN unch) was rated a new 'Buy' at Mizuho Securities with a price target of $50.

KB Home (KBH +1.68%) rose more than 3% in after-hours trading after it reported Q2 revenue of $1.10 billion, higher than consensus of $1.04 billion.

Huntington Bancshares (HBAN +0.07%) gained more than 2% in after=hours trading after it said it plans to boost its quarterly dividend by 27% and buyback up to $1 billion of its stock.

Gemphire Therapeutics (GEMP -5.07%) surged nearly 60% in after-hours trading after it said its Gemcabene drug achieved the primary endpoint of reducing triglycerides in its Phase 2b trial in patients with severe hypertriglyceridemia.

Ziopharm Oncology (ZIOP +1.66%) climbed almost 4% in after-hours trading after it enrolled the first patient in its Phase I study of its Ad-RTS-hIL-12 plus veledimex in combination with Bristol-Myer-Squib's OPDIVO drug for adult patients with recurrent glioblastoma.