US : Pre Market News – 04 Oct 2016

Dec E-mini S&Ps (ESZ16 +0.05%) are up +0.05% and European stocks are up +0.54%. The markets will focus on upcoming U.S. economic data on factory orders and unemployment for indications of the health of the economy and the likely trajectory of interest rates. Also, a speech today from Richmond Fed President Lacker, who has recently called for higher interest rates, will also be in focus. Gains in stocks were limited due to hawkish comments late Monday from Cleveland Fed President Mester (voter) that bolstered speculation the Fed will raise interest rates this year when she said the case for a Fed rate hike is “compelling.” The British pound sank to a 31-1/4 year low on mounting economic concerns over Brexit after Prime Minister May said that financial services would get no special favors in EU exit talks. Asian stocks settled higher: Japan +0.83%, Hong Kong +0.45%, China closed for holiday, Taiwan +0.58%, Australia +0.10%, Singapore +0.48%, South Korea +0.66%, India +0.32%. Japanese stocks rallied, led by strength in exporter stocks, after USD/JPY climbed to a 1-1/2 week high, which boosts the earnings prospects of exporters.

The dollar index (DXY00 +0.54%) is up +0.52% at a 1-1/2 week high. EUR/USD (^EURUSD) is down -0.35% at a 1-1/2 week low after ECB Executive Board member Praet said that low rates will probably prevail for an extended time. USD/JPY (^USDJPY) is up +0.73% at a 1-1/2 week high. GBP/USD is down -0.61% at a 31-1/4 year low on Brexit concerns.

Dec 10-year T-note prices (ZNZ16 +0.05%) are little changed, up +0.5 of a tick.

ECB Executive Board member Praet said that low rates will probably prevail for an extended time and that the ECB will monitor the impact of monetary policy on bank prospects.

Key U.S. news today includes: (1) Richmond Fed President Jeffrey Lacker (non-voter) speaks at the west Virginia Economic Outlook Conference, (2) Sep New York ISM (Aug -13.2 to 47.5), (3) Chicago Fed President Charles Evans (non-voter) speaks on the economy and monetary policy at an event in Auckland, New Zealand.

Russell 1000 companies that report earnings today: Darden Restaurants (consensus $ 0.82), Micron Technology (-0.08).

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

Equity conferences this week include: Capital Link Shipping, Marine Services & Offshore Forum on Wed, ACI European Biomass to Power Conference on Wed, Seaport Global Securities Dallas Energy Day on Thu.

Las Vegas Sands (LVS +2.31%) is up over 1% in pre-market trading after it was upgraded to a ‘Buy’ from ‘Neutral’ at Bank of America/Merrill Lynch.

Wells Fargo (WFC -1.02%) was downgraded to ‘Underperform’ from ‘Market Perform’ at Raymond James, citing a “cloudy” outlook.

Pandora Media (P -1.19%) rose nearly 3% in pre-market trading after it was added to the ‘Conviction List’ at Goldman Sachs.

Avnet (AVT -1.36%) climbed over 1% in pre-market trading after it was upgraded to ‘Strong Buy’ from ‘Market Perform’ by Raymond James with a price target of $ 52.

HubSpot (HUBS -0.03%) was rated anew ‘Buy’ at DA Davidson with an 18-month target price of $ 76.

AmerisourceBergen (ABC -0.82%) was upgraded to ‘Market Outperform’ from ‘Market Perform’ at Avondale Partners LLC with a target price of $ 96.

Kinder Morgan (KMI -0.52%) was downgraded to ‘Hold’ from ‘Buy’ at Stifel.

Cypress Semiconductor (CY -1.32%) said it will cut 500 jobs and take a $ 40 million to $ 50 million charge as it restructures to ‘high-growth” businesses.

Fifth Third Bancorp (FITB -0.54%) lost 1% in after-hours trading after it was downgraded to ‘Market Perform’ from ‘Outperform’ at KBW.

Cousins Properties (CUZ -2.68%) will replace Community Health Systems in the S&P MidCap 400 after the close of trading Wednesday, October 5.

Brocade Communications Systems (BRCD +0.87%) was rated a new ‘Buy’ at DA Davidson with a 12-month target price of $ 12.

Soroban Capital reported that it raised its stake in Autodesk (ADSK -1.59%) to 8% from 4.66% and is now the third largest holder in the company.

Marchex (MCHX -0.72%) CEO Pete Christothouou resigned immediately after the company said its Q3 adjusted Ebitda would be a loss of -$ 2.5 million to -$ 3.5 million, wider than a -1$ million to -$ 3 million loss than estimated in August.

Dec E-mini S&Ps (ESZ16 +0.05%) this morning are up +1.00 point (+0.05%). Monday’s closes: S&P 500 -0.33%, Dow Jones -0.30%, Nasdaq -0.19%. The S&P 500 on Monday closed lower on concern that the larger-than-expected increase in the Sep ISM manufacturing index (+2.1 to 51.5 versus expectations of +1.0 to 50.4) will push the Fed to raise interest rates sooner rather than later. Stocks were also undercut by the unexpected -0.7% decline in U.S. Aug construction spending (weaker than expectations of +0.3%) and Fitch’s cut in its U.S. 2016 GDP estimate to +1.4% from July’s +1.8% estimate due to oil sector adjustments, weak external demand, and dollar appreciation that undercuts industrial demand.

Dec 10-year T-notes (ZNZ16 +0.05%) this morning are up +0.5 of a tick. Monday’s closes: TYZ6 -5.50, FVZ6 -5.50. Dec 10-year T-notes on Monday fell to a 1-week low and closed lower on the bigger-than-expected increase in the Sep ISM index and on increased inflation expectations after the 10-year T-note breakeven inflation rate jumped to a 4-1/4 month high.

The dollar index (DXY00 +0.54%) this morning is up +0.498 (+0.52%) at a 1-1/2 week high. EUR/USD (^EURUSD) is down -0.0039 (-0.35%) at a 1-1/2 week low. USD/JPY (^USDJPY) is up +0.74 (+0.73%) at a 1-1/2 week high. Monday’s closes: Dollar index +0.246 (+0.25%), EUR/USD -0.0024 (-0.21%), USD/JPY +0.30 (+0.30%). The dollar index on Monday closed higher on the stronger-than-expected Sep ISM manufacturing index, which bolsters the case for the Fed to raise interest rates. There was also weakness in the British pound as GBP/USD tumbled to a 2-3/4 month low after UK Prime Minister May said she will start the process of England’s withdrawal from the European Union by March.

Nov WTI crude oil (CLX16 -0.92%) this morning is down -39 cents (-0.80%) and Nov gasoline (RBX16 +0.20%) is up +0.0044 (+0.30%). Monday’s closes: Nov crude +0.41 (+0.85%), Nov gasoline +0.0074 (+0.51%). Nov crude oil and gasoline on Monday closed higher with Nov crude at a 3-month high on carry-over support from last week’s OPEC agreement to cut production to 32.5-33.0 million bpd. Crude oil was undercut by a stronger dollar and by expectations that Wednesday’s weekly EIA data will show that U.S. crude inventories rose +1.75 million bbl.