Morning Call: Optimism that the U.S. and China can resolve their trade differences lifts stocks; Jun E-mini S&Ps up +0.18% at a 1-3/4 month high; Dollar index down -0.23% at a 1-week low.
Related Stocks
 ESM18 - S&P 500 E-Mini
SymLastChgPct
ESM182,776.85s-6.40-0.23%
DXY0094.640s+0.144+0.15%
ZNM18119-310s-0-055-0.14%
GCM181,252.8s-3.8-0.30%
SIN1815.436s-0.002-0.01%
HGN182.7875s-0.0165-0.59%
CLM1872.13s-0.11-0.15%
RBM182.1603s-0.0239-1.09%
UPS118.24-0.85-0.71%
MAS38.50+0.18+0.47%
LB29.57+1.13+3.97%
MTH44.75-0.25-0.56%
DF7.62-0.02-0.26%
OC58.79+0.21+0.36%
LRCX153.65+1.55+1.02%
FNHC24.75+0.46+1.89%
REGI27.60+0.35+1.28%
PRGO72.99+0.42+0.58%
TEVA24.46+1.03+4.40%
HTLD20.38+0.09+0.44%
ABEO13.70-0.30-2.14%

Overnight Markets and News

Jun E-mini S&Ps (ESM18 +0.15%) this morning are up +0.18% at a 1-3/4 month high on optimism the U.S. and China can resolve their trade differences after President Trump tweeted that he and Chinese President Xi Jinping are working together to give China's ZTE Corporation "a way to get back into business fast." The Trump administration had cut off ZTE from doing business with its U.S. suppliers for violating the terms of a 2017 sanctions settlement related to trading with Iran and North Korea. Xi Jinping said he had dispatched his top economic advisor, Liu He, to Washington for trade talks with U.S. Treasury Secretary Mnuchin. European stocks are down -0.20% as interest rates rose after the 10-year German bund yield climbed to a 2-week high of 0.606% when ECB Board member Villeroy De Galhau said an increase in the ECB's deposit rate would be "at least some quarters, but not years" after the end of its asset-purchase program. The rise in European government bond yields also boosted EUR/USD to a 1-week high, which undercut European exporter stocks. Asian stocks settled mostly higher: Japan +0.47%, Hong Kong +1.35%, China +0.34%, Taiwan +0.86%, Australia +0.31%, Singapore -0.22%, South Korea -0.25%, India +0.06%. China's Shanghai Composite rose to a 1-month high and Japan's Nikkei Stock Index rallied to a 3-1/4 month high on reduced U.S.-China trade tensions.

The dollar index (DXY00 +0.02%) is down -0.23% at a 1-week low. EUR/USD (^EURUSD +0.42%) is up +0.39% at a 1-week high on hawkish comments from ECB Board member Villeroy De Galhau. USD/JPY (^USDJPY +0.14%) is up +0.11%.

Jun 10-year T-note prices (ZNM18 -0-020) are down -2.5 ticks.

ECB Board member Villeroy De Galhau said an increase in the ECB's deposit rate would be "at least some quarters, but not years" after the end of its asset-purchase program.

Cleveland Fed President Mester said "the global economy overall is healthy" and the outlook is pretty positive," and the Fed "can stay on our gradual upward path of interest rates.

U.S. Stock Preview

Key U.S. news today includes: (1) Cleveland Fed President Loretta Mester (voter) speaks at a Bank of France conference, (2) Louis Fed President James Bullard (non-voter) speaks at a Blockchain technology conference in New York, (3) USDA weekly grain export inspections, (4) USDA weekly Crop Progress.

Notable Russell 2000 earnings reports today include: Agilent (consensus $0.64), Itron (0.13).

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

Equity conferences this week: J.P. Morgan Homebuilding and Building Products Conference on Mon, MUFG Securities Houston Energy Tour on Mon, MoffettNathanson Media & Communications Summit on Mon-Tue, Bank of America Merrill Lynch Transportation Conference on Tue, Bank of America Merrill Lynch Global Mining Metals & Steel Conference on Tue, Barclays Insurance Forum on Tue, Evercore ISI Global Auto Conference on Tue, Barclays Americas Select Franchise Conference on Tue-Wed, Citi Global Energy & Utilities Conference on Tue-Wed, Goldman Sachs Basic Materials Conference on Tue-Wed, Needham Emerging Tech Conference on Tue-Wed, Tudor, Pickering, Holt & Co. Hotter N Hell Energy Conference on Tue-Wed, Bank of America Merrill Lynch Health Care Conference on Tue-Thu, JP Morgan Global Technology, Media and Communications Conference on Tue-Thu, Stephens Energy Executive Summit on Wed, BMO Capital Markets Farm to Market Conference on Wed-Thu, Capital Link Closed-End Funds and Global ETFs Forum on Thu.

Market Comments

June S&P 500 E-minis (ESM18 +0.15%) this morning are up +5.00 points (+0.18%) at a fresh 1-3/4 month high. Friday's closes: S&P 500 +0.17%, Dow Jones +0.37%, Nasdaq -0.16%. The S&P 500 on Friday rallied to a 1-3/4 month high and closed higher on slack price pressures that were dovish for Fed policy after U.S. Apr import prices rose +0.3% m/m and +3.3% y/y, weaker than expectations of +0.5% m/m and +3.9% y/y. Stocks were also boosted by the unchanged University of Michigan U.S. May consumer sentiment index of 98.8, which was stronger than expectations of -0.5 to 98. There were also reduced geopolitical risks as U.S. President Trump is set to meet with North Korean leader Kim Jong Un on June 12 in Singapore.

June 10-year T-notes (ZNM18 -0-020) this morning are down -2.5 ticks. Friday's closes: TYM8 +0.50, FVM8 +0.25. Jun 10-year T-notes on Friday closed higher on the weaker-than-expected U.S. Apr import price report, which was dovish for Fed policy. T-notes were also supported by dovish comments from St. Louis Fed President Bullard who said the Fed doesn't need to raise interest rates further because the policy rate has reached its neutral setting.

The dollar index (DXY00 +0.02%) this morning is down -0.216 (-0.23%) at a 1-week low. EUR/USD (^EURUSD +0.42%) is up +0.0046 (+0.39%) at a 1-week high. USD/JPY (^USDJPY +0.14%) is up +0.12 (+).11%). Friday's closes: Dollar Index -0.113 (-0.12%), EUR/USD +0.0028 (+0.23%), USD/JPY -0.01 (-0.01%). The dollar index on Friday closed lower on dovish comments from St. Louis Fed President Bullard who said the Fed doesn't need to raise interest rates further because the policy rate has reached its neutral setting and inflation expectations are at or below target. The dollar was also undercut by the decline in T-note yields, which reduces the dollar's interest rate differentials.

Metals prices this morning are lower with Jun gold (GCM18 -0.14%) -0.9 (-0.07%), Jul silver (SIN18 -0.58%) -0.077 (-0.46%), and Jul copper (HGN18 -0.88%) -0.024 (-0.77%). Friday's closes: Jun gold -1.60 (-0.12%), Jul silver -0.007 (-0.04%), Jul copper +0.0015 (+0.05%). Metals on Friday settled mixed with Jul copper at a 2-week high. Metals prices were boosted by a weaker dollar and by tighter copper supplies after LME copper inventories fell by -4,000 MT to a 3-1/2 month low. Precious metals prices were undercut by reduced safe-haven demand with the rally in the S&P 500 to a 1-1/2 month high.

Jun WTI crude oil prices (CLM18 +0.04%) this morning are up +10 cents (+0.14%) and Jun gasoline (RBM18 -0.22%) is -0.0034 (-0.16%). Friday's closes: Jun crude -0.66 (-0.92%), Jun gasoline -0.0002 (-0.01%). Jun crude oil and gasoline on Friday closed lower on comments from St. Louis Fed President Bullard who said that higher oil prices may stimulate U.S. energy production that will cap oil prices. Crude oil prices were also undercut by the Baker Hughes report that active U.S. oil rigs the week of May 11 rose to a 3-year high of 844. Crude oil prices were supported by a weaker dollar and by the increase in the crack spread to a 7-1/2 month high, which provides incentive for refiners to boost crude purchases to refine the crude into gasoline.

Overnight U.S. Stock Movers

United Parcel Service (UPS +1.28%) was upgraded to 'Buy' from 'Neutral' at Bank of America/Merrill Lynch with a price target of $144.

Masco (MAS +0.55%) was upgraded to 'Outperform' from 'Market Perform' a Wells Fargo Securities with a price target of $45.

L Brands (LB +2.05%) was upgraded to 'Buy' from 'Neutral' at Citigroup with a price target of $38.

Meritage Homes (MTH -0.34%) was upgraded to 'Buy' from 'Underperform' at Bank of America/Merrill Lynch with a price target of $60.

Dean Foods (DF +2.05%) was downgraded to 'Sell' from 'Hold' at Deutsche Bank with a price target of $9.

Owens Corning (OC -0.43%) was downgraded to 'Market Perform' from 'Outperform' at Wells Fargo Securities.

Lam Research (LRCX -1.21%) was upgraded to 'Buy' from 'Neutral' at Citigroup with a price target of $245.

Federated National Holding (FNHC -0.54%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James with a price target of $24.

Renewable Energy Group (REGI +0.36%) jumped over 6% in after-hours trading after it was announced that it will replace Synchronoss Technologies in the S&P SmallCap 600 effective prior to the open of trading on Tuesday, May 15.

Perrigo (PRGO +2.62%) slid 4% in after-hours trading after it said it expects the FDA will reject its application for its asthma inhaler, a generic version of Teva Pharmaceutical Industries Pro Air. Teva Pharmaceutical Industries Ltd (TEVA +0.36%) gained more than 1% after the news.

Heartland Express (HTLD +0.11%) announced the authorization for the repurchase of up to 5 million shares of its outstanding common stock.

Abeona Therapeutics (ABEO +4.24%) dropped 5% in after-hours trading after it filed to sell a $500 million mixed securities shelf.