Morning Call: Reduced trade war concerns boosts stocks; Jun E-mini S&Ps up +0.30%; USD/JPY up +0.35% at a 6-week high.
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 ESM18 - S&P 500 E-Mini

Overnight Markets and News

Jun E-mini S&Ps (ESM18 +0.22%) this morning are up +0.30% and European stocks are up +0.50% at a 6-week high as fears of a trade war subside. President Trump hinted late yesterday the U.S. may rejoin the Trans-Pacific Partnership free-trade deal he pulled out of when he first took office and expressed optimism about a deal with China saying the two countries may ultimately end up not imposing tariffs on each other as they negotiate their differences. Strength in energy stocks is also giving a boost to the overall market as May WTI crude oil (CLK18 -0.34%) climbed to a new 3-1/3 year high in overnight trade. Crude rallied after the IEA said less than 10% of the global surplus in oil inventories remain and OPEC is on the verge of "mission accomplished" in its quest to clear a global supply glut. Asian stocks settled mixed: Japan +0.55%, Hong Kong -0.07%, China -0.66%, Taiwan +0.09%, Australia +0.23%, Singapore +0.94%, South Korea +0.52%, India +0.27%. Chinese stocks moved lower after China Mar credit growth grew less than expected and after China's Mar trade balance unexpectedly posted its biggest deficit in 13-months. A rally in Japanese exporter stocks led Japan's Nikkei Stock Index higher after USD/JPY climbed to a 6-week high, which boosts the earnings prospects of exporters, and after President Trump expressed interest in rejoining the Trans-Pacific Partnership.

The dollar index (DXY00 +0.09%)is up +0.07%. EUR/USD (^EURUSD -0.07%) is down -0.10%. USD/JPY (^USDJPY +0.35%) is up +0.35% at a 6-week high as safe-haven demand for the yen abates on reduced trade war concerns.

Jun 10-year T-note prices (ZNM18 -0-010) are unchanged.

China Mar new yuan loans rose +1.120 trillion yuan, weaker than expectations of +1.176 trillion yuan. Mar aggregate financing rose +1.33 trillion yuan, weaker than expectations of +1.80 trillion yuan.

The China Mar trade balance unexpectedly fell into a deficit of -$4.98 billion, weaker than expectations of a surplus of +$27.50 billion, the largest deficit in 13-months. Mar exports unexpectedly fell -2.7% y/y, weaker than expectations of +11.8% y/y and the biggest decline in 15 months. Mar imports rose +14.4% y/y, stronger than expectations of +12.0% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) Boston Fed President Eric Rosengren (non-voter) is keynote speaker on economic outlook at Greater Boston Chamber’s Economic Outlook Breakfast, (2) St. Louis Fed President James Bullard (non-voter) speaks on living standards across U.S. cities at Washington University in St. Louis, (3) Feb JOLTS job openings (expected -247,000 to 6.065 million, Jan +645,000 to 6.312 million), (4) preliminary-April University of Michigan U.S. consumer sentiment index (expected -0.9 to 100.5, Mar +1.7 to 101.4), (5) Dallas Fed President Robert Kaplan (non-voter) at Odessa Chamber of Commerce Member Luncheon in Odessa, TX.

Notable S&P 500 earnings reports today include: Citigroup (consensus $1.61), JPMorgan Chase (2.28), Wells Fargo (1.06), PNC Financial Services Group (2.43).

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

Equity conferences this week: none.

Market Comments

June S&P 500 E-minis (ESM18 +0.22%) this morning are up +8.00 points (+0.30%). Thursday's closes: S&P 500 +0.83%, Dow Jones +1.21%, Nasdaq +1.11%. The S&P 500 on Thursday rallied to a 2-week high and closed higher on somewhat reduced Middle East tensions after President Trump said military action against Syria may not be imminent. There were also mildly reduced trade tensions after President Trump claimed that since the U.S. and China are negotiating on trade conflicts there may be no need to levy any tariffs. Financial stocks saw support after BlackRock reported Q1 adjusted EPS of $6.70, better than consensus of $6.38.

June 10-year T-notes (ZNM18 -0-010) this morning are unch. Thursday's closes: TYM8 -12.00, FVM8 -8.25. Jun 10-year T-notes on Thursday fell to a 2-week low and closed lower on reduced safe-haven demand after stocks rallied on mildly reduced geopolitical and trade risks. T-note prices were also undercut by an increase in inflation expectations after the 10-year T-note breakeven inflation rate rose to a 1-month high.

The dollar index (DXY00 +0.09%) this morning is up +0.059 (+0.07%). EUR/USD (^EURUSD -0.07%) is -0.0012 (-0.10%) and USD/JPY (^USDJPY +0.35%) is up +0.38 (+0.35%) at a 6-week high. Thursday's closes: Dollar Index +0.183 (+0.20%), EUR/USD -0.0040 (-0.32%), USD/JPY +0.54 (+0.51%). The dollar index on Thursday closed higher on strength in USD/JPY on reduced safe-haven demand for the yen after President Trump said military action against Syria may not be imminent. There was also weakness in EUR/USD after Eurozone Feb industrial production unexpectedly fell -0.8% m/m, weaker than expectations of +0.1% m/m and the biggest decline in 8 months, which is dovish for ECB monetary policy.

Metals prices this morning are mixed with Jun gold (GCM18 -0.13%) -0.05 (-0.04%), May silver (SIK18 +0.13%) +0.022 (+0.13%) and May copper (HGK18 +0.67%) +0.017 (+0.54%). Thursday's closes: Jun gold -18.10 (-1.33%), May silver -0.295 (-1.76%), May copper -0.520 (-1.67%). Metals on Thursday closed lower on strength in the dollar and reduced geopolitical risks after President Trump signaled a military strike on Syria may not be imminent. There was also negative carry-over from Wednesday's minutes of the Mar 20-21 FOMC meeting that were released after the metal markets closed, which signaled Fed members were leaning toward a faster pace of interest rate increases.

May crude oil prices (CLK18 -0.34%) this morning fell back from a fresh 3-1/3 year in overnight trade and are down -16 cents (-0.24%) and May gasoline (RBK18 -0.65%) is -0.0133 (-0.65%). Thursday's closes: May crude +0.25 (+0.37%), May gasoline -0.0130 (-0.63%). May crude oil and gasoline on Thursday settled mixed. Crude oil prices were undercut by a stronger dollar and by the slide in the crack spread to a 4-session low, which may reduce refinery demand for crude oil. Crude oil prices were supported by news that OPEC March compliance with crude output cuts rose to a record 164% from 148% in Feb, the fifth consecutive month compliance rose to a record. Crude oil prices continued to see strength on what appears to be an imminent U.S. military attack on Syria.

Overnight U.S. Stock Movers

Netflix (NFLX +1.84%) gained almost 2% in pre-market trading after it was upgraded to 'Buy' at Deutsche Bank with a price target of $350.

Broadcom (AVGO -0.37%) climbed over 4% in after-hours trading after it announced a $12 billion stock buyback program.

Albemarle (ALB +0.09%) was upgraded to 'Buy' from 'Hold' at Citigroup with a price target of $106.

Starbucks (SBUX +0.02%) was downgraded to 'Market Perform' from 'Outperform' at Cowen.

Zillow Group (Z +0.73%) rose 3% in after-hours trading after it reported preliminary Q1 revenue of $299 million to $301 million, above consensus of $295.1 million.

Southern Copper (SCCO +0.39%) was downgraded to 'Underweight' from 'Neutral' at JPMorgan Chase with a price target of $45.

Endocyte (ECYT +4.37%) was rated a new 'Buy' at Jeffries with a price target of $17.

Select Energy Services (WTTR +1.05%) was rated a new 'Overweight' at Stephens with a price target of $16.

Hostess Brands (TWNK -0.76%) announced that Andy Callahan will replace C. Dean Metropoulos ae CEO and president effective May 7.

Dropbox (DBX +2.94%) fell 3% in after-hours trading after Nomura Instinet initiated coverage of the stock with a recommendation of 'Reduce' with a price target of $21.

Hi-Crush Partners (HCLP +0.87%) was rated a new 'Overweight' at Stephens with a price target of $16.

Seven Stars Cloud (SSC +1.71%) slid almost 4% in after-hours trading after CFO Simon Wang resigned effective April 6.