Morning Preview: July 3, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, July 3, 18

The late day rally that reversed markets higher late Monday afternoon has carried over to Tuesday morning trading, with stock futures tracking gains in Europe with Germany finding relief in Merkel’s migration deal. Trading volumes are expected to be lower than normal because of the Fourth of July holiday on Wednesday with U.S. markets closing at 1:00 PM EST today (and closed tomorrow). The uncertainty over trade policy still hanging over markets, ahead of the U.S.’s planned tariffs on up to $50 billion on Chinese products set to come into effect on Friday. Currency wars also coming a topic as the Chinese yuan has depreciated about 3.5% against the dollar over the past month but rose slightly on Tuesday. There are a few economic data points today, but overall is expected to be quiet.

U.S. stocks closed higher on Monday, reversing earlier losses as the S&P 500 avoided deeper declines, the Dow Industrials erased a near 200-point loss and the Nasdaq Composite bounced more than 100-points off its lows. The S&P 500 rose for a third day, gaining 0.3%, after dropping as much 0.7% earlier. Technology, utilities and banks paced the gains, offsetting losses from energy and consumer staples. Major indexes had opened lower in a broad decline as trade concerns between the U.S. and its trading partners lingers, but equities improved throughout the session as seven of the 11 primary S&P 500 sectors ended in positive territory.

In Asian markets, The Nikkei Index slipped -26 points to settle at 21,785, the Shanghai Index gained 11 points to settle at 2,786 and the Hang Seng Index fell -409 points to close at 28,545. In Europe, the German DAX is up around 150 points near 12,400, while the FTSE 100 is up over 30 points at 7,585. Europe is getting a lift after Germany’s Chancellor Angela Merkel reached an agreement on immigration late Monday with the Christian Social Union, led by interior minister Horst Seehofer, which could help keep intact a fragile coalition.

Market Closing Prices Yesterday

· The S&P 500 Index gained 8.34 points, or 0.31%, to 2,726.71

· The Dow Jones Industrial Average rose 35.77 points, or 0.15%, to 24,307.18

· The Nasdaq Composite spiked 57.38 points, or 0.76%, to 7,567.69

· The Russell 2000 Index advanced 12.02 points, or 0.73% to 1,655.09

Events Calendar for Today

· U.S. equity markets close early at 1:00 PM EST, Bond markets at 2:00 PM EST

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:55 AM EST Johnson/Redbook Weekly Sales…

· 10:00 AM EST Factory Orders for May…est. 0.0%

· 10:00 AM EST Durable Goods Orders, May-F…est. (-0.5%)

· N/A Monthly auto sales for June

World News

· Retail sales across the eurozone remained subdued in May, as the European Union’s statistics agency said Tuesday that retail sales were unchanged from April, and now estimates they fell in that earlier month

· U.K. construction PMI at 53.1 in June vs. 52.5 estimate and reaches 7-month highs

· Sweden’s central bank Tuesday reiterated its intention to start raising its key policy rate in the fourth quarter, but signaled that it is in no rush to end negative repo rates

· Turkish inflation in June accelerated more than expected, driven by rising transport and food prices, as the consumer price index was 15.39% on year, accelerating from May’s 12.15% reading

Sector News Breakdown

Consumer

· Herman Miller (MLHR) Q4 EPS 66c/$618M vs. est. 58c/$600M; Q4 gross margin 36.9% vs. est. 36.7%; sees Q1 EPS 63c-67c on sales $610M-$630M vs. est. 65c/$611.5M; raises quarterly dividend to 19.75c from 18c

· Great Lakes Dredge & Dock (GLDD) announced the receipt of a several major dredging awards totaling $164M

· Airlines Delta (DAL), American (AAL) and United Continental (UAL) all downgraded to hold from buy at Deutsche Bank

· Hyundai (HYMLF) workers in South Korea vote to strike after talks over wage increases stalled; the union representing Hyundai workers says almost 75% of its workers approved the strike action

Healthcare

· Karyopharm (KPTI) files automatic mixed securities shelf

· Pfizer Inc. (PFE) raised the list prices for more than 40 of its prescription drugs this week, marking a second round of increases this year. The increases apply to widely used drugs including lung-cancer treatment Xalkori, Norvasc blood-pressure pills and Lyrica pain capsules, according to drug-pricing data, by 9.4% and by double-digit percentages for the year overall.

Industrials & Materials

· Glencore (GLNCY), the mining and trading giant has been ordered to hand over documents and records to the US Department of Justice related to its operations in Nigeria

· AZZ Inc. (AZZ) Q1 EPS 60c/$262.2M vs. est. 49c/$228.87M; reaffirms FY19 EPS view $1.75-$2.25 and reaffirms revenue view $900M-$960M

· Industrial distributors Watsco (WSO), Grainger (GWW) and Fastenal (FAST)all downgraded to neutral from outperform at Baird

· US soybean futures have tumbled to the lowest price in nine years as the market succumbs to healthy growing conditions and fears over imminent tariffs from China

· Japan has selected Lockheed Martin Corp’s (LMT) advanced radar for its multibillion-dollar missile defense system, a Japanese defense ministry official with direct knowledge told Reuters

· Innophos Holdings, Inc. (IPHS) said that as part of its strategic value chain repositioning initiative it has restructured its merchant grade acid strategic sourcing arrangement with global agricultural leader Nutrien, including a new MGA strategic supply agreement

Technology, Media & Telecom

· Acxiom® (ACXM) entered into a definitive agreement to sell its Acxiom Marketing Solutions business to Interpublic Group (IPG), one of the world’s leading organizations of advertising agencies and marketing services companies, for $2.3 billion in cash (confirming prior reports from the WSJ and Reuters yesterday)

· The SEC and FBI join the Justice Department and Federal Trade Commission in probing how the political analytics firm Cambridge Analytica, which aided President Donald Trump’s 2016 presidential election, purchased data on 87 million users of Facebook (FB) without their consent, according to reports overnight

· A10 Networks Inc. (ATEN) said it would have to restate several financial reports dating back to 2016 after an internal investigation found errors regarding revenue recognition. The disclosure follows an internal investigation launched in January.

· SS&C Technologies Holdings (SSNC) approved a plan which is expected to result in a reduction in headcount of approximately 900 employees of DST; take $60M-$70M charge

· The Trump administration has recommended denying market entry to China Mobile, the state-owned Chinese telecommunications group, citing national security concerns

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Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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