Morning Call: Global stocks mixed as the U.S. imposes $34 billion of tariffs on Chinese goods; Sep E-mini S&Ps down -0.16%; China's Shanghai Composite recovers from a 2-1/3 year low and closes up +0.49%.
Barchart.com - Fri Jul 06, 6:43AM CDT
Related Stocks
 ESU18 - S&P 500 E-Mini
SymLastChgPct
ESU182,798.25+1.75+0.06%
HGU182.7965+0.0320+1.16%
DXY0094.477-0.034-0.04%
ZNU18120-020-0-035-0.09%
GCQ181,241.1+1.4+0.11%
SIU1815.825+0.013+0.08%
CLQ1868.05-0.01-0.01%
RBQ182.0078+0.0056+0.28%
LKSD14.12-0.43-2.96%
SLCA25.88+0.04+0.15%
GCI10.15-0.11-1.07%
BIIB353.03+4.55+1.31%
DG99.13-0.37-0.37%
MANT59.59-0.01-0.02%
PSMT78.50-0.40-0.51%
SBUX50.94-0.68-1.32%
ABUS10.80-0.90-7.69%
TTI4.68-0.14-2.90%
CVEO4.46-0.10-2.19%

Overnight Markets and News

Sep E-mini S&Ps (ESU18 -0.20%) this morning are down -0.16% after the U.S. imposed $34 billion in tariffs on $34 billion of Chinese imports and President Trump said another $16 billion of tariffs could follow in two weeks. China responded by imposing higher levies on an equivalent amount of U.S. goods, which in turn could prompt the U.S. to raise trade barriers even higher. European stocks are unchanged. European equities found support on signs of strength in German industrial output after German May industrial production posted its biggest increase in 6-months. Gains were limited as mining stocks and metals producers fell after Sep COMEX copper (HGU18 -0.04%) dropped to a new 11-1/2 month low. Asian stocks settled mostly higher: Japan +1.12%, Hong Kong +0.47%, China +0.49%, Taiwan -0.03%, Australia +0.91%, Singapore -1.99%, South Korea +0.51%, India +0.23%. China's Shanghai Composite rebounded from a 2-1/3 year low and closed higher as consumer staples and health-care stocks led the overall market higher. Japanese stocks moved higher on signs of rising wages after Japan May labor cash earnings jumped +2.1% y/y, the largest increase in nearly 15 years.

The dollar index (DXY00 -0.22%) is down -0.09%. EUR/USD (^EURUSD +0.23%) is up +0.21% at a 3-week high after German May industrial production rose more than expected. USD/JPY (^USDJPY +0.03%) is down -0.02%.

Sep 10-year T-note prices (ZNU18 +0-025) are up +3 ticks.

German May industrial production rose +2.6% m/m, stronger than expectations of +0.3% m/m and the largest increase in 6 months.

Japan May labor cash earnings rose +2.1% y/y, stronger than expectations of +0.9% y/y and the biggest increase in almost 15-years.

Japan May household spending fell -3.9% y/y, weaker than expectations of -1.5% y/y and the biggest decline in 1-3/4 years.

U.S. Stock Preview

Key U.S. news today includes: (1) Jun non-farm payrolls (expected +195,000, May +233,000), (2) Jun private payrolls (expected +190,000, May +218,000), (3) Jun manufacturing payrolls (expected +15,000, May +18,000), (4) Jun unemployment rate (expected unch at 3.8%, May -0.1 to 3.8%), (5) Jun avg hourly earnings (expected +0.3% m/m and +2.8% y/y, May +0.3% m/m and +2.7% y/y), (6) Jun avg weekly hours all employees (expected unch at 34.5 hours, May unch at 34.5 hours), (7) May trade balance (expected -$43.7 billion, Apr -$46.2 billion).

Notable Russell 1000 earnings reports today include: none ($0.00).

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

Equity conferences this week: none.

Market Comments

Sep S&P 500 E-minis (ESU18 -0.20%) this morning are down -4.50 points (-0.16%). Thursday's closes: S&P 500 +0.86%, Dow Jones +0.75%, Nasdaq 100 +1.23%. The S&P 500 on Thursday closed higher due to strength in automakers on optimism for a trans-Atlantic tariff agreement after the Handelsblattt newspaper reported that German auto-industry executives met with the U.S. Ambassador to Germany who said that Washington was seeking talks with the EU on lowering car duties to zero. Stocks also found support on the +0.5 point increase in the U.S. Jun ISM non-manufacturing index to a 4-month high of 59.1, stronger than expectations of -0.3 to 58.3.

Sep 10-year T-notes (ZNU18 +0-025) this morning are up +3 ticks. Thursday's closes: TYU8 +7.50, FVU8 +3.50. Sep 10-year T-notes on Thursday closed higher and the 10-year T-note yield fell to a 5-week low on an unexpected increase in U.S. weekly jobless claims and the smaller-than-expected increase in the Jun ADP employment. T-notes held their gains on increased safe-haven demand on concern trade tensions will escalate between the U.S. and China when the U.S. levies $34 billion of tariffs on Chinese goods Friday.

The dollar index (DXY00 -0.22%) this morning is down -0.089 (-0.09%), EUR/USD (^EURUSD +0.23%) is up +0.0024 (+0.21%) at a 3-week high and USD/JPY (^USDJPY +0.03%) is down -0.02 (-0.02%). Thursday's closes: Dollar Index -0.202 (-0.21%), EUR/USD +0.0034 (+0.29%), USD/JPY +0.15 (+0.14%). The dollar index on Thursday fell to a 1-week low and closed lower after the 10-year T-note yield fell to a 5-week low, which undercut the dollar's interest rate differentials. The dollar also fell back on strength in EUR/USD which matched a 3-week high after German May factory orders rose +2.6% m/m, stronger than expectations of +1.1% m/m and the biggest increase in 5 months, which is hawkish for ECB policy.

Metals this morning are mixed with Aug gold (GCQ18 -0.25%) -3.0 (-0.24%), Sep silver (SIU18 -0.32%) -0.047 (-0.29%), and Sep copper (HGU18 -0.04%) +0.001 (+0.02%). Thursday's closes: Aug gold +5.30 (+0.42%), Sep silver +0.054 (+0.34%), Sep copper -0.910 (-3.12%). Metals on Thursday settled mixed with Aug gold at a 1-week high after the dollar index fell to a 1-week low, and on increased safe-haven demand for gold ahead of U.S. action on Friday to levy $34 billion of tariffs on Chinese goods, which may escalate into a trade war. Sep copper plunged to an 11-1/2 month low on concern that an escalation of trade tensions between the U.S. and China will lead to a trade war that curbs global economic growth and demand for industrial metals.

Aug WTI crude oil prices (CLQ18 -0.86%) this morning are down -57 cents (-0.78%) and Aug gasoline (RBQ18 -0.77%) is -0.0218 (-1.02%). Thursday's closes: Aug crude -1.20 (-1.62%), Aug gasoline +1.17 (+0.55%). Aug crude oil and gasoline on Thursday settled mixed. Energy markets found support on the fall in the dollar index to a 1-week low and on the -1.51 million bbl decline in EIA gasoline stockpiles, more than expectations of -750,000. Also, a -2.113 million bbl drop in crude supplies at Cushing, OK, to a 3-1/2 year low was supportive for energy prices. The main bearish factor was the unexpected +1.25 million bbl increase in EIA crude inventories, more than expectations for a -5.0 million bbl decline.

Overnight U.S. Stock Movers

LSC Communications (LKSD +1.18%) was downgraded to 'Underweight' from 'Neutral' at JP Morgan Chase with a price target of $14.

U.S. Silica (SLCA +0.04%) was downgraded to 'Neutral' from 'Buy' at Guggenheim.

Gannett (GCI +0.56%) was downgraded to 'Underweight' from 'Neutral' at JPMorgan Chase with a price target of $10.

Biogen (BIIB +1.81%) jumped 13% in pre-market-trading after its BAN2401 drug for treating Alzheimer's disease showed a significant slowing of disease progression in the brain during a Phase 2 trial.

Dollar General (DG +0.02%) was rated a 'Buy' at Citigroup.

ManTech International (MANT -0.02%) was upgraded to 'Buy' from 'Hold' at SunTrust Robinson Humphrey with a price target of $66.

PriceSmart (PSMT +2.24%) dropped 6% in after-hours trading after it reported Q3 net income of $18.7 million versus $18.8 million y/y.

Starbucks (SBUX -0.33%) was upgraded to 'Hold' from 'Sell' at DZ Bank AG.

Arbutus Biopharma (ABUS +9.64%) was downgraded to 'Neutral' from 'Buy' at B Riley FBR.

Tetra Technologies (TTI +1.80%) was rated a new 'Buy' at B Riley FBR with a price target of $8.

Civeo (CVEO +0.75%) rallied 8% in after-hours trading after the company won contracts worth C$100 million to provide facilities for the Coastal GasLink pipeline project in British Columbia.