Overnight Markets and News

Jun E-mini S&Ps (ESM18 +0.46%) this morning are up +0.47% at a 3-week high on expectations of strong S&P 500 Q1 corporate earnings results. Netflix is up over 7% in pre-market trading after it reported better-than-expected Q1 earnings and forecast a bigger-than expected increase in subscribers for Q2. European stocks are up +0.63% as automakers gained when China removed a two-decade restriction and will let foreign car makers own more than 50% of local ventures, which should boost foreign automakers profits. Also, exporters gained after EUR/USD fell back from a 2-week high and moved lower, which is positive for earnings for European exporters. Gains were limited in European stocks after the German Apr ZEW survey expectations of economic growth fell -13.3 to a 5-1/3 year low of -8.2. Asian stocks settled mixed: Japan +0.06%, Hong Kong -0.83%, China -1.41%, Taiwan -1.32%, Australia unch, Singapore +0.03%, South Korea -0.17%, India +0.26%. China's Shanghai Composite fell to a 2-1/4 month low after China Mar industrial production rose +6.0% y/y, the slowest pace of increase in 7 months, and as technology stocks tumbled after the U.S. banned ZTE Corp, China's second-largest telecommunications gear-maker, from buying American technology. Chinese bank stocks may get a boost in Wednesday's session as the PBOC, after Chinese markets closed Tuesday, cut some banks' reserve requirement ratio by 100 bp or 1.0%, effective Apr 25.

The dollar index (DXY00 +0.02%) is up +0.04%. EUR/USD (^EURUSD -0.03%) is down -0.03%. USD/JPY (^USDJPY -0.03%) is down -0.03%.

Jun 10-year T-note prices (ZNM18 -0-015) are down -2 ticks.

The German Apr ZEW survey expectations of economic growth fell -13.3 to a 5-1/3 year low of -8.2, weaker than expectations of -6.1 to -1.0.

China Q1 GDP rose +6.8% y/y, right on expectations.

China Mar industrial production rose +6.0% y/y, weaker than expectations of +6.3% y/y and the slowest pace of increase in 7 months.

China Mar retail sales rose +10.1% y/y, stronger than expectations of +9.7% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) Mar housing starts (expected +2.4% to 1.266 million, Feb -7.0% m/m to 1.236 million), (2) Mar industrial production (expected +0.4% m/m, Feb +0.9% m/m), (3) San Francisco Fed President John Williams (voter) speaks at a NABE conference in Madrid, Spain, (4) Fed Governor Randal Quarles testifies before the House Financial Services Committee on the conduct of supervision and regulation of depository institution holding companies and other financial firms supervised by the Fed, (5) Philadelphia Fed President Patrick Harker (non-voter) speaks on “The Economics of Equitable Education: How Today’s Loans, Access and Training Affect Tomorrow’s Economy” at an event in Philadelphia, (6) Chicago Fed President Charles Evans (non-voter) discusses current economic conditions and monetary policy at the Chicago Rotary Club, (7) Atlanta Fed President Raphael Bostic (voter) speaks on the economy at a seminar in Atlanta.

Notable S&P 500 earnings reports today include: Goldman Sachs (consensus $5.56), Northern Trust (1.41), IBM (2.41), CSX (0.66), Johnson & Johnson (2.01), Comerica (1.53), UnitedHealth (2.89).

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

Equity conferences this week: American Association for Cancer Research Meeting on Mon-Wed, RSA Conference on Mon-Thu.

Market Comments

June S&P 500 E-minis (ESM18 +0.46%) this morning are up +12.50 points (+0.47%) at a 3-week high. Monday's closes: S&P 500 +0.81%, Dow Jones +0.87%, Nasdaq +0.71%. The S&P 500 on Monday rallied to a 3-week high and closed higher on reduced Middle East tensions after Saturday's U.S. attack on Syria was only a limited one-time strike with no impact on Russian personnel or military assets. Stocks were also boosted by the +0.6% increase in U.S. Mar retail sales, stronger than expectations of +0.4%. Healthcare stocks rallied after CNBC reported that Amazon has shelved a plan to sell and distribute pharmaceutical products after considering it last year.

June 10-year T-notes (ZNM18 -0-015) this morning are down -2 ticks. Monday's closes: TYM8 -0.5, FVM8 -0.5 Jun 10-year T-notes on Monday fell to a 3-week low and closed slightly lower on reduced safe-haven demand for T-notes on relief that the U.S. military strike on Syria is over and that there was no impact on Russian personnel or military assets. T-note prices were also undercut by the stronger-than-expected U.S. Mar retail sales report of +0.6%. T-notes found support on New York Fed President Dudley's comment that the Fed will stick to its "gradual" path of raising interest rates unless inflation moves up by an "appreciable margin."

The dollar index (DXY00 +0.02%) this morning is up +0.04 (+0.04%). EUR/USD (^EURUSD -0.03%) is down -0.0004 (-0.03%) and USD/JPY (^USDJPY -0.03%) is down -0.03 (-0.03%). Monday's closes: Dollar Index -0.375 (-0.42%), EUR/USD +0.0049 (+0.40%), USD/JPY -0.23 (-0.21%). The dollar index on Monday closed lower on comments from President Trump who tweeted that Russia and China are playing the currency devaluation game while the U.S. raises interest rates and that is "not acceptable." The dollar was also undercut by dovish comments from New York Fed President Dudley who said the Fed will stay on is "gradual" rate hike path unless inflation moves up by an "appreciable margin."

Metals prices this morning are weaker with Jun gold (GCM18 -0.39%) -5.4 (-0.40%), May silver (SIK18 -0.34%) -0.062 (-0.37%), and May copper (HGK18 -0.94%) -0.024 (-0.78%). Monday's closes: Jun gold +2.80 (+0.21%), May silver +0.019 (+0.11%), May copper +0.0245 (+0.80%). Metals on Monday closed higher on a weaker dollar and on fund buying of gold as long gold positions in ETFs rose to a 5-year high last Friday of 2393 MT. Copper prices were boosted by tighter supplies after LME copper inventories fell -5,025 MT to a 3-week low of 352,000 MT.

May crude oil prices (CLK18 +0.02%) this morning are up +9 cents (+0.14%) and May gasoline (RBK18 -0.07%) is up +0.0004 (+0.02%). Monday's closes: May crude -1.17 (-1.74%), May gasoline -0.0255 (-1.23%). May crude oil and gasoline on Monday closed lower on reduced Middle East tensions after the U.S. military strike on Syria was conducted quickly and on a very contained basis. Crude oil prices were also undercut by negative carry-over from last Friday's Baker Hughes report that active U.S. oil rigs rose by +7 rigs to a 3-year high of 815 rigs.

Overnight U.S. Stock Movers

Netflix (NFLX -1.24%) jumped nearly 7% in pre-market trading after it reported Q1 total net streaming adds of 7.41 million, better than expectations of 6.43 million, and said it sees Q2 total net subscriber additions of 6.2 million, well above consensus of 4.83 million.

GrubHub (GRUB +0.60%) was rated a new 'Overweight' at Stephens with a price target of $120.

Merk & Co (MRK +2.59%) was upgraded to 'Overweight' from 'Equal-Weight' at Morgan Stanley with a price target of $68.

Celanese (CE +2.17%) climbed over 6% in after-hours trading after it reported Q1 adjusted EPS of $2.79, well above consensus of $2.33.

Dollar General (DG +0.82%) is up over 1% in pre-market trading after it was upgraded to 'Overweight' from 'Neutral' at JPMorgan Chase.

Progressive Corp (PGR +1.43%) rose 3% in after-hours trading on expectations of stellar quarterly earnings results when they are reported Tuesday.

CRISPR Therapeutics AG (CRSP -1.14%) gained almost 3% in after-hours trading after it said data from an allogeneic chimeric antigen receptor T cell program showed progress.

Penske Automotive Group (PAG +2.20%) was rated a new 'Buy' at Guggenheim Securities.

Roku (ROKU +1.01%) climbed 5% in after-hours trading after Point72 Asset Management reported a 5.1% passive stake in the company.

Acacia Communications (ACIA -35.97%) was downgraded to 'Neutral' from 'Overweight' at Piper Jaffray.

Bellicum Pharmaceuticals (BLCM -0.11%) dropped 10% in after-hours trading after it said it had commenced an underwritten public offering of 7 million shares of its common stock.

Viveve Medical (VIVE +11.63%) was rated a new 'Buy' at Stifel with a price target of $6.

Seachange International (SEAC +2.68%) tumbled nearly 8% in after-hours trading after it forecast Q1 revenue of $13 million to $15 million, below consensus of $18.6 million.