Morning Call: A fresh 3-1/2 year high in crude prices boosts energy stocks; Jun E-mini S&Ps up +0.06% at a 3-week high; Jun WTI crude oil up +0.51% a a 3-1/2 year high.
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 ESM18 - S&P 500 E-Mini

Overnight Markets and News

Jun E-mini S&Ps (ESM18 +0.10%) this morning are up +0.06% at a 3-week high as a rally in crude oil prices to a new 3-1/2 year high bolsters energy stocks. Jun WTI crude oil (CLM18 +0.52%) is up +0.51% at a fresh 3-1/2 year high on heightened Middle East tensions after Israel said it struck dozens of Iranian targets inside Syria after missiles were fired by Iranian forces at the Golan Heights. European stocks are down -0.35% as the formation of a populist government in Italy moves closer to fruition. Trading activity throughout Europe is muted as some countries are closed for the Ascension Day holiday. As expected, the BOE kept its benchmark interest rate unchanged at 0.50% and maintained its asset purchase target at 435 billion pounds at the end of today's policy meeting. Asian stocks settled mostly higher: Japan +0.38%, Hong Kong +0.89%, China +0.48%, Taiwan +0.53%, Australia +0.18%, Singapore -0.31%, South Korea +0.92%, India -0.21%. China's Shanghai Composite climbed to a 3-1/2 week high on strength in energy stocks with the rally in crude oil to a 3-1/2 year high, along with reduced geopolitical risks on the Korean peninsula after North Korea released three American prisoners.

The dollar index (DXY00 -0.16%) is down -0.17%. EUR/USD (^EURUSD +0.27%) is up +0.22%. USD/JPY (^USDJPY -0.06%) fell back from a 1-week high and is down -0.06% as the yen strengthened after BOJ Governor Kuroda said the BOJ has no plans to conduct another comprehensive assessment of monetary easing.

Jun 10-year T-note prices (ZNM18 +0-045) are up +4 ticks as turmoil in the Middle East boosts safe-haven demand for government debt.

UK Mar industrial production rose +0.1% m/m, weaker than expectations of +0.2% m/m. Mar manufacturing production fell -0.1% m/m, better than expectations of -0.2% m/m.

China Apr CPI rose +3.4% y/y, right on expectations. Apr PPI rose +1.8% y/y, weaker than expectations of +1.9% y/y.

The Japan Apr eco watchers survey outlook rose +0.5 to 50.1, stronger than expectations of +0.3 to 49.9. The Apr eco watchers current survey rose +0.1 to 49.0, right on expectations.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +8,000 to 219,000, previous +2,000 to 211,000) and continuing claims (expected +44,000 to 1.800 million, previous -77,000 to 1,756 million), (2) Apr CPI (expected +0.3% m/m and +2.5% y/y, Mar -0.1% m/m and +2.4% y/y) and Apr CPI ex food & energy (expected +0.2% m/m and +2.2% y/y, Mar +0.2% m/m and +2.1% y/y), (3) USDA weekly Export Sales, (4) USDA May WASDE crop production, (5) Treasury auctions $17 billion 30-year T-bonds, (6) Apr monthly budget statement (Mar -$208.7 billion).

Notable S&P 500 earnings reports today include: NVIDIA (consensus 1.66), Duke Energy (1.14), Symantec (0.39), News Corp (0.06), Flowserve (0.27), Nektar Therapeutics (-0.53).

U.S. IPO's scheduled to price today: Abpro Corp (ABP), Trinity Merger Corp (TMCXU), HUYA Inc (HUYA).

Equity conferences this week: Jefferies Global Technology Conference on Wed-Thu, Goldman Sachs Leveraged Finance Conference on Thu, Macquarie Business Services C-Suite Conference on Thu, UBS Utility & MLP Conference on Thu.

Market Comments

June S&P 500 E-minis (ESM18 +0.10%) this morning are up +1.50 points (+0.06%) at a 3-week high. Wednesday's closes: S&P 500 +0.97%, Dow Jones +0.75%, Nasdaq +1.14%. The S&P 500 on Wednesday climbed to a 2-1/2 week high and closed higher on a rally in energy stocks after crude oil prices jumped +3.01% to a 3-1/2 year high. There were also reduced inflation concerns after the U.S. Apr PPI ex food and energy rose +2.3% y/y, slightly less than expectations of +2.4% y/y.

June 10-year T-notes (ZNM18 +0-045) this morning are up +4 ticks. Wednesday's closes: TYM8 -8.00, FVM8 -4.25. Jun 10-year T-notes on Wednesday fell to a 1-1/2 week low and closed lower on increased inflation expectations after the 10-year T-note breakeven inflation rate rose to a 2-week high. There were also continued supply pressures as the Treasury auctioned $25 billion in 10-year T-notes.

The dollar index (DXY00 -0.16%) this morning is down -0.162 (-0.17%). EUR/USD (^EURUSD +0.27%) is up +0.0026 (+0.22%). USD/JPY (^USDJPY -0.06%) is down -0.07 (-0.06%). Wednesday's closes: Dollar Index -0.080 (-0.09%), EUR/USD -0.0013 (-0.11%), USD/JPY +0.61 (+0.56%). The dollar index on Wednesday fell back from a 4-1/2 month high and closed lower on the +2.3% y/y increase in U.S. Apr PPI ex food & energy, weaker than expectations of +2.4% y/y, which is dovish for Fed policy. There was also strength in the currencies of the oil-producing countries of Canada and Norway against the dollar with the surge in crude prices to a 3-1/2 year high.

Metals prices this morning are higher with Jun gold (GCM18 +0.34%) +4.0 (+0.30%), Jul silver (SIN18 +0.67%) +0.091 (+0.55%), and Jul copper (HGN18 +1.47%) +0.049 (+1.60%). Wednesday's closes: Jun gold -0.70 (-0.05%), Jul silver +0.067 (+0.41%), Jul copper -0.00015 (-0.05%). Metals on Wednesday settled mixed with Jul silver at a 1-1/2 week high. Metals prices were boosted by a weaker dollar and by signs of tighter copper supplies after LME copper inventories fell -9,600 MT to a 3-1/2 month low. Precious metals prices were undercut by reduced safe-haven demand as the S&P 500 index rallied to a 2-week high.

Jun WTI crude oil prices (CLM18 +0.52%) this morning are up +36 cents (+0.51%) at a new 3-1/2 year high and Jun gasoline (RBM18 +0.32%) is +0.0058 (+0.27%) at a 2-3/4 year high. Wednesday's closes: Jun crude +2.08 (+3.01%), Jun gasoline +0.0559 (+2.65%). Jun crude oil and gasoline on Wednesday closed higher with Jun crude at a 3-1/2 year nearest-futures high and Jun gasoline at an 8-1/4 month nearest-futures high. Crude oil prices were boosted by the unexpected -2.2 million bbl decline in EIA crude inventories (vs expectations of +1.0 million bbl), the -2.174 million bbl decline in EIA gasoline inventories (vs expectations of unchanged), and the -3.791 million bbl drop in EIA distillate inventories to a 3-1/2 year low. Oil prices were also boosted by carry-over support from President Trump's exit from the Iran nuclear deal on Tuesday and the renewed sanctions on Iran, which will curb their crude exports and tighten global oil supplies.

Overnight U.S. Stock Movers

First Solar (FSLR +3.23%) was upgraded to 'Overweight' from 'Neutral' at JPMorgan Chase with a price target of $85.

CBRE (CBG -0.23%) was upgraded to 'Strong Buy' from 'Outperfom' at Raymond James with a price target of $62.

Trade Desk (TTD +1.14%) was rated a new 'Outperform' at Oppenheimer with a price target of $66.

Qualcomm (QCOM +0.59%) rose more than 2% in after-hours trading after it announced a new $10 billion stock buyback authorization.

RingCentral (RNG +2.09%) climbed over 2% in after-hours trading after it forecast Q2 adjusted EPS of 14 cents to 16 cents, above consensus of 13 cents.

MercadoLibre (MELI -2.44%) fell more than 7% in after-hours trading after it reported a Q1 net loss of -29 cents per share.

Roku (ROKU +8.94%) gained 3% in after-hours trading after it forecast Q2 net revenue of $135 million to $145 million, the midpoint better than consensus of $135.6 million.

Synaptics (SYNA +1.77%) dropped nearly 6% in after-hours trading after it forecast Q4 revenue of $370 million to $410 million, weaker than consensus of $419.8 million.

Carvana (CVNA -0.84%) rose 7% in after-hours trading after it reported Q1 revenue of $360 million, higher than consensus of $350.3 million.

Nuance Communications (NUAN +0.66%) sank 11% in after-hours trading after it reported Q1 adjusted EPS of 27 cents, higher than consensus of 28 cents, and lowered its 2018 growth estimate to 2% to 4% from a prior view of 3% to 5%.

Infinera (INFN -0.34%) jumped almost 7% in after-hours trading after it reported Q1 adjusted gross margin of +43.7%, higher than consensus of +40.0%.

Turtle Beach (HEAR -11.48%) surged over 40% in after-hours trading after it boosted its full-year revenue forecast to $205 million from a March 6 view of $157 million, well above consensus of $169.7 million.

Spark Energy (SPKE -0.43%) tumbled 13% in after-hours trading after it reported Q1 adjusted Ebitda of $15.9 million, weaker than consensus of $27 million.

Inovio Pharmaceuticals (INO +3.21%) slid 4% in after-hours trading after it posted a Q1 loss of -36 cents per share, wider than consensus of -11 cents.