Overnight Markets And News

Sep E-mini S&Ps (ESU18 -0.17%) this morning are down -0.17% and European stocks are down -0.48%. Trade war concerns weighed on U.S. equity markets after President Trump accused China of undermining U.S. efforts to get North Korea to give up its nuclear weapons, which may further exacerbate trade tensions with China. The U.S. has imposed $50 billion of tariffs on Chinese goods so far, with another $200 billion of additional tariffs ready to be imposed on Chinese imports next month. China has responded with equal tariffs and pledged further measures. European stocks fell back on a slump in confidence after the Eurozone Aug economic confidence fell more than expected to a 1-year low. On the positive side, energy stocks are higher with Oct WTI crude oil (CLV18 +0.55%) up +0.60%^ at a 3-week high. Also, Politico reported that the EU is willing to scrap tariffs on all industrial products, including automobiles, in its trade talks with the U.S. Asian stocks settled mostly lower: Japan +0.09%, Hong Kong -0.89%, China -1.14%, Taiwan -0.05%, Australia -0.01%, Singapore -0.56%, South Korea unch, India -0.08%. Chinese stocks retreated on ramped up U.S. trade tensions. China's Ministry of Commerce urged the U.S. to back away from imposing new tariffs on $200 billion of Chinese goods, which the U.S. said may happen on Sep 6. Japan's Nikkei Stock Index climbed to a 3-1/4 month high on the heels of a rally in the S&P 500 to new record high Wednesday.

The dollar index (DXY00 +0.03%) is down -0.03%. EUR/USD (^EURUSD -0.15%) is down -0.10%. USD/JPY (^USDJPY-0.18%) is down -0.10%.

Sep 10-year T-note prices (ZNU18 +0-010) are little changed, up +0.5 of a tick.

Eurozone Aug economic confidence fell -0.5 to a 1-year low of 111.6, weaker than expectations of -0.2 to 111.9. The Aug business climate indicator fell -0.08 to a 1-year low of 1.22, weaker than expectations of -0.03 to 1.26.

The German Aug unemployment change fell -8,000 to 2.33 million, right on expectations. The Aug unemployment rate remained unch at a record low of 5.2%, also right on expectations.

Japan Jul retail sales rose +0.1% m/m, weaker than expectations of +0.2% m/m.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +3,000 to 213,000, previous -2,000 to 210,000) and continuing claims (expected +3,000 to 1.730 million, previous -2,000 to 1.727 million), (2) Jul personal spending (expected +0.4%, Jun +0.4%) and Jul personal income (expected +0.4%, Jun +0.4%), (3) Jul PCE deflator (expected +0.1% m/m and +2.3% y/y, Jun +0.1% m/m and +2.2% y/y) and Jul core PCE deflator (expected +0.2% m/m and +2.0% y/y, Jun +0.1% m/m and +1.9% y/y), (4) USDA weekly Export Sales.

Notable Russell 2000 earnings reports today include: Kroger (consensus $0.38), Campbell Soup (0.25), Dollar Tree (1.16), Dollar General (1.49), Lululemon Athletica (0.49), Cooper Cos (3.07).

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

Equity conferences during the remainder of this week: none.

Market Comments

Sep S&P 500 E-minis (ESU18 -0.17%) this morning are down -5.00 points (-0.17%). Wednesday's closes: S&P 500 +0.57%, Dow Jones +0.23%, Nasdaq 100 +1.19%. The S&P 500 on Wednesday rallied to a new record high and closed higher on the unexpected upward revision to U.S. Q2 GDP to +4.2% from +4.1%, stronger than expectations of -0.1 to +4.0% and the fastest pace of growth in 3-3/4 years. There was also strength in energy producers as crude oil prices rose +1.43% to a 3-week high. Technology stocks also rallied after the Nasdaq 100 jumped to a fresh record high.

Sep 10-year T-notes (ZNU18 +0-010) this morning are up +0.5 of a tick. Wednesday's closes: TYU8 unch, FVU8 -2.00. Sep 10-year T-notes on Wednesday recovered from a 2-week low and closed little changed. T-notes were supported by the unexpected decline in U.S. Jul pending home sales and by strong demand for the Treasury's $31 billion 7-year T-note auction that had a bid-to-cover ratio of 2.65, well above the 12-auction average of 2.50 and the highest in 7 months. T-note prices were undercut by reduced safe-haven demand for T-notes after the S&P 500 rallied to a new record high and by increased inflation expectations after the 10-year T-note breakeven inflation rate rose to a 2-1/2 week high.

The dollar index (DXY00 +0.03%) this morning is down -0.032 (-0.03%). EUR/USD (^EURUSD -0.15%) is down -0.0012 (-0.10%). USD/JPY (^USDJPY -0.18%) is down -0.11 (-0.10%). Wednesday's closes: Dollar Index -0.181 (-0.19%), EUR/USD +0.0012 (+0.10%), USD/JPY +0.49 (+0.44%). The dollar index on Wednesday closed lower on strength in GBP/USD which rallied to a 3-week high on optimism for a Brexit deal after the EU's chief negotiator said it was prepared to offer Britain an unprecedented partnership. The dollar was also undercut by the unexpected decline in U.S. Jul pending home sales.

Metals this morning are lower with Dec gold (GCZ18 -0.12%) -1.2 (-0.10%), Dec silver (SIZ18 -0.78%) -0.100 (-0.68%) and Dec copper (HGZ18 -0.88%) -0.022 (-0.80%). Wednesday's closes: Dec gold -2.9 (-0.24%), Dec silver -0.089 (-0.60%), Dec copper -0.0220 (-0.80%). Metals on Wednesday closed lower on the rally in the S&P 500 to a new record high, which reduces safe-haven demand for precious metals, and by fund selling of gold as long gold positions in ETFs fell to a 9-1/2 month low. Metals prices also fell on the unexpected decline in U.S. Jul pending home sales, which is negative for copper demand.

Oct WTI crude oil (CLV18 +0.55%) this morning is up +42 cents (+0.60%) at a fresh 3-week high. Oct gasoline (RBV18+0.48%) is +1.14 (+0.57%). Wednesday's closes: Oct crude oil +0.98 (+1.43%), Oct gasoline +2.47 (+1.25%). Oct crude oil and gasoline on Wednesday closed higher with Oct crude at a 3-week high. Crude oil prices were supported by a weaker dollar. Crude oil prices were also supported by the weekly EIA report that showed a -2.57 million bbl decline in EIA crude inventories (vs expectations of -1.5 million bbl) and the -1.55 million bbl drop in EIA gasoline supplies (vs expectations of unchanged). In addition, the EIA showed very strong gasoline demand with U.S. gasoline demand in the week of Aug 24 rising to a record 9.9 million bpd.

Overnight U.S. Stock Movers

Campbell Soup (CPB +0.40%) fell 5% in pre-market trading after it reported Q4 net sales of $2.22 billion, weaker than consensus of $2.24 billion, and after it forecast full-year adjusted EPS of $2.45 to $2.53, well below consensus of $2.67.

Genesco (GCO +1.53%) was upgraded to 'Buy' from 'Hold' at Pivotal Research Group LLC with a price target of $54.

PayPal (PYPL +2.22%) was rated a new 'Buy' at Berenberg with a price target of $104.

Salesforce.com (CRM +1.18%) slid almost 2% in after-hours trading after it reported Q2 billings growth of +24.4%, weaker than consensus of +25.3%.

Textron (TXT +0.27%) was rated a new 'Overweight' at Alembic Global with a price target of $82.

PVH Corp (PVH +0.47%) lost more than 1% in after-hours trading after it forecast Q3 adjusted EPS of $3.10 to $3.13, the midpoint below consensus of $3.13.

Grief (GEF +1.25%) may move higher initially this morning after it reported Q3 adjusted EPS of $1.20, higher than consensus of $1.08, and then forecast full-year adjusted EPS of $3.53 to $3.69, the midpoint above consensus of $3.57.

Semtech (SMTC unch) rose 6% in after-hours trading after it reported Q2 adjusted EPS of 55 cents, better than consensus of 54 cents, and then forecast Q3 adjusted EPS of 58 cents to 64 cents, the midpoint above consensus of 60 cents.

Guess? (GES -0.99%) climbed more than 6% in after-hours trading after it reported Q2 adjusted EPS of 36 cents, higher than consensus of 32 cents, and then forecast full-year EPS of 94 cents to $1.03, the midpoint above consensus of 98 cents.

At Home Group (HOME +0.70%) lost 1% in after-hours trading after it reported Q2 comparable sales were up +2.8%, weaker than consensus of +3.1%.

Tilly's (TLYS +1.18%) jumped almost 10% in after-hours trading after it reported Q2 adjusted EPS of 29 cents, better than consensus of 26 cents.

Net 1 UEPS Technologies (UEPS -1.46%) tumbled nearly 13% in after-hours trading after it reported Q4 preliminary fundamental EPS of 22 cents, weaker than consensus of 27 cents, and then forecast fiscal 2019 fundamental EPS of at least $1.05, below consensus of $1.35.