Overnight Markets and News

Sep E-mini S&Ps (ESU18 +0.19%) this morning are up +0.20% at a new 3-month high and European stocks are up +0.22% a strength in technology stocks lifts the overall market. The Fed is expected to raise interest rates by 25 bp later today, so the focus of the market will be on the comments from Fed Chair Powell after the meeting for the future course of Fed policy. The upside in European stocks was limited on economic concerns after Eurozone Apr industrial production fell -0.9% m/m, the biggest decline in 10-months. Asian stocks settled mixed: Japan +0.38%, Hong Kong -1.22%, China -0.97%, Taiwan +0.26%, Australia -0.51%, Singapore -1.11%, South Korea closed for holiday, India +0.13%. Stock prices in China and Hong Kong moved lower, led by a 42% plunge in ZTE Corp, after the company agreed to a $1 billion fine and major revamp on management. Japanese stocks were led higher by strength in exporters after USD/JPY climbed to a 3-week high, which boosts the earnings prospects of exporters with the weaker yen.

The dollar index (DXY00 +0.03%) is down -0.02%. EUR/USD (^EURUSD +0.11%) is up +0.12%. USD/JPY (^USDJPY +0.15%) is up +0.14% at a 3-week high.

Sep 10-year T-note prices (ZNU18 +0-010) are unchanged.

Eurozone Apr industrial production fell -0.9% m/m, weaker than expectations of -0.7% m/m and the biggest decline in 10-months.

UK May CPI rose +0.4% m/m and +2.4% y/y, right on expectations. May core CPI rose +2.1% y/y, right on expectations.

The UK Apr house price index rose +3.9% y/y, the smallest year-on-year increase in 13-months.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +4.1% to 370.8 with the purchase sub-index +4.2% to 252.8 and the refi sub-index up +3.8% to 1007.3), (2) May PPI final demand (expected +0.3% m/m and +2.8% y/y, Apr +0.1% m/m and +2.6% y/y) and May PPI ex food & energy (expected +0.2% m/m and +2.3% y/y, Apr +0.2% m/m and +2.3% y/y), (3) EIA weekly Petroleum Status Report, (4) FOMC announces interest rate decision (expected +25 bp increase in the fed funds rate target to 1.75% to 2.00% from 1.50% to 1.75%), (5) Fed Chair Jerome Powell holds press conference following FOMC meeting.

Notable Russell 1000 earnings reports today include: none.

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

Equity conferences this week: Stifel Cross Sector Insight Conference on Mon-Wed, 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 +0.19%) this morning are up +5.50 points (+0.20%) at a new 3-month high. Tuesday's closes: S&P 500 +0.17%, Dow Jones -0.01%, Nasdaq +0.57%. The S&P 500 on Tuesday closed higher on reduced geopolitical concerns on the Korean peninsula after President Trump and North Korean leader Kim Jong Un met in Singapore and agreed to work towards denuclearization of the Korean peninsula. There was also strength in energy stocks after Jul WTI crude oil rose by +0.39% to a 1-week high. Stocks were undercut by the +2.2% y/y increase in the May core CPI, which was a 15-month high and was hawkish for Fed policy. There was also weakness in defense stocks as a potential peace deal between the U.S. and Korea could conceivably lead to reduced U.S. defense spending.

Sep 10-year T-notes (ZNU18 +0-010) this morning are unch. Tuesday's closes: TYU8 -1.00, FVU8 -1.25. Sep 10-year T-notes on Tuesday closed lower on the U.S. May core CPI report of +2.2% y/y, the fastest pace of increase in 15 months, which was hawkish for Fed policy. T-note prices were also undercut by expectations for the Fed to hike the fed funds target range by 25 bp at Wednesday's FOMC meeting.

The dollar index (DXY00 +0.03%) this morning is down -0.020 (-0.02%). EUR/USD (^EURUSD +0.11%) is up +0.0014 (+0.12%). USD/JPY (^USDJPY +0.15%) is up +0.16 (+0.14%) at a 3-week high. Tuesday's closes: Dollar Index +0.226 (+0.24%), EUR/USD -0.0039 (-0.33%), USD/JPY +0.34 (+0.31%). The dollar index on Tuesday closed higher on a rally in USD/JPY to a 2-1/2 week high as the easing of tensions on the Korean peninsula reduced the safe-haven demand for the yen. The dollar was also supported by expectations for the Fed to boost its fed funds rate target by 25 bp after Wednesday's FOMC meeting.

Metals prices this morning are mixed with Aug gold (GCQ18 -0.10%) -0.9 (-0.07%) at a 1-week low, Jul silver (SIN18 +0.14%) +0.034 (+0.20%) and Jul copper (HGN18 -0.18%) -0.002 (-0.05%). Tuesday's closes: Aug gold -3.8 (-0.29%), Jul silver -0.061 (-0.36%), Jul copper -0.0075 (-0.23%). Metals on Tuesday closed lower on reduced geopolitical risks from North Korea on a potential peace deal between the U.S. and Korea, which reduces the safe-haven demand for precious metals. Metals prices were also undercut by expectations for a Fed rate hike at the conclusion of Wednesday's 2-day FOMC meeting and by optimism a strike by copper miners at Chile's Escondidia copper mine, the world's largest, can be averted after workers at the BHP Billiton Spence copper mine in Chile agreed to a wage settlement.

Jul WTI crude oil prices (CLN18 -0.53%) this morning are down -14 cents (-0.21%) and Jul gasoline (RBN18 -0.40%) is +0.0010 (+0.05%). Tuesday's closes: Jul crude +0.26 (+0.39%), Jul gasoline -0.0150 (-0.71%). Jul crude oil and gasoline on Tuesday settled mixed with Jul crude at a 1-week high. Crude oil prices were boosted by the EIA's hike in its 2018 U.S. petroleum demand forecast to 20.41 million bpd from a May forecast of 20.38 million bpd and by expectations for Wednesday's weekly EIA crude oil inventories report to fall -1.5 million bbl. Crude oil prices were undercut by a stronger dollar and by the slide in the crack spread to a 2-1/2 week low, which reduces incentive for refiners to purchase crude oil to refine into gasoline.

Overnight U.S. Stock Movers

Control4 (CTRL +1.21%) was rated a new 'Buy' at Roth Capital Partners with a price target of $31.

Time Warner (TWX +0.05%) rose nearly 4% in after-hours trading after a U.S. District judge cleared the company's acquisition by AT&T without conditions. 21st Century Fox (FOXA +1.02%) rose more than 4% and CBS (CBS +0.75%) rose more than 1% on the news. Disney (DIS -0.02%) fell almost 2% and Comcast (CMCSA +1.19%) dropped 4% on the news.

Express Scripts Holdings (ESRX -0.50%) climbed almost 5% in after-hours trading on speculation the judge's decision in favor of AT&T's deal for Time Warner is positive for the Cigna/Express Scripts merger.

RH (RH +30.55%) lost 1% in after-hours trading after it said it was exploring a potential offering of $300 million in convertible notes due 2023.

SAIC (SAIC -0.17%) may open to the upside this morning after reported Q1 revenue of $1.18 billion, stronger than expectations of $1.13 billion.

Nine Energy Service (NINE -0.37%) was rated a 'Strong Buy' at Raymond James with a price target of $40.

Oxford Industries (OXM +2.71%) dropped 8% in after-hours trading after it forecast Q2 adjusted EPS of $1.75 to $1.85, weaker than consensus of $1.94.

Brighthouse Financial (BHF -1.50%) slid 2% in after-hours trading after it announced the commencement of an underwritten public offering of 23.115 million shares of its common stock previously issued to and currently owned by MetLife.

Puma Biotechnology (PBYI +2.46%) gained more than 3% in after-hours trading after it said Europe's Committee for Medicinal Products for Human Use will conduct as oral hearing to discuss the re-examination of Puma's breast cancer drug Neratinib on June 26.

H&R Block (HRB +0.75%) plunged 20% in pre-market trading after it forecast 2019 revenue of $3.05 billion to $3.10 billion, below consensus of $3.14 billion.

Pivotal Software (PVTL +1.29%) rallied 5% in after-hours trading after it reported Q1 revenue of $155.7 million, better than consensus of $141 million, and forecast full-year revenue of $642 million to $649 million, above consensus of $623.5 million.

Enphase Energy (ENPH -2.60%) soared more than 30% in after-hours trading after it agreed to acquire SunPower's microinverter unit for $25 million in cash and 7.5 million shares in stock.