Overnight Markets and News

Sep E-mini S&Ps (ESU18 -0.11%) this morning are down -0.09% and European stocks are down -0.04% as the prospects of tighter global central bank policies weighs on stock prices. The Fed is expected to raise the fed funds target range by 25 bp on Wednesday and the ECB may announce the end of its QE program on Thursday. The outlook for tighter monetary policy has pushed up the yield on the German 10-year bund to a 2-week high of 0.518%. Europeans stocks were also undercut after the German Jun ZEW survey expectations of economic growth fell -7.9 to a 5-3/4 year low of -16.1. Asian stocks settled mostly higher: Japan +0.33%, Hong Kong +0.13%, China +0.89%, Taiwan -0.04%, Australia +0.15%, Singapore -0.32%, South Korea -0.12%, India +0.59%. Asian markets found support on reduced geopolitical risks on the Korean peninsula after President Trump and North Korean leader Kim Jong Un met in Singapore and signed a document that called for "complete denuclearization of the Korean peninsula" and a commitment to a "lasting and stable peace." Gains in Chinese stocks were limited on signs of tighter credit growth in China after China May aggregate financing, the broadest measure of credit growth, rose 760.8 billion yuan, the slowest pace of growth in 1-3/4 years. Japan's Nikkei Stock Index climbed to a 3-week high as the prospects of peace on the Korean peninsula reduced the safe-haven demand for the yen and boosted exporter stocks as USD/JPY rose to a 2-1/2 week high.

The dollar index (DXY00 +0.05%) is down -0.02%. EUR/USD (^EURUSD -0.04%) is up +0.01%. USD/JPY (^USDJPY +0.22%) is up +0.20% at a 2-1/2 week high as an easing of geopolitical risks on the Korean peninsula undercuts the safe-haven demand for the yen.

Sep 10-year T-note prices (ZNU18 -0-020) are down -2.5 ticks.

The German Jun ZEW survey expectations of economic growth fell -7.9 to a 5-3/4 year low of -16.1, weaker than expectations of -5.8 to -14.0.

China May new yuan loans rose 1.15 trillion yuan, weaker than expectations of 1.20 trillion yuan. May aggregate financing rose 760.8 billion yuan, weaker than expectations of 1.30 trillion yuan and the slowest pace of growth in 1-3/4 years.

Japan May PPI rose +0.6% m/m and +2.7% y/y, stronger than expectations of +0.2% m/m and +2.1% y/y with the +0.6% m/m gain the largest monthly increase in 16 months.

The Japan Q2 BSI large all-industry business conditions fell -5.3 to -2.0, the lowest in a year. The Q2 BSI large manufacturing business conditions fell -6.1 to -3.2, the lowest in 2-years.

U.S. Stock Preview

Key U.S. news today includes: (1) May CPI (expected +0.2% m/m and +2.7% y/y, Apr +0.2% m/m and +2.5% y/y) and May CPI ex food & energy (expected +0.2% m/m and +2.2% y/y, Apr +0.1% m/m and +2.1% y/y), (2) FOMC begins 2-day meeting, (3) USDA WASDE Jun crop production, (4) Treasury auctions $14 billion 30-year T-bonds, (5) May monthly budget statement (expected -$139.5 billion, Apr +$214.255 billion).

Notable Russell 1000 earnings reports today include: John Wiley (consensus $0.79), Casey's General Stores (0.66), H&R Block (5.30).

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

Equity conferences this week: Stifel Cross Sector Insight Conference on Mon-Wed, Nasdaq Investor Conference on Tue, Wells Fargo West Coast Energy Conference on Tue, Morgan Stanley Financials Conference on Tue-Wed, Goldman Sachs Global Health Care Conference on Tue-Thu, Deutsche Bank Global Consumer Conference on Tue-Thu, William Blair Growth Stock Conference on Tue-Thu, Berenberg Design Software Conference on Wed, ACI Hospitality Minds Europe Conference on Wed-Thu, UBS Industrials and Transportation Conference on Wed-Thu, RBC Capital Markets Financial Technology Investor Day on Thu, Vertical Research Partners Materials Conference on Thu.

Market Comments

Sep S&P 500 E-minis (ESU18 -0.11%) this morning are down -2.50 points (-0.09%). Monday's closes: S&P 500 +0.11%, Dow Jones +0.02%, Nasdaq +0.22%. The S&P 500 on Monday rallied to a 2-3/4 month high and closed higher on carry-over support from a rally in European stocks after Italian political risks subsided when Italian Prime Minister Tria said "there is no discussion of any proposal to leave the euro." There was also strength in energy stocks as crude oil prices rose +0.55%.

Sep 10-year T-notes (ZNU18 -0-020) this morning are down -2.5 ticks. Monday's closes: TYU8 -5.00h, FVU8 -3.75. Sep 10-year T-notes on Monday closed lower on supply pressures as the Treasury auctioned $54 billion of 3-year and 10-year T-notes on Monday. There was also reduced safe-haven demand for T-notes after the S&P 500 climbed to a 2-3/4 month high.

The dollar index (DXY00 +0.05%) this morning is down -0.019 (-0.02%). EUR/USD (^EURUSD -0.04%) is up +0.0001 (+0.01%). USD/JPY (^USDJPY +0.22%) is up +0.22 (+0.20%) at a 2-1/2 week high. Monday's closes: Dollar Index +0.025 (+0.03%), EUR/USD +0.0015 (+0.13%), USD/JPY +0.48 (+0.44%). The dollar index on Monday closed slightly higher on the increase in the 10-year T-note yield, which improved the dollar's interest rate differentials. The dollar was undercut by strength in EUR/USD on reduced Italian political risks as the 10-year Italian bond yield fell -30 bp to 2.82% after Italian Finance Minister Tria said "there is no discussion of any proposal to leave the euro.

Metals prices this morning are lower with Aug gold (GCQ18 -0.17%) -1.8 (-0.14%), Jul silver (SIN18 -0.42%) -0.067 (-0.40%) and Jul copper (HGN18 -0.49%) -0.016 (-0.48%). Monday's closes: Aug gold +0.50 (+0.04%), Jul silver +0.211 (+1.26%), Jul copper -0.0430 (-1.30%). Metals on Monday settled mixed with Jul silver at a 1-1/2 month high. Metals prices were boosted by a weaker dollar and by increased Chinese copper demand after China May unwrought copper imports climbed by +6.8% m/m and +21.8% y/y to a 17-month high of +475,000 MT. Metals prices were undercut by the rally in the S&P 500 to a 2-3/4 month high, which curbed the safe-haven demand for precious metals, and by the weaker-than-expected UK Apr manufacturing production report, which suggested weaker industrial metals demand.

Jul WTI crude oil prices (CLN18 -0.27%) this morning are down -17 cents (-0.26%) and Jul gasoline (RBN18 -0.48%) is -0.0118 (-0.56%). Monday's closes: Jul crude +0.36 (+0.55%), Jul gasoline -0.0104 (-0.49%). Jul crude oil and gasoline on Monday settled mixed. Crude oil prices were undercut by increased crude output from Saudi Arabia as Saudi May crude production rose +162,000 bpd to 10.03 million bpd. Russian crude oil production also rose after Interfax reported Russia raised its crude production in the first week of June to 11.1 million bpd, above the 10.05 million bpd level it had agreed to with OPEC. Crude oil prices were boosted by a weaker dollar and by comments from Iraq Oil Minister Jabbar al-Luibi who said OPEC and its allied producers have not reached their objectives and shouldn't be influenced by calls to pump more oil.

Overnight U.S. Stock Movers

Franklin Financial Network (FSB +5.07%) was downgraded to 'Sell' from 'Neutral' at Compass Point Research & Trading LLC with a price target of $36.

Twitter (TWTR +0.51%) is up 2% in pre-market trading after JPMorgan Chase reiterated its 'Overweight' rating on the stock and lifted its price target to $50 from $39.

RH (RH +4.81%) surged 16% in after-hours trading after it reported an unexpected +1% increase in Q1 comparable sales, stronger than consensus for -0.9% loss, and then forecast Q2 adjusted EPS of $1.70 to $1.77, well above consensus of $1.50.

KMG Chemicals (KMG +0.11%) climbed nearly 4% in after-hours trading after it reported Q3 net sales of $118.6 million, better than consensus of $113.0 million, and then forecast full net sales of $455 million to $465 million, the midpoint above consensus of $455.3 million.

Dave & Buster's Entertainment (PLAY +0.44%) jumped 15% in after-hours trading after it reported Q1 revenue of $332.2 million, better than consensus of $321.5 million.

Urban Outfitters (URBN +1.29%) gained 3% in after-hours trading after it said its Q2 comparable sales-to-date rose in the mid-teens range.

At Home Group (HOME -1.16%) slipped nearly 3% in after-hours trading after it announced the launch of an underwritten secondary public offering of 8.0 million shares of its common stock by some of the company's existing stockholders.

Immunomedics (IMMU -1.37%) dropped 5% in after-hours trading after it announced that it had commenced an underwritten public offering of $275 million of shares of its common stock.

Jernigan Capital (JCAP +1.65%) fell 4% in after-hours trading after it announced that it had commenced an underwritten public offering of 3.5 million shares of its common stock.

Hercules Capital (HTGC +0.49%) slid almost 3% in after-hours trading after it announced it plans to make a public offering of 6.0 million shares of its common stock.

Enzo Biochem (ENZ +1.82%) tumbled more than 10% in after-hours trading after it reported Q3 revenue of $25.6 million, below the $26.95 million from Q2 and below the $27.1 million from Q3 of last year.

Pfenex (PFNX -4.52%) rallied 5% in after-hours trading after it announced that it had entered into an agreement granting Alvogen exclusive rights to commercialize Pfenex's PF708, a teriparatide therapeutic equivalent candidate to Eli Lilly's Forteo drug.

AcelRx Pharmaceuticals (ACRX -1.35%) jumped almost 6% in after-hours trading after it was rated a new 'Overweight' at Cantor Fitzgerald with a price target of $6.