Wednesday, July 18, 2018

07/18/2018 - **Overnight Markets and News**

**Overnight Markets and News**

Sep E-mini S&Ps (ESU18 -0.04%) this morning are up +0.01% at a 5-1/2 month high and European stocks are up +0.63% at a 1-month high.  A rally in automakers is leading the overall market higher after people with knowledge of the matter said European Commission President Juncker will meet President Trump next Tuesday to explore the possibility of starting negotiations on reducing car tariffs.  Gains in Sep E-mini S&Ps were limited on weakness in technology stocks, led by a -0.5% decline in Alphabet in pre-market trading, after it was fined $5 billion by the EU.  GBP/USD tumbled to a 10-1/4 month low after UK Jun CPI came in weaker-than-expected.  Asian stocks settled mixed: Japan +0.43%, Hong Kong -0.23%, China -0.39%, Taiwan +0.59%, Australia +0.67%, Singapore +0.03%, South Korea -0.14%, India -0.40%.  Chinese stocks moved lower as the yuan dropped to an 11-1/4 month low against the dollar.  The Nikkei Stock Index rallied to a 1-month high on strength in exporters after USD/JPY rose to a new 6-1/4 month high, which improves the earnings prospects of exporters.

The dollar index (DXY00 +0.38%) is up +0.33% at a 2-week high on upbeat comments from Kansas City Fed President George who said the U.S. economy is in "excellent" shape and firing on all cylinders.  EUR/USD (^EURUSD -0.34%) is down -0.36% at a 2-week low after Eurozone Jun core CPI was revised lower.  USD/JPY (^USDJPY +0.09%) is up +0.11% at a 6-1/4 month high on central bank divergence after Fed Chair Powell said Tuesday the Fed will continue to gradually raise interest rates while the BOJ continues its QE program.

Sep 10-year T-note prices (ZNU18 +0-020) are up +1.5 ticks.

Kansas City Fed President George said the economy is in "excellent" shape, firing on all cylinders, and that "the Fed's large holdings of Treasury securities may be keeping longer-term rates below where they otherwise would be, and, therefore, distorting the signal from the yield curve."

Eurozone Jun core CPI was revised lower to +0.9% y/y from the previously reported +1.0% y/y.

UK Jun CPI was unch m/m and rose +2.4% y/y, weaker than expectations of +0.2% m/m and +2.% y/y.  Jun core CPI rose +1.9% y/y, weaker than expectations of +2.1 y/y and the slowest pace of increase n 15-months.

The UK May house price increase rose +4.0% y/y, weaker than expectations of +3.7% y/y and the smallest pace of increase in 4-3/4 years.


**U.S. Stock Preview**

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous up +2.5% to 372.6 with purchase sub-index up +6.5% to 261.5 and refi sub-index down -3.8% to 958.5), (2) Jun housing starts (expected -2.2% to 1.320 million, May +5.0% to 1.350 million), (3) Fed Chair Jerome Powell speaks on monetary policy and the state of the economy before the House Financial Services Committee, (4) EIA weekly Petroleum Status Report, (5) Fed Beige Book.

Notable S&P 500 earnings reports today include: Morgan Stanley (consensus $1.11), Amex (1.82), IBM (3.04), eBay (0.51), Abbott Labs (0.71), Northern Trust (1.63), Textron (0.70), WW Grainger (3.71), United Rentals (3.43), Kinder Morgan (0.20).

U.S. IPO's scheduled to price today: DERMAdoctor (DDOC), AFG Holdings (AFGL), First Western Financial (MYFW), Constellation Pharmaceuticals (CNST), Establishment Labs Holdings (ESTA), Allakos Inc (ALLK), Tilray (TLRY).

Equity conferences during the remainder of this week: Sprott Natural Resource Symposium on Wed, 64th ISTH (International Society on Thrombosis and Haemostasis) Conference on Wed.


**Overnight U.S. Stock Movers**

Alphabet (GOOG +1.26%) is down -0.5% in pre-market trading after the EU was said to fine the company 4.3 billion euros ($5 billion) over apps for Android mobile devices.

Morgan Stanley (MS +0.57%) rose 3% in pre-market trading after it reported Q2 FICC sales and trading revenue of $1.40 billion, better than consensus of $1.24 billion.

BorgWarner (BWA +1.81%) was upgraded to 'Outperform' from 'Market Perform' at Wells Fargo Securities with a price target of $56.

Equinix (EQIX -0.30%) was rated a new 'Outperform' at BMO Capital Markets with a price target of $526.

CSX Corp (CSX +0.69%) climbed almost 3% in after-hours trading after it reported Q2 revenue of $3.10 billion, better than consensus of $3.01 billion.

Mellanox Technologies Ltd (MLNX +0.89%) gained more than 1% after it reported Q2 revenue of $268.5 million, above consensus of $263.3 million, and then forecast Q3 revenue of $270 million to $280 million, higher than consensus of $269.8 million.

United Continental (UAL +0.50%) rose 3% in after-hours trading after it reported Q2 adjusted EPS of $3.23, higher than consensus of $3.06.

Healthcare Services Group (HCSG -0.80%) fell nearly 7% in after-hours trading after it reported Q2 revenue of $503.7 million, weaker than consensus of $508.6 million.

Sonic Automotive (SAH +1.24%) dropped 11% in after-hours trading after it said preliminary Q2 adjusted EPS will be 32 cents to 36 cents, weaker than consensus of 49 cents, and then lowered its full-year adjusted EPS forecast to $1.90 to $2.00, below consensus of $2.26.

Cara Therapeutics (CARA +2.08%) sild more than 4% in after-hours trading after it announced that it had commenced an underwritten public offering of 4.5 million shares of its common stock.

Marten Transport Ltd (MRTN +0.23%) rose 8% in after-hours trading after it reported Q2 EPS of 25 cents, better than consensus of 22 cents.

Coherus Biosciences (CHRS +0.34%) surged 17% in after-hours trading after it said it expects its marketing application for its CHS-1701 will be included in the European Medicines Agency's Committee for Medicinal Products for Human Use meeting agenda for July.

RumbleON (RMBL -6.93%) lost more than 2% in after-hours trading after it proposed an underwritten public offering of $10 million in shares of its Class B common stock.











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