US : Pre Market News – 25 Jul 2016

Sep E-mini S&Ps (ESU16 +0.03%) are little changed this morning as the market gains some support from higher European stocks but faces uncertainty about whether the FOMC at its Tue-Wed meeting might turn a bit more hawkish in its post-meeting statement. The Euro Stoxx 50 index this morning is up +0.65% on a boost from Germany’s business climate index, which largely shook off Brexit concerns and fell by only -0.4 to 108.3, stronger than expectations of -1.2 to 107.5. Asian stocks on Monday were mixed: Japan -0.04%, Hong Kong +0.13%, China Shanghai +0.10%, Taiwan -0.24%, Australia +0.64%, Singapore -0.53%, South Korea +0.24%, India +1.05%, Turkey +2.94%.

There was little news out of the weekend G20 meeting in China where finance ministers and central bankers said that “all policy tools — monetary, fiscal and structural” should be used to support growth in the wake of Brexit. There was also talk about how to limit the damage from rising calls for trade protectionism.

Turkey’s stock market is up +2.9% today and the Turkish lira is up +1% after Turkey’s prime minister ruled out early elections and said that Turkey plans a multi-billion-dollar infrastructure program to provide stimulus to support the economy after the recent failed military coup.

Europe and the U.S. remain on edge about terrorist attacks after (1) last Friday’s shooting spree at a shopping center in Munich that killed nine people, (2) a suicide bombing attack on Sunday at a music festival in the German town of Ansbach near Nuremberg that injured 12, and (3) a shooting at a Fort Myers, Florida night club on Sunday night that killed two people and wounded 14-16 people although there was no news as yet as to whether there were connections to terrorism.

The dollar index (DXY00 -0.16%) is mildly lower by -0.18 points (-0.18%) this morning with EUR/USD (^EURUSD) up +0.0010 (+0.09%) and USD/JPY (^USDJPY) up +0.16 (+0.15%).

Sep 10-year T-note prices (ZNU16 -0.12%) are down -6 ticks due to higher global stocks and supply overhang ahead of this week’s $ 103 billion T-note package that begins today with the sale of $ 26 billion of 2-year T-notes.

Commodity prices this morning are slightly lower by -0.08 points despite the lower dollar. Sep WTI crude oil (CLU16 -0.86%) this morning is down -32 cents (-0.72%) on continued weakness from last Friday’s news from Baker Hughes that the number of active U.S. oil rigs rose by another 14 rigs to 371, bringing the 8-week upward rebound to a total of 55 rigs (+17.4%) from the 6-3/4 year low of 316 rigs posted in late May. Metals prices are mixed this morning with Aug gold (GCQ16 -0.49%) down -6.8 (-0.51%) and Sep silver (SIU16 -1.09%) down -0.164 (-0.83%) but Sep copper (HGU16 +0.16%) is up +0.005 (+0.22%). Grains this morning are mixed with Dec corn up +0.75 (+0.22%), Nov beans down -1.25 (-0.13%), and Sep wheat up +5.50 (+1.29%). Softs this morning are mixed with Oct sugar up +0.15 (+0.77%), Sep coffee down -0.30 (-0.21%), Sep cocoa up +11 (+0.38%), and Dec cotton down -0.67 (-0.92%).

Key U.S. news today includes: (1) Jul Dallas Fed manufacturing activity index (expected +8.3 to -10.0, Jun -18.3), (2) Treasury auctions $ 26 billion of 2-year T-notes, (3) USDA weekly grain export inspections, and (4) USDA Weekly Crop Progress.

There are 9 of the S&P 500 companies that report earnings today with notable reports including: Texas Instruments (consensus $ 0.73), Rockwell Collins (1.21), Kimberly-Clark (1.47), Express Scripts (1.57), Gilead Sciences (3.02).

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

Equity conferences this week include: none.

Sep E-mini S&Ps are little changed this morning as the market gains some support from higher European stocks but faces uncertainty about whether the FOMC at its Tue-Wed meeting might turn a bit more hawkish in its post-meeting statement. Friday’s closes: S&P 500 +0.46%, Dow Jones +0.29%, Nasdaq +0.41%. The S&P 500 on Friday closed higher on the +1.6 point increase in the U.S. Jul Markit manufacturing PMI to 52.9, stronger than expectations of +0.2 to 51.5 and the fastest pace of expansion in 9 months. Stocks were also boosted by M&A activity after reports that Verizon Communications is nearing a deal to acquire Yahoo for $ 5 billion. Stocks were undercut by weakness in energy and raw-material producer as the dollar index rose to a 4-1/4 month high.

• Verizon (VZ +1.32%) this morning announced a detal to buy Yahoo’s (YHOO +1.36%) core assets for about $ 4.83 billion in cash. Yahoo this morning is up about +0.4% in pre-market trading this morning.
• Nintendo (7974 Japan) in Japan today fell sharply by the daily limit of -18% after Nintendo’s U.S.-listed shares (NTDOY -10.55%) dropped -11% on Friday as the company said late Friday its financial impact will be limited from the worldwide hit-app Pokeman Go and that the company would not need to revise its guidance higher due to the hit. The company has an effective economic stake of just 13% in the app, according to some estimates. Nintendo reports earnings later this week.
• Tesla (TSLA +0.80%) and SolarCity (SCTY +0.19%) said they are close to a final acquisition agreement.
• TerraForm Power (TERP -0.40%) announced that the company adopted a poison pill shareholder rights plan to prevent Class A shares after lat Friday’s regulatory filing disclosing that Brookfield Asset Management and Appaloosa plan to jointly bid for SunEdison’s stake in TERP.
• Credit Suisse raised its target price on American Airlines (AAL +4.00%) to $ 34 from $ 29 due to the recent higher valutions in the airline sector.
• Capital One Financial (COF -1.41%) was downgraded to ‘Hold’ from ‘Buy’ at Rafferty Capital Markets with a 12-month target price of $ 78.
• VeriFone Systems (PAY -0.42%) gained almost 1% in after-hours trading after former CEO Doug Bergeron said he would consider a takeover bid for VeriFone at the right price.
• Terraform Power (TERP -0.40%) rose over 3% in after-hours trading after news that Brookfield met with Appaloosa on Jul 18 to discuss purchasing SUNE Terra Form shares.
• Core Laboratories NV (CLB +0.41%) fell over 1% in after-hours trading after the company said it was contacted by the U.S. Department of Justice “several months ago” over Unaoil.

Sep 10-year T-note prices are down -6 ticks due to higher global stocks and supply overhang ahead of this week’s $ 103 billion T-note package that begins today with the sale of $ 26 billion of 2-year T-notes. Friday’s closes: TYU6 -3.50, FVU6 -3.00. Sep T-notes on Friday closed lower on reduced safe-haven demand with the rally in stocks and on the stronger-than-expected Jul Markit manufacturing PMI which expanded at its fastest pace in 9 months and bolstered the case for the Fed to raise interest rates. T-notes received some support from global growth concerns after both the Eurozone and UK Jul Markit manufacturing PMI indexes moved lower.

The dollar index is mildly lower by -0.18 points (-0.18%) this morning with EUR/USD up +0.0010 (+0.09%) and USD/JPY up +0.16 (+0.15%). Friday’s closes: Dollar index +0.467 (+0.48%), EUR/USD -0.0049 (-0.44%), USD/JPY +0.31 (+0.29%). The dollar index on Friday climbed to a 4-1/4 month high and settled higher on U.S. economic strength that may spur the Fed to raise interest rates after the Jul Markit manufacturing PMI rose +1.6 to 52.9, a 9-month high. The dollar was also boosted by weakness in EUR/USD which tumbled to a 1-month low on speculation the ECB may need to boost stimulus after the Eurozone Jul Markit manufacturing PMI fell more than expected (-0.9 to 51.9).

Sep WTI crude oil this morning is down -32 cents (-0.72%) on continued weakness from last Friday’s news from Baker Hughes that the number of active U.S. oil rigs rose by another 14 rigs to 371, bringing the 8-week upward rebound to a total of 55 rigs (+17.4%) from the 6-3/4 year low of 316 rigs posted in late May. Friday’s closes: CLU6 -0.49 (-1.09%), RBU6 -0.0011 (-0.08%). Sep crude oil and gasoline closed lower on Friday with Sep gasoline at a 3-1/2 month low. Crude oil prices were undercut by the rally in the dollar index to a 4-1/4 month high and by ample supplies with U.S. crude and gasoline supplies at their highest seasonal level in at least two decades.