Morning Call: Escalation of a trade war between the U.S. and China hammers global stocks; Jun E-mini S&Ps down -0.26% at a 6-week low; May COMEX copper down -0.25% at a 3-1/4 month low.
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Overnight Markets and News

Jun E-mini S&Ps (ESM18 -0.24%) this morning are down -0.26% at a 6-week low and European stocks are down -1.38% at a 13-1/4 month low as global stocks sell-off on heightened trade concerns. The trade conflict between the U.S. and China escalated after China unveiled tariffs on $3 billion of U.S. imports of pork, recycled aluminum, steel pipes, fruit and wine in retaliation for U.S. tariffs on some Chinese imports. The U.S. then declared a temporary exemption for the European Union (EU) and other countries on steel and aluminum tariffs, signaling out China as the main recipient of the tariffs. The U.S. will give the EU, Argentina, Australia, Brazil, Canada, Mexico and South Korea until May 1 to negotiated levies on steel and aluminum. Increased supplies along with demand concerns have hammered copper prices with May COMEX copper (HGK18 -0.76%) down -0.25% at a 3-1/4 month low. Weekly Shanghai copper inventories rose +10,441 MT to a 11-1/2 month high of 307,435 MT. Asian stocks settled sharply lower: Japan -4.51%, Hong Kong -2.45%, China -3.39%, Taiwan -1.66%, Australia -1.96%, Singapore -2.00%, South Korea -3.37%, India -1.24%. Escalation of the trade war between the U.S. and China undercuts the outlook for global economic growth and fueled a slump in Asian equity markets.

The dollar index (DXY00 -0.21%) is down -0.17%. EUR/USD (^EURUSD +0.30%) is up +0.25%. USD/JPY (^USDJPY -0.29%) is down -0.25% at a 16-1/2 month low as the slump in global equity markets boosts safe-haven demand for the yen.

Jun 10-year T-note prices (ZNM18 +0-020) are up +3.5 ticks at a 6-week high.

Japan Feb national CPI rose +1.5% y/y, right on expectations and the fastest pace of increase in 2-3/4 years. Feb national CPI ex fresh food & energy rose +0.5% y/y, right on expectations and the fastest pace of increase in 1-1/2 years.

U.S. Stock Preview

Key U.S. news today includes: (1) Atlanta Fed President Raphael Bostic (voter) speaks about the economic outlook to the Knoxville Economic Forum, (2) Feb durable goods orders (expected +1.6% and +0.5% ex transportation, Jan -3.7% and -0.3% ex transportation), (3) Feb new home sales (expected +5.2% to 624,000, Jan -7.8% to 593,000), (4) Minneapolis Fed President Neel Kashkari (non-voter) speaks in a moderated Q&A, (5) USDA Feb Cattle on Feed, (6) Boston Fed President Eric Rosengren (non-voter) speaks at the International Research Forum in Washington, D.C.

Notable Russell 1000 earnings reports today include: none.

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

Equity conferences this week: Gabelli & Company Waste Conference on Fri.

Market Comments

Jun S&P 500 E-mini stock futures (ESM18 -0.24%) this morning are down -7.00 points (-0.26%) at a 6-week low. Thursday's closes: S&P 500 -2.52%, Dow Jones -2.93%, Nasdaq -2.50%. The S&P 500 on Thursday sold off to a 2-1/2 week low and settled sharply lower. Stocks were undercut by concerns about a trade war with China after the Trump administration unveiled tariffs on $50 billion of Chinese imports in retaliation for China’s intellectual-property violations. There were also heightened U.S. political risks after President Trump's lead lawyer fighting Special Counsel Mueller's Russia probe resigned. Stocks found some support from the +0.4 point increase in the U.S. Mar Markit manufacturing PMI to a 3-year high of 55.7, stronger than expectations of +0.2 to 55.5.

Jun 10-year T-note prices (ZNM18 +0-020) this morning are up +3.5 ticks at a 6-week high. Thursday's closes: TYM8 +18.00, FVM8 +9.75. Jun 10-year T-notes on Thursday rallied to a 1-1/2 month high and closed higher on increased safe-haven demand for T-notes on heightened U.S. political risks after President Trump's lead lawyer countering Special Counsel Mueller's Russia probe resigned. T-notes were also boosted by the sharp sell-off in stocks that boosted the flight-to-safety demand for T-notes. There were also reduced inflation expectations after the 10-year T-note breakeven inflation rate fell to a 1-week low.

The dollar index (DXY00 -0.21%) this morning is down -0.157 (-0.17%). EUR/USD (^EURUSD +0.30%) is up +0.0031 (+0.25%) and USD/JPY (^USDJPY -0.29%) is down -0.26 (-0.25%) at a 16-1/2 month low. Thursday's closes: Dollar Index +0.074 (+0.08%), EUR/USD -0.0036 (-0.29%), USD/JPY -0.77 (-0.73%). The dollar index on Thursday recovered from a 1-month low and closed higher on carry-over support from Wednesday's FOMC meeting where the Fed was slightly more hawkish as they raised their 2019 and 2020 median fed funds rate forecasts. There was also weakness in EUR/USD after the Eurozone Mar Markit manufacturing PMI fell -2.0 to a 1-year low of 56.6. USD/JPY slid to a 2-1/2 week low as the slump in stocks boosted the safe-haven demand for the yen.

May crude oil (CLK18 +0.34%) this morning is up +23 cents (+0.36%) and May gasoline (RBK18 +0.05%) is +0.0032 (+0.16%). Thursday's closes: May WTI crude -0.87 (-1.33%), May gasoline -0.0043 (-0.21%). May crude oil and gasoline on Thursday closed lower on a rebound in the dollar after the dollar index recovered from a 1-month low and moved higher. Crude oil prices were also undercut by the slump in the S&P 500 to a 2-1/2 week low, which undercut confidence in the economic outlook and energy demand.

Metals prices this morning are mixed with Apr gold (GCJ18 +1.02%) +14.8 (+1.11%) at a 1-month high, May silver (SIK18 +0.69%) +0.158 (+0.96%), and May copper (HGK18 -0.76%) -0.008 (-0.25%) at a 3-1/4 month low. Thursday's closes: Apr gold +5.9 (+0.45%), May silver -0.032 (-0.19%), May copper -0.0370 (-1.18). Metals on Thursday settled mixed with May copper at a 3-1/4 month low. Metals prices were boosted by fund buying of gold as long gold positions in ETFs rose to a 4-3/4 year high Wednesday and by the slump in the S&P 500 to a 2-1/2 week low, which boosted the safe-haven demand for precious metals. Copper prices tumbled on concern the action by the U.S. to impose tariffs on China will start a trade war that curbs economic growth and industrial metals demand.

Overnight U.S. Stock Movers

Children's Place (PLCE -2.48%) was downgraded to 'Underperform' from 'Buy' at Bank of America/Merrill Lynch with a price target of $115.

GoDaddy (GDDY -1.89%) was rated a new 'Buy' at Goldman Sachs with a price target of $81.

Cintas (CTAS -5.87%) rose 2% in after-hours trading after it reported Q3 revenue of $1.59 billion, above consensus of $1.57 billion, and forecast Q4 revenue of $1.63 billion to $1.65 billion, higher than consensus of $1.63 billion.

Nike (NKE -2.91%) rallied almost 5% in after-hours trading after it reported Q3 revenue of $8.98 billion, better than consensus of $8.85 billion.

Paycom Software (PAYC -2.02%) was downgraded to 'Hold' from 'Buy' at Stifel with a price target of $90.

KB Home (KBH -3.03%) lost 2% in after-hours trading after it reported Q1 revenue of $871.6 million, below consensus of $873.5 million.

American Eagle Outfitters (AEO -2.54%) was rated a new 'Buy' at Loop Capital Markets with a price target of $25.

SMART Global Holdings (SGH -5.99%) climbed nearly 9% in after-hours trading after it reported Q2 adjusted EPS of $1.73, well above consensus of $1.33, and said it sees Q3 adjusted EPS of $1.73-$1.82, higher than consensus of $1.26.

Akebia Therapeutics (AKBA -2.67%) dropped 8% in after-hours trading after it announced that ii had commenced an underwritten public offering of $85 million of its common stock.

At home Group (HOME -4.23%) rose almost 7% in after-hours trading after it reported Q4 adjusted proforma EPS of 50 cents, higher than consensus of 35 cents, and said it sees full-year adjusted proforma EPS of $1.18-$1.24, better than consensus of $1.15.

Leap Therapeutics (LPTX -1.91%) sank 10% in after-hours trading after it announced that ii had commenced an underwritten public offering of $14 million of its common stock.

HTG Molecular Diagnostics (HTGM -1.28%) rose over 5% in after-hours trading after it reported Q4 revenue of $7.9 million, stronger than consensus of $6.9 million to $7.2 million.

Progenics Pharmaceuticals (PGNX unch) plunged over 19% in after-hours trading after the FDA said they were extending the review for Progenic's Azedra drag for three months until July 30.