Wednesday, August 22, 2018

08/22/2018 - **Overnight Markets and News**

**Overnight Markets and News**

*Sep E-mini S&Ps (ESU18 -0.16%) this morning are down -0.06% on concern about President Trump's legal woes after his former lawyer pleaded guilty to illegal campaign finance charges late Tuesday afternoon.  European stocks are up +0.52% at a 1-week high and U.S. stock indexes recovered from their worst levels on strength in energy stocks as Oct WTI crude oil (CLV18 +1.69%) rose +1.70% to a 1-week high.  Crude oil gained on the heels of API data late Tuesday afternoon that showed U.S. crude inventories fell -5.17 million bbl last week.  Also, a 5% jump in Target in pre-market trading is lifting retail stocks after Target reported stronger-than-expected Q2 earnings and forecast higher-than-expected full-year earnings.  Asian stocks settled mixed: Japan +0.64%, Hong Kong +0.63%, China-0.70%, Taiwan +0.11%, Australia -0.29%, Singapore -0.16%, South Korea +0.37%, India +0.02%.  Trade concerns weighed on Chinese stocks ahead of a Chinese delegation's arrival in the U.S. for two days of trade talks today and tomorrow.  A rally in Japanese exporters led the Nikkei Stock Index up to a 1-week high on optimism over trade on reports that the U.S. and Mexico have moved closer toward a consensus on forging a new North American Free Trade Agreement.

*The dollar index (DXY00 -0.25%) is down -0.12% at a 1-1/2 week low.  EUR/USD (^EURUSD +0.33%) is up +0.25% at a 1-1/2 week high.  USD/JPY (^USDJPY -0.02%) is up +0.08%. 

*Sep 10-year T-note prices (ZNU18 +0-045) are up +2.5 ticks at a 2-1/2 month high.

*The Japan Jun all-industry activity index fell -0.8% m/m, right on expectations and the biggest decline in 5-months.


**U.S. Stock Preview**

*Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -2.0% to 335.8 with purchase sub-index -3.3% to 225.5 and refi sub-index unch at 927.5), (2) Jul existing home sales (expected +0.4% to 5.40 million, Jun -0.6% to 5.38 million), (3) EIA weekly Petroleum Status Report, (4) minutes of the Jul 31-Aug 1 FOMC meeting, (5) USDA Jul Cold Storage.

*Notable Russell 2000 earnings reports today include: Lowe's (consensus $2.02), Target (1.40), Analog Devices (1.46), L Brands (0.35), Williams-Sonoma (0.68), Zayo Group Holdings (0.09), Synopsys (0.92).

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

*Equity conferences during the remainder of this week: Data Integrity Seminar on Wed, Mobile Payments Conference 2018 on Wed-Thu, ACI US Base Oils and Lubricants Summit on Thu, SEB Industrial & Technology Seminar on Thu, UBS Kohler Utility Mini-Conference on Thu, NGAUS Conference on Fri.


**Overnight U.S. Stock Movers**

*Public Storage (PSA -0.73%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs with a price target of $198.

*Target (TGT -0.06%) jumped more than 5% in pre-market trading after it reported Q2 adjusted EPS of $1.47, better than consensus of $1.40, and then forecast full-year adjusted EPS of $5.30 to $5.50, above consensus of $5.29.

*Keysight Technologies (KEYS +0.42%) jumped more than 12% in after-hours trading after it reported Q3 adjusted revenue of $1.01 billion, above consensus of $963.2 million, and then forecast Q4 adjusted revenue of $1.00 billion to $1.02 billion, stronger than consensus of $984.2 million.

*Urban Outfitters (URBN +0.48%) rose more than 3% in after-hours trading after it reported Q2 net sales of $992.5 million, higher than consensus of $980 million.

*Jack Henry (JKHY -0.27%) may move higher initially this morning after it reported Q4 EPS of $11.0, better than consensus of 94 cents.

*ScanSource (SCSC +2.59%) rallied 5% in after-hours trading after it acquired Canpango.

*Myriad Genetics (MYGN +2.19%) climbed nearly 4% in after-hours trading after it reported Q4 adjusted EPS of 38 cents, higher than consensus of 33 cents.

*Red Robin Gourmet Burgers (RRGB +1.26%) slid more than 3% in after-hours trading after it reported Q2 adjusted EPS of 46 cents, below consensus of 49 cents.

*Cardiovascular Systems (CSII +1.14%) was rated a new 'Buy' at Stifel with a price target of $45.

*La-Z-Boy (LZB +2.16%) rallied more than 17% in after-hours trading after it reported Q1 sales of $384.7 million, higher than expectations of $370.5 million.

*Pure Storage (PSTG +1.01%) jumped 8% in after-hours trading after it reported Q2 revenue of $308.9 million, higher than consensus of $301.2 million, and then forecast Q3 revenue of $361 million to $369 million, the midpoint higher than consensus of $363.1 million.

*Super Micro Computer (SMCI -3.17%) plunged more than 18% in after-hours trading after it said it will be unable to meet the Aug 24 deadline date to regain compliance with the Nasdaq Stock Market on several accounting judgements and that it expects its stock will soon be suspended from trading.

*Ferroglobe PLC (GSM +1.00%) dropped more than 4% in after-hours trading after it reported Q2 adjusted Ebitda of $86.3 million, weaker than consensus of $93.1 million.

*Ocular Therapeutics (OCUL +1.16%) rose almost 4% in after-hours trading after a SEC filing showed CEO Mattessich bought $119,000 in shares of the company's stock Monday at an average price of $5.95.


**Market Comments**

*Sep S&P 500 E-minis (ESU18 -0.16%) this morning are down -1.75 points (-0.06%).  Tuesday's closes: S&P 500 +0.21%, Dow Jones +0.25%, Nasdaq 100 +0.35%.  The S&P 500 on Tuesday rallied to a new all-time high and closed higher on optimism that China and the U.S. may be able to resolve their trade differences as the two countries hold trade talks this Wed/Thu.  Mining stocks showed strength after copper prices rose +1.01% on signs of stronger demand when LME canceled warrants, or orders to withdraw copper from LME warehouses, rose +18,000 MT to a 1-1/2 month high.  Energy stocks showed strength after crude oil prices climbed +0.64%. 

*Sep 10-year T-notes (ZNU18 +0-045) this morning are up +2.5 ticks at a 2-1/2 month high.  Tuesday's closes: TYU8 -5.50, FVU8 -3.75.  Sep 10-year T-notes on Tuesday closed lower on reports that President Trump is "not thrilled" with Fed Chair Powell raising interest rates and that he will keep criticizing the Fed if it keeps raising rates, which may push the Fed to accelerate its rate hikes to get the President's criticism out of the way sooner rather than later.  T-note prices were also undercut by reduced safe-haven demand after the S&P 500 climbed to a record high.

*The dollar index (DXY00 -0.25%) this morning is down -0.117 (-0.12%) at a 1-1/2 week low.  EUR/USD (^EURUSD +0.33%) is up +0.0029 (+0.25%) at a 1-1/2 week high.  USD/JPY (^USDJPY -0.02%) is up +0.09 (+0.08%).  Tuesday's closes: Dollar Index -0.644 (-0.67%), EUR/USD +0.0089 (+0.78%), USD/JPY +0.24 (+0.22%).  The dollar index on Tuesday fell to a 1-1/2 week low and closed lower.  The dollar was undercut by negative carry-over from Monday's comments by President Trump who criticized the Fed for raising interest rates.  The dollar was also undercut by strength in the yuan and EUR/USD which both rose to 1-week highs after President Trump accused China and the EU of manipulating their currencies to gain a trade advantage.  In addition, GBP/USD rallied to a 1-1/2 week high after UK Brexit Secretary Raab said his talks with EU negotiator Barnier were positive and he's "confident" of reaching an agreement in October.

*Metals this morning are mixed with Dec gold (GCZ18 +0.52%) +3.6 (+0.30%) at a 1-week high, Sep silver (SIU18 +0.50%) +0.029 (+0.20%) and Sep copper (HGU18 -0.56%) -0.018 (-0.67%).  Tuesday's closes: Dec gold +5.4 (+0.45%), Sep silver +0.096 (+0.65%), Sep copper +0.0270 (+1.01%).  Metals prices on Tuesday closed higher on the fall in the dollar index to a 1-1/2 week low.  Copper prices were supported by signs of stronger demand after LME cancelled warrants, or orders to withdraw copper from LME warehouses, rose +18,000 MT to a 1-1/2 month high of 54,050 MT.

*Oct WTI crude oil (CLV18 +1.69%) this morning is up +$1.12 a barrel (+1.70%) at a 1-week high.  Oct gasoline (RBV18 +1.74%) is up +3.24 ((+1.70%) at a 1-week high.  Tuesday's closes: Oct crude oil +0.42 (+0.64%), Oct gasoline +0.01 (+0.01%).  Oct crude oil and gasoline on Tuesday closed higher on the decline in the dollar index to a 1-1/2 week low and on expectations for Wednesday's weekly EIA crude inventories to fall -2.0 million bbl.  Gasoline prices were undercut as the crack spread fell to a 1-week low, which reduces the incentive for refiners to purchase crude oil to refine into gasoline.




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