Morning Preview: July 6, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, July 6, 2018

U.S. stock futures are lower as the U.S. kept its schedule to impose tariffs on $34 billion of Chinese imports Friday, while China media reports indicate Beijing countered with corresponding tariffs on U.S. imports in the continuing tit-for-tat conflict between the two countries. Adding to pressures, President Donald Trump said Thursday night the U.S. could soon impose tariffs on more than $500 billion in Chinese imports, about the amount of total goods the U.S. imported from China last year. In addition to the trade concerns, investors will await a key report on jobs on Friday at 8:30 AM EST, when the nonfarm payroll report is expected (estimate. For 195K jobs to be added). The data follows somewhat lighter than expected ADP private payrolls yesterday and a slight uptick to weekly jobless claims. U.S. stocks finished solidly higher on Thursday as investors dismissed worries about the impending deadline on trade between the U.S. and China, and the release of minutes from the Federal Reserve that acknowledged the potential for tariff disputes to harm domestic economic expansion. Stocks jumped yesterday on reports the U.S. was softening its stance against the European Union, with an offer of a “zero solution” to car tariffs. In Asian markets, The Nikkei Index gained 241 points to settle at 21,788, the Shanghai Index rose 13 points to end at 2,747 and the Hang Seng Index gained 133 points to settle at 28,315. In Europe, the German DAX is up a few points above 12,450, while the FTSE 100 is down a few points under 7,600.

Events Calendar for Today

· 8:30 AM EST Change in Nonfarm Payrolls for June…est. 195K

· 8:30 AM EST Change in Private Payrolls for June…est. 193K

· 8:30 AM EST Change in Manufacturing Payrolls…est. 15K

· 8:30 AM EST Unemployment Rate for June…est. 3.8%

· 8:30 AM EST Average Hourly Earnings MoM for June…est. 0.3%

· 8:30 AM EST Trade Balance for May…est. (-$43.7B)

· 1:00 PM EST Baker Hughes Weekly Rig Count

Market Closing Prices Yesterday

· The S&P 500 Index jumped 23.39 points, or 0.86%, to 2,736.61

· The Dow Jones Industrial Average rose 181.92 points, or 0.75%, to 24,356.74

· The Nasdaq Composite spiked 83.75 points, or 1.12%, to 7,586.43

· The Russell 2000 Index advanced 19.06 points, or 1.15% to 1,679.48

World News

· Environmental Protection Agency chief Scott Pruitt, who had been lauded by President Donald Trump for his aggressive efforts to roll back environmental regulations, resigned on Thursday under heavy fire for a series of ethics-related controversies.

· Japan household spending tumbled 3.9% y/y in May after the 1.3% drop in April. That is the largest one month drop since a 4.6% plunge in August of 2016

Sector News Breakdown

Consumer

· PriceSmart (PSMT) Q3 EPS 61c/$782.2M vs. est. 63c/$777M

· Visteon Corp. (VC) will replace WGL Holdings (WGL) in the S&P MidCap 400 effective prior to the open of trading on Wednesday, July 11

· GOL Linhas (GOL) reduced its domestic supply by 11% compared to the March quarter, as Q2 is low season in the Brazilian domestic passenger air transportation market; expects Q2 operating margin of 1.0%-1.5%, flat in relation to the year-ago quarter margin of 1.0%

· LGI Homes (LGIH) announced 637 homes closed in June 2018, up from 623 home closings in June 2017, representing year-over-year growth of 2.2%

· Daimler ended its 63-month winning streak, as global deliveries fell 2.6% in June, marking the first monthly decline in sales since February 2013

Energy & Industrials

· Civeo (CVEO) announced that it has been awarded contracts to supply accommodations for four locations along the Coastal GasLink pipeline project in British Colombia, Canada

Healthcare

· Eisai (ESALY) and Biogen (BIIB) announced positive topline results from the Phase II study with BAN2401, an anti-amyloid beta protofibril antibody, in 856 patients with early Alzheimer’s disease. The study achieved statistical significance on key predefined endpoints

· Regulus (RGLS) cuts workforce by 60%, pauses Phase 1 study for RGLS4326; recruitment activities for the RG-012 clinical program in Alport syndrome have been paused while discussions with Sanofi to potentially restructure the partnership are ongoing

Technology, Media & Telecom

· Samsung Electronics Co. forecast Q2 operating profit will grow 5%, though the result missed analyst estimates and would halt what had been four straight quarters of record earnings

· British satellite company Inmarsat has rejected a second bid from its American rival EchoStar (SATS), but EchoStar has said it continues to pursue its target in the hope of landing a recommended offer

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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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