Overnight Markets and News

Jun E-mini S&Ps (ESM18 +0.56%) this morning are up +0.47% and European stocks are up +0.21% as Italian political risks eased, and stronger-than-expected Eurozone economic data bolstered economic growth prospects. The yield on Italy's 10-year government bond fell -19 bp back below 3.00% after it had surged to a 4-year high Tuesday at 3.16%. The German May unemployment rate unexpectedly fell -0.1 to a record low 5.2% and Eurozone May economic confidence came in higher than expected. Asian stocks settled lower: Japan -1.52%, Hong Kong -1.40%, China -2.53%, Taiwan -1.30%, Australia -0.48%, Singapore -2.12%, South Korea -2.19%, India -0.12%. China's Shanghai Stock Index tumbled to a 1-year low as trade tensions increased with the U.S. after President Trump said he was going ahead with $50 billion of tariffs on Chinese imports and restrict investment in sensitive technology and that the final list of imported goods to be targeted will be released by Jun 15. China's foreign ministry responded by saying if the U.S. insists on unilateral measures, China will respond accordingly. Japan's Nikkei Stock Index fell to a 6-week low as the Italian political crisis weighed on stock prices as did the slump in USD/JPY to a 5-week low Tuesday, which undercut Japanese exporters.

The dollar index (DXY00 -0.53%) is down -0.46%. EUR/USD (^EURUSD +0.83%) is up +0.85%. USD/JPY (^USDJPY +0.13%) is up +0.15%.

Jun 10-year T-note prices (ZNM18 -0-300) are down -26.5 ticks.

German May unemployment fell -11,000 to 2.358 million, stronger than expectations of -10,000. The May unemployment rate unexpectedly fell -0.1 to a record low 5.2% (data from 1990), stronger than expectations of no change at 5.3%,

German Apr retail sales rose +2.3% m/m, stronger than expectations of +0.5% m/m and the largest increase in 1-1/2 years.

Eurozone May economic confidence fell -0.2 to 112.5, stronger than expectations of -0.7 to 112.0. The May business climate indicator unexpectedly rose +0.06 to 1.45, stronger than expectations of -0.06 to 1.29.

Japan Apr retail sales rose +1.4% m/m, stronger than expectations of +0.5% m/m and the biggest increase in 17 months.

Japan May consumer confidence rose +0.2 to 43.8, weaker than expectations of +0.3 to 43.9.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -2.6% to 366.7 with purchase sub-index -2,0% to 247.4 and refi sub-index -3.7% to 1018.1), (2) May ADP employment (expected +190,000, Apr +204,000), (3) Q1 GDP (expected unrevised at +2.3% q/q annualized), (4) Apr wholesale inventories (expected +0.5%, Mar +0.3%), and (5) Fed Beige Book.

Notable Russell 1000 earnings reports today include: Dick's Sporting Goods (consensus $0.44), Michael Kors (0.60), Analog Devices (1.37), PVH Corp (2.25), Keysight Technologies (0.83), AMERCO (0.85).

U.S. IPO's scheduled to price today: Trident Acquisitions (TDACU).

Equity conferences this week: Deutsche Bank Global Financial Services Investor Conference on Tue-Wed, Stifel Dental & Veterinary Conference on Wed, Cowen & Co. Technology, Media, and Telecom Conference on Wed-Thu, KeyBank Capital Markets Industrials and Basic Materials Conference on Wed-Thu, Bernstein Strategic Decisions CEO Conference on Wed-Fri, RBC Capital Markets Auto Tech: Connected, Autonomous, Shared, Electric Conference on Thu, RBC Capital Markets Consumer & Retail Conference on Wed-Thu, American Society of Clinical Oncology Meeting on Fri.

Market Comments

June S&P 500 E-minis (ESM18 +0.56%) this morning are up +12.75 points (+0.47%). Tuesday's closes: S&P 500 -1.16%, Dow Jones -1.58%, Nasdaq -0.49%. The S&P 500 on Tuesday fell to a 2-1/2 week low and closed sharply lower on negative carry-over from a slide in European stocks to a 1-1/2 month low on the Italian political crisis and impending new elections. There was also weakness in energy stocks after crude oil prices tumbled -1.69% to a 1-1/4 month low.

June 10-year T-notes (ZNM18 -0-300) this morning are down -26.5 ticks. Tuesday's closes: TYM8 +1-12/32, FVM8 +28.50. Jun 10-year T-notes on Tuesday rallied to a 1-1/2 month high and closed higher on safe-haven demand from the Italian political crisis and on positive carry-over from a rally in 10-year German bunds to a 13-1/4 month high. T-note prices were also boosted by comments from St. Louis Fed President Bullard who said, "inflation expectations in the U.S. remain low, suggesting that further normalization may not be necessary to keep inflation near target." T-notes also saw support from reduced inflation expectations as the Jun 10-year T-note breakeven inflation rate fell to a 1-1/2 month low.

The dollar index (DXY00 -0.53%) this morning is down -0.432 (-0.46%). EUR/USD (^EURUSD +0.83%) is up +0.0098 (+0.85%). USD/JPY (^USDJPY +0.13%) is up +0.16 (+0.15%). Tuesday's closes: Dollar Index +0.645 (+0.68%), EUR/USD -0.0085 (-0.73%), USD/JPY -0.65 (-0.59%). The dollar index on Tuesday climbed to a 6-1/2 month high and closed higher on the sharp sell-off in EUR/USD to a 10-1/4 month low. The euro fell on an escalation of Italian political risks and the threat to Eurozone stability. The euro was also undercut by the plunge in the 10-year German bund yield to a 13-1/4 month low of 0.188%, which undercut the euro's interest rate differentials.

Metals prices this morning are mixed with Jun gold (GCM18 -0.12%) -1.8 (-0.14%), Jul silver (SIN18 +0.13%) +0.012 (+0.07%), and Jul copper (HGN18 -0.41%) -0.011 (-0.36%) at a 1-3/4 month low. Tuesday's closes: Jun gold -4.70 (-0.36%), Jul silver -0.173 (-1.05%), Jul copper -0.0150 (-0.49%). Metals on Tuesday closed lower on the rally in the dollar index to a 6-1/2 month high and reduced demand for gold as an inflation hedge after the 10-year T-note breakeven inflation rate fell to a 1-1/2 month low.

Jul WTI crude oil prices (CLN18 +0.39%) this morning are up +6 cents (+0.09%) and Jul gasoline (RBN18 +0.82%) is +0.0117 (+0.55%). Tuesday's closes: Jul crude -1.15 (-1.69%), Jul gasoline -0.0372 (-1.71%). Jul crude oil and gasoline on Tuesday closed lower with Jul crude at a 1-1/4 month low and Jul gasoline at a 2-1/2 week low. Crude oil prices were undercut by the rally in the dollar index to a 6-1/2 month high and by negative carry-over from Friday's comments by Saudi Arabian Energy Minister Khalid Al-Falih who said OPEC and its allies are likely to gradually boost crude production in the second half of this year. Crude oil prices were also undercut by signs of increased U.S. crude output after Friday's data from Baker Hughes showed active U.S. oil rigs in the week ended May 25 rose 15 rigs to a 3-year high of 859 rigs.

Overnight U.S. Stock Movers

Exxon-Mobile (XOM -0.37%) was upgraded to 'Outperform' from 'Sector Perform' at RBC Capital Markets with a price target of $100.

Meredith (MDP +0.31%) was upgraded to 'Buy' from 'Neutral' at Citigroup with a price target of $59.

Salesforce.com (CRM -0.84%) rose almost 4% in after-hours trading after it reported Q1 adjusted EPS of 74 cents, well above consensus of 45 cents.

LKQ Corp (LKQ -0.59%) was rated a new 'Buy' at SunTrust Robinson Humphrey with a price target of $40.

Franco-Nevada (FNV -1.00%) may open to the downside this morning after it filed to sell a $2 billion shelf of mixed securities.

WellCare Health Plans (WCG +0.49%) said it will acquire Meridian for $2.5 billion in cash.

Cavco Industries (CVCO -2.65%) reported Q4 EPS of $2.40, well above consensus of $1.62.

Heico (HEI +2.53%) may open to the upside this morning after it reported Q2 EPS of 55 cents, above consensus of 52 cents.

SpartanNash (SPTN -1.92%) jumped more than 5% in after-hours trading after it reported Q1 adjusted EPS from continuing operations of 55 cents, better than consensus of 53 cents.

HP Inc (HPQ -2.78%) may open to the upside this morning after it reported Q2 net revenue of $14.0 billion, higher than consensus of $13.6 billion, and then raised guidance on fiscal 2018 adjusted EPS to $1.97 to $2.02 from a Feb 21 estimate of $1.90 to $2.00, better than consensus of $1.96.

T2 Biosystems (TTOO -9.13%) dropped nearly 8% in after-hours trading after it announced that it had commenced an underwritten registered public offering of 5.65 million shares of its common stock.

Safe Bulkers (SB +1.97%) rose 3% in after-hours trading after it reported Q1 net revenue of $43.5 million, higher than consensus of $41.7 million.

TransEnterix (TRXC +8.95%) gained 2% in after-hours trading, on top of Tuesday's 9% gain after it received FDA clearance for expanded indications of its Senhance Surgical System.