Barchart Morning Call
BC - 2 hrs 53 mins ago
- Global stock and commodity prices are mixed with June E-mini S&Ps up +1.50 points and the Euro Stoxx 50 up +0/22%. The euro rose from its worst levels and European stocks recovered from early losses after Italy sold 4.92 billion of 2017 and 202 bonds, close to its maximum target, while earnings results from Vinci SA and Sandvik AB beat analysts' forecasts. 10-year Treasury futures climbed to an all-time high and stocks and commodities slumped earlier after Standard & Poor's cut Spain's long-term credit rating by 2-steps to BBB+ from A with a negative outlook on concern it will have to provide further fiscal support to its banks as the economy contracts. Stocks fell further and the yield on Spain's 10-year bond rose to 6% after Spain's Q1 unemployment rate rose +1.5 to 24.4%, an 18-year high. After S&P downgraded Spain's sovereign-debt rating for the second time this year, Spain's Economy Minister Luis de Guindos said Spanish banks won't need external aid, nor will Spain need a bailout from its European partners. The British pound rose to a 7-1/2 month high against the dollar and a 22-month high against the euro on increased safe-haven demand on concern the European debt crisis is spreading. Other negatives for European stocks and the euro were the unexpected -0.2 point decline in the May German GfK consumer confidence survey to a 6-month low of 4.6 and the sharper-than-expected decline in Mar French consumer spending which fell -2.9% m/m and -2.0% y/y, weaker than expectations of -1.9% m/m and -0.2% y/y.
- Asian stocks today closed mostly lower with Japan down -0.43%, China -0.20%, Australia -0.30%, South Korea +0.73%, and India +0.02%. Most Asian stocks settled lower on concern that the European debt crisis will worsen and slow global economic growth after Spain had its credit rating cut by S&P. The yen rose to a 1-1/2 week high against the dollar, which undercut exporter stocks, despite the action by the BOJ to boost its asset-purchase program by 10 trillion yen ($125 billion), near the high side of expectations, after industrial production rose less than expected. Mar Japan industrial production increased +1.0% m/m and +13.9% y/y, weaker than expectations of +2.3% m/m and +15.5% y/y. Chinese stocks finished lower as well, as slumping corporate earnings overshadowed speculation the PBOC will ease monetary policy to boost economic growth.
Overnight U.S. Stock News
- June E-mini S&Ps this morning are trading up +1.50 points after recovering from earlier losses when S&P cut Spain's credit rating. The U.S. stock market on Thursday overcame early weakness from disappointing weekly U.S. jobless claims and shed its losses and moved higher the rest of the day on decent company earnings results and stronger-than-expected Mar U.S. pending home sales: Dow Jones +0.87%, S&P 500 +0.67%, Nasdaq Composite +0.69%. The S&P 500 and the Dow posted 3-week highs. Strong earnings results continue to support stocks as 75% of the S&P 500 companies that reported earnings results from Apr 10 have beaten estimates. Limiting gains in stocks were the larger-than-expected weekly initial U.S. unemployment claims (-1,000 to 388,000 versus expectations of -11,000 to 375,000), the decline in the Mar Chicago Fed national activity index to its weakest level in 7-months (-0.36 to -0.29), and carry-over weakness from a decline in European stocks after Apr Euro-Zone economic confidence fell to its lowest level in 2-1/2 years (-1.7 to 92.8).
- Starbucks (NASDAQ:SBUX) fell 4.6% in European trading after the company reported Q2 same-store sales rose 7% globally, weaker than analysts' estimates of 8.2%.
Today's Market Focus
- June 10-year T-notes this morning are up +7 ticks as they posted a new all-time nearest futures high of 132-170. T-note prices Thursday strengthened after higher-than-expected weekly U.S. jobless claims added to speculation the Fed was far from cutting back on monetary stimulus: TYM2 +7.5, FVM2 +3.7. Dealer short-covering and hedge-lifting also boosted Treasuries after the conclusion of $99 billion of T-note auctions this week along with the larger-than-expected decline in the Mar Chicago Fed national activity index to its lowest level in 7 months (-0.36 to -0.29). Limiting gains in T-notes was stock market strength that sapped the safe-haven demand for Treasuries along with the larger-than-expected increase in Mar pending home sales (+4.1% m/m) and strong demand for the Treasury's $35 billion 5-year T-note auction that had a 3.09 bid-to-cover ratio, stronger than the 12-auction average of 2.90.
- The dollar index this morning is little changed with USD/JPY -0.27 yen and EUR/USD +0.11 cents. The dollar index on Thursday extended this week's decline to a fresh 3-week low and settled lower on reduced safe-haven demand after the S&P 500 rose to a 3-week high along with strength in the yen which rose to a 1-week high and the British pound which posted a 7-1/2 month high against the dollar: Dollar Index -0.093, USD/JPY -0.353, EUR/USD +0.00065. The yen strengthened on safe-haven demand and euro gains were limited after Apr Euro-Zone economic confidence fell to a 2-1/2 year low while the British pound rallied after Mar U.K. nationwide consumer confidence unexpectedly jumped +9 to a 10-month high of 53. The dollar also weakened on speculation Friday's Q1 U.S. GDP will show a slowdown in economic growth that prompts the Fed to keep its overly easy monetary policy in place.
- Jun crude oil prices this morning are trading down -24 cents a barrel and Jun gasoline is -0.92 of a cent per gallon. Crude oil and gasoline prices on Thursday erased early losses and moved higher as the dollar index slipped to a 3-week low and after a larger-than-expected increase in Mar U.S. pending home sales reduced economic concerns: CLM12 +0.43, RBM2 +1.37. Jun crude posted a 1-week high. A rally in stocks bolstered confidence in the economic outlook and was another positive for crude, while gains in crude were limited after Apr Euro-Zone economic confidence fell to its lowest level in 2-1/2 years.
Today's U.S. Earnings Reports
Earnings reports (sorted by mkt cap): CVX-Chevron (consensus $3.23), PG-Procter & Gamble (0.92), MRK-Merk (0.98), SPG-Simon Property Group (0.65), F-Ford Motor (0.35), SCCO-Southern Copper (0.60), COV-Covidien Plc (1.03), NEM-Newmont Mining (1.13), VTR-Ventas (0.32), VFC-VF Corp. (1.88), IP-International Paper (0.50), WY-Weyerhaeuser (0.00), KKR-KKR & Co. LP (0.71), DTE-DTE Energy (1.09), CPN-Calpine (-0.13).
Global Financial Calendar
|0830 ET||Q1 employment cost index expected +0.5%, Q4 +0.4%.|
|0830 ET||Q1 GDP expected +2.5% annualized, Q4 +3.0% annualized. Q1 personal consumption expected +2.3%, Q4 +2.1%. Q1 GDP price index expected +2.1%, Q4 +0.9%. Q1 core PCE deflator expected +2.1% q/q, Q4 +1.3% q/q.|
|0955 ET||Final Apr U.S. University of Michigan consumer confidence expected unchanged at 75.7, previous -0.5 to 75.7.|
|0100 ET||Mar Japan construction orders, Feb -1.8% y/y.|
|0100 ET||Mar Japan housing starts expected +8.2% y/y to 875,000, Feb +7.5% y/y to 917,000.|
|0200 ET||May German GfK consumer confidence survey expected unchanged at 5.9, Apr -0.1 to 5.9.|
|0200 ET||Mar German import price index expected +0.9% m/m and +3.3% y/y, Feb +1.0% m/m and +3.5% y/y.|
|0245 ET||Mar French producer prices expected +0.6% m/m and +4.0% y/y, Feb +0.8% m/m and +4.3% y/y.|
|0245 ET||Mar French consumer spending expected -1.9% m/m and -0.2% y/y, Feb +3.0% m/m and +0.5% y/y.|
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