Morning Call For Thursday, Feb. 1
OVERNIGHT MARKETS AND NEWS
Mar E-mini S&Ps (ESH18 +0.05%) this morning are up +0.08% led by a 2% gain in Facebook in pre-market trading. Energy stocks are higher as well with Mar WTI crude oil (CLH18 +0.70%) up +0.59% after Goldman Sachs raised their 6-month crude oil price outlook to $82.50 from $62.00 and said output cuts by OPEC and a collapse in Venezuelan crude production have helped clear a global glut in crude supplies six months earlier than expected. European stocks are up +0.20% on solid quarterly stock earnings results, although gains were contained on interest rate concerns after the 10-year German bund yield rose to a new 2-year high of 0.734%. Asian stocks settled mixed: Japan +1.68%, Hong Kong -0.75%, China -0.97%, Taiwan +0.51%, Australia +0.87%, Singapore +0.37%, South Korea -0.01%, India -0.16%. China's Shanghai Composite fell to a 2-week low on long liquidation after China's Securities Regulatory Commission called for stepped up monitoring of risks in stock, bond and futures markets. Japan's Nikkei Stock Index closed higher after the Fed acknowledged stronger growth and signaled optimism in the U.S. economy following Wednesday's 2-day FOMC meeting.
The dollar index (DXY00 -0.11%) is down -0.05%. EUR/USD (^EURUSD) is up +0.23%. USD/JPY (^USDJPY) is up +0.43%.
Mar 10-year T-note prices (ZNH18 -0.19%) are down -7.5 ticks at a new contract low.
The UK Jan Markit manufacturing PMI unexpectedly fell -0.9 to 55.2, weaker than expectations of +0.2 to 56.5 and the slowest pace of expansion in 7 months.
UK Jan nationwide house prices rose +0.6% m/m and +3.2% y/y, stronger than expectations of +0.1% m/m and +2.5% y/y with the +3.2% y/y gains the largest year-on-year increase in 10-months.
The China Jan Caixin (flash) manufacturing PMI was unch at 51.5, right on expectations.
Japan Jan vehicle sales fell -5.7% y/y, the fourth straight monthly decline and the biggest drop in 2-3/4 years.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Jan Challenger job cuts (Dec -3.6% y/y), (2) weekly initial unemployment claims (expected +2,000 to 235,000, previous +17,000 to 233,000) and continuing claims (expected -8,000 to 1.929 million, previous -28,000 to 1.937 million), (3) Q4 nonfarm productivity (expected +0.8%, Q3 +3.0%) and O4 unit labor costs (expected +0.9%, Q3 -0.2%), (4) USDA weekly Export Sales, (5) revised Jan Markit manufacturing PMI (expected unrevised, prelim-Jan +0.4 to 55.5), (6) Jan ISM manufacturing index (expected -0.7 to 58.6, Dec +1.1 to 59.3), (7) Dec construction spending (expected +0.4%, Nov +0.8%), (8) Jan total vehicle sales (expected 17.25 million, Dec 17.76 million).
Notable S&P 500 earnings reports today include: Exxon Mobil (consensus $1.03), Weyerhaeuser (0.35), Aon (2.35), Chevron (1.22), Clorox (1.23), Merck (0.94), Phillips 66 (0.88), Charter Communications (0.88).
U.S. IPO's scheduled to price today: none.
Equity conferences this week: none.
OVERNIGHT U.S. STOCK MOVERS
Facebook (FB -0.12%) is up 2% in pre-market trading after it said in an earnings call that daily active users in North America may fluctuate but the downward trend isn't expected to continue. Facebook initially declined 5% in after-hours trading after it reported 1.40 billion daily active users in Q4, below consensus of 1.41 billion.
AT&T (T +0.03%) rose over 3% in after-hours trading after it reported Q4 adjusted EPS of 78 cents, higher than consensus of 65 cents.
Qualcomm (QCOM +1.88%) lost almost 1% in after-hours trading after it said it sees Q2 revenue of $4.80 billion to $5.60 billion, the midpoint below consensus of $5.58 billion.
Microsoft (MSFT +2.45%) lost nearly 2% in after-hours trading after it said it took net -82 cents a share loss in Q2 due to a $13.8 billion charge related to taxes owed on overseas cash.
Citrix Systems (CTXS +0.08%) fell almost 2% in after-hours trading after it said it sees Q1 revenue of $670 million to $680 million, below consensus of $683.8 million.
Vertex Pharmaceuticals (VRTX +0.20%) rose nearly 4% in after-hours trading after it reported Q4 adjusted EPS of 61 cents, better than consensus of 53 cents, and said it authorized a $500 million stock repurchase program.
Allegiant Travel (ALGT -0.09%) gained 2% in after-hours trading after it reported Q4 operating revenue of $378.6 million, above consensus of $377.1 million.
eBay (EBAY +0.45%) climbed almost 6% in after-hours trading after said it sees full-year net revenue of $10.9 billion to $11.1 billion, above consensus of $10.27 billion.
PayPal Holdings (PYPL +1.84%) fell over 10% in after-hours trading after eBay said it will replace PayPal with Adyent as its payments processor. PayPal was already down over 4% in after-hours trading after it said it sees full-year net revenue of $15.00 billion to $15.25 billion, weaker than consensus of $15.26 billion.
Qorvo (QRVO +1.56%) rallied 8% in after-hours trading after it reported Q3 adjusted EPS of $1.69, better than consensus of $1.60.
Tractor Supply (TSCO -2.32%) fell 4% in after-hours trading after it said it sees full-year EPS of $3.95 to $4.15, the midpoint below consensus of $4.15.
Open Text (OTEX +0.41%) jumped 12% in after-hours trading it reported Q2 adjusted EPS of 76 cents, higher than consensus of 63 cents.
Electro Scientific Industries (ESIO -0.93%) climbed almost 4% in after-hours trading after it reported Q3 adjusted EPS of 99 cents, higher than consensus of 83 cents.
QuinStreet (QNST -1.58%) surged 20% in after-hours trading after it reported Q2 revenue of $87.5 million, better than consensus of $75.3 million, and then raised guidance on full-year 2018 revenue growth to up 20% from an Oct 30 projection of up 10%-15%.
MARKET COMMENTS
Mar S&P 500 E-mini stock futures (ESH18 +0.05%) this morning are up +2.25 points (+0.08%). Wednesday's closes: S&P 500 +0.05%, Dow Jones +0.28%, Nasdaq +0.28%. The S&P 500 on Wednesday recovered from a 1-week low and closed higher on the +234,000 increase in U.S. Jan ADP employment (stronger than expectations of +185,000) and on the upbeat FOMC post-meeting statement that said economic activity is rising at a solid rate and gains in employment, spending and investment have been solid. A negative factor was interest rate concerns after the 10-year T-note yield rose to a new 3-3/4 year high of 2.75%.
Mar 10-year T-note prices (ZNH18 -0.19%) this morning are down -7.5 ticks at a fresh contract low. Wednesday's closes: TYH8 -2.00, FVH8 -4.00. Mar 10-year T-notes fell to new contract low and the 10-year T-note yield rose to a new 3-3/4 year high. T-note prices were undercut by the Treasury's $1 billion hike in the size of next week's 10-year T-note and 30-year T-bond auctions (the first increase since 2009) and the stronger-than-expected U.S. Jan ADP employment report and Jan Chicago PMI, which bolstered the outlook for tighter Fed policy. T-notes were also undercut by the rise in the 10-year T-note breakeven inflation rate to a 3-1/3 year high of 2.12%.
The dollar index (DXY00 -0.11%) this morning is down -0.047 (-0.05%). EUR/USD (^EURUSD) is up +0.0028 (+0.23%) and USD/JPY (^USDJPY) is up +0.47 (+0.43%). Wednesday's closes: Dollar Index -0.027 (-0.03%), EUR/USD +0.0012 (+0.10%), USD/JPY +0.41 (+0.38%). The dollar index on Wednesday closed lower on concern the U.S. budget deficit will worsen after President Trump in Tuesday night's State of the Union speech asked Congress to approve a $1.5 trillion infrastructure spending plan that failed to include details on how it will be funded. There was also strength in EUR/USD after Eurozone Jan CPI rose +1.3% y/y, stronger than expectations of +1.2%. The dollar recovered most its losses after the post-FOMC statement said, "economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate."
Mar crude oil (CLH18 +0.70%) this morning is up +38 cents (+0.59%) and Mar gasoline (RBH18 +0.33%) is +0.0077 (+0.41%). Wednesday's closes: Mar WTI crude +0.23 (+0.36%), Mar gasoline +0.0230 (+1.23%). Mar crude oil and gasoline on Wednesday closed higher on the unexpected -1.98 million bbl decline in EIA gasoline inventories (vs expectations of +2.0 million bbl) and the -2.22 million bbl decline in Cushing crude stockpiles to a 3-year low of 37.02 million bbl. Crude oil prices were undercut by the +6.78 million bbl increase in EIA crude inventories (vs expectations of +1.0 million bbl) and by the +0.4% increase in U.S. crude production the week of Jan 26 to 47-year high of 9.919 million bpd.
Metals prices this morning are lower with Apr gold (GCJ18 -0.09%) -2.6 (-0.19%), Mar silver (SIH18 -0.35%) -0.076 (-0.44%), and Mar copper (HGH18 -0.13%) -0.004 (-0.11%). Wednesday's closes: Apr gold +3.1 (+0.23%), Mar silver +0.183 (+1.07%), Mar copper +0.065 (+0.20%). Metals on Wednesday closed higher on a weaker dollar and on President Trump's State of the Union address where he asked Congress to approve a $1.5 trillion infrastructure spending plan, which would boost industrial metals demand. Gold prices were boosted by increased demand for gold as an inflation hedge after the 10-year T-note breakeven inflation rate rose to a 3-1/3 year high of 2.12%.
Disclosure: None.