Morning Preview: July 5, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, July 5, 2018

U.S. and European markets are pushing higher as traders return from the 4th of July holiday amid reports of a potential softening in the Trump administration’s tariff threat. German newspaper Handelsblatt said a U.S. official has told Germany’s car chiefs that the U.S would be prepared to stop threatening to impose stiff tariffs on cars imported from the European Union if the EU eliminates duties on U.S. cars, a “zero solution.” The move is helping easing auto related stocks in Europe, lifting the German Dax by roughly 150-points. However, trade-war worries continue to weigh on the broader market as the U.S. and China are prepared to implement new import levies starting tomorrow. The tariffs on Chinese products will backfire on the U.S., Beijing officials said Thursday, as $20 billion of the $34 billion in goods targeted are made by foreign companies in China. On Tuesday, technology shares plunged late day Tuesday, specifically chip makers after a report that a Chinese court temporarily banned MU chip sales, sending those shares down over 7%, while FB shares dropped 2% on reports of increased gov’t questions on Cambridge Analytica controversy. The MU move by China followed reports early Tuesday the U.S. moved to block China Mobile Ltd. In Asian markets, The Nikkei Index dropped -170 points to settle at 21,546, the Shanghai Index fell -25 points to settle at 2,733 and the Hang Seng Index fell -59 points to close at 28,182. In Europe, the German DAX is up over 150 points at 12,470, while the FTSE 100 is up around 30 points above 7,600.

Events Calendar for Today

· 7:30 AM EST Challenger Job Cuts YoY for June

· 8:15 AM EST ADP Employment Change for June…est. 190K

· 8:30 AM EST Weekly Jobless Claims…est. 225K

· 8:30 AM EST Continuing Claims…est. 1.718M

· 9:45 AM EST Markit US Services PMI, Jun-F…est. 56.5

· 10:00 AM EST ISM Non-Manufacturing Composite for June…est. 58.3

· 10:30 AM EST Weekly EIA Natural Gas Inventory Data

· 2:00 PM EST FOMC Meeting Minutes

Market Closing Prices Yesterday

· The S&P 500 Index dropped -13.49 points, or 0.49%, to 2,713.22

· The Dow Jones Industrial Average fell -132.36 points, or 0.54%, to 24,174.82

· The Nasdaq Composite slumped -65.01 points, or 0.86%, to 7,502.67

· The Russell 2000 Index advanced 5.33 points, or 0.32% to 1,660.42

World News

· China’s services activity expanded at the quickest rate in four months in June, as the Caixin China services purchasing managers’ index rose to 53.9 in June from 52.9 in May

· German manufacturing orders rebounded in May, beating forecasts as total manufacturing orders rose 2.6% compared with April, led by a 4.3% increase in domestic orders (est. 1.1% gain)

· U.K. June services CPI at 55.1 vs. 54.0 estimate

· Eurozone final June services PMI at 55.2 vs. 55.0 estimate

· The number of new cars registered in the U.K. fell -3.5% in June, compared with the same month the previous year

Sector News Breakdown


· J Sainsbury PLC (SBRY.LN) said that Q1 sales growth slowed as it cut prices on key products due to a competitive U.K. grocery market; also said that it has agreed to a 3.50B pounds ($4.61B) financing package with its existing banks and new institutions for its proposed merger with Asda Group Ltd. Sainsbury’s current line of credit will increase to GBP2B from GBP1.5B

· Tesla (TSLA) shares ended near lows Tuesday, down over 7.2% (after falling more than 2% Monday) after late day reports that CEO Elon Musk asked engineers to remove a standard brake and roll test from the tasks completed as Model 3 cars were finished to speed up production and make the company’s goal of making 5,000 of the cars in a week

· Associated British Foods PLC (ABF.LN) fell said that sales growth for its core Primark retail business slowed due to delays and changes in selling space

· Barnes & Noble (BKS) terminates CEO Demos Parneros for violation of policies; affirms fiscal 2019 EBITDA guidance of $175M-$200M

· Volkswagen AG (VLKAY) said it will launch an electric car-share service in 2019, following similar announcements from French auto makers Renault SA and Peugeot SA

· Uber Technologies Inc. is in preliminary talks to combine with rival Middle Eastern ride-hailing service Careem Networks, Bloomberg News reported Tuesday

· Boot Barn Holdings (BOOT) acquired certain assets of Drysdales, Inc., a retailer with two stores in Tulsa, Oklahoma


· The American Petroleum Institute (API) reported that U.S. crude supplies fell by -4.5M barrels for the week ended June 29, showed supply declines of roughly -3.1M barrels in gasoline and -438,000 in distillates,

· ConocoPhillips (COP) said it will buy BP PLC’s (BP) interest in the Greater Kuparuk Area, an oil field located 40 miles west of Prudhoe Bay on Alaska’s northern coast, as well as BP’s 38% share of a pipeline operator, the Kuparuk Transportation Company.

· ConocoPhillips (COP) will also sell BP a subsidiary that will hold a 16.5% share of the Clair Field, which is around 46 miles west of the Shetland Islands off Scotland. ConocoPhillips will retain a 7.5% interest in the Clair, down from the 24% stake it said it owned in its last annual report.

· SBM Offshore NV shares declined as the Dutch offshore oil-and-gas services company said it “strongly disagrees” with a Brazilian court order obliging Brazilian state-run oil producer Petroleo Brasileiro (PBR) to withhold payments to SBM.


· British appeals court ruled in favor of retailers and found that the fees fixed by Visa (V) and MasterCard (MA) restrict competition and are unlawful, according to Bloomberg. The case now goes back to a specialty competition judge

Industrials & Materials

· A U.S. official has told Germany’s car chiefs that the U.S would be prepared to stop threatening to impose stiff tariffs on cars imported from the European Union if the EU eliminates duties on U.S. cars, a “zero solution,” Handelsblatt reports, citing sources.

· Glencore (GLNCY) announces plan to buy back up to $1 billion in shares

· Praxair Inc. (PX) said it agreed to sell the majority of its European gases business to Taiyo Nippon Sanso Corp. (4091.TO)for about 5 billion euros ($5.83 billion) to ease regulatory concerns in Europe over its proposed merger with Germany’s Linde AG


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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