Systra Market Report 06/16/17

June 16, 2017 | Market Commentary

OVERNIGHT MARKETS AND NEWS

Sep E-mini S&Ps (ESU17 +0.13%) this morning are up +0.14% on strength in energy producing stocks with Jul WTI crude oil (CLN17 +1.03%) up +0.61%. European stocks are up +0.32% ahead of Sunday’s second round of elections in France that are expected to hand President Macron an overwhelming legislative majority. Asian stocks settled mixed: Japan +0.56%, Hong Kong +0.24%, China -0.30%, Taiwan +0.68%, Australia +0.19%, Singapore -0.02%, South Korea +0.03%, India -0.06%. Japanese stocks settled higher as strength in exporter companies led the overall market higher on improved earnings prospects for exporters after USD/JPY rose to a 2-week high when the BOJ left monetary policy unchanged. The Chinese yuan fell to a 2-week low against the dollar after the PBOC injected a net 250 billion yuan through reverse-repurchase agreements the most in 5 months, as it boosts the supply of cash in the financial system to alleviate a cash squeeze caused by regulatory checks on banks.

The dollar index (DXY00 -0.07%) is down -0.12%. EUR/USD (^EURUSD) is up +0.31%. USD/JPY (^USDJPY) is up +0.32% at a 2-week high.

Sep 10-year T-note prices (ZNU17 -0.06%) are down -2 ticks.

As expected, the BOJ decided by a 7-2 vote to keep a negative interest rate of -0.1% to the balances in current accounts held by financial institutions at the central bank and the BOJ will continue to purchase Japanese government bonds so that 10-year JGB yields remain at around 0%. The BOJ’s overall assessment of the economy remained unchanged from the last meeting, saying it was “turning toward a moderate expansion.”

As expected, the Bank of Russia cut its key interest rate by -25 bp to 9.00% from 9.25%.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) May housing starts (expected +3.9% to 1.218 million, Apr -2.6% to 1.172 million), (2) prelim-June University of Michigan U.S. consumer sentiment (expected -0.1 to 97.0, May +0.1 to 97.1), (3) Dallas Fed President Robert Kaplan (voter) speaks to the Park Cities Rotary Club.

Notable Russell 2000 earnings reports today include: none.

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

Equity conferences this week: none

 

 

 

 

 

 

 

OVERNIGHT U.S. STOCK MOVERS

Planet Fitness (PLNT +0.67%) was added to the U.S. ‘Focus List’ at William O’Neil.

Square (SQ +2.22%) lost over 1% in pre-market trading after it was downgraded to ‘Neutral’ from ‘Outperform’ at Credit Suisse.

Celgene (CELG -0.36%) was upgraded to “Outperform’ from ‘Market Perform’ at Leerink Partners LLC.

Stanley Black & Decker (SWK -0.44%) was initiated with a ‘Buy’ rating at Seaport Global Securities with a 12-month target price of $160.

Cal-Maine (CALM -1.39%) was downgraded to ‘Sell’ from ‘Neutral’ at Goldman Sachs with a price target of $31.

Shire PLC (SHPG -0.81%) was initiated with a recommendation of ‘Overweight’ at Wolfe Research with a 12-month target price of $222.

Aclaris Therapeutics (ACRS -1.95%) was initiated with an ‘Overweight’ rating at Cantor Fitzgerald with a 12-month target price of $50.

Microchip (MCHP -0.89%) was initiated with an “Outperform’ rating at Raymond James with a 12-month target price of $95.

Booz Allen Hamilton Holdings (BAH -0.51%) sank over 10% in pre-market trading after the company said the U.S. Justice Department is investigating its cost accounting and charging practices.

Valeant Pharmaceuticals International (VRX -2.73%) rose over 1% in after-hours trading after it was initiated with an ‘Overweight’ rating at Cantor Fitzgerald with a 12-month target price of $18.

Finisar (FNSR +1.50%) bounced back from a 10% loss in after-hours trading and rose over 5% after management said on an earnings call that they remain optimistic about fiscal 2018 and expect revenue growth to resume in Q2 driven by sales of 100-gigabit transceivers for hyper-scale data centers and arrays for 3D sensing. Finisar had fallen 10% after it reported Q4 revenue of $357.5 million, less than consensus of $359.6 million, and said it sees Q1 revenue of $330 million-$350 million, below consensus of $366.2 million.

Horizon Pharma Plc (HZNP -5.12%) gained almost 2% in after-hours trading after it was initiated with an ‘Overweight’ rating at Cantor Fitzgerald with a 12-month target price of $13.

Adamis Pharmaceuticals (ADMP +53.33%) rose over 2% in after-hours trading, after it surged over 50% in Thursday’s session, when it received approval from the FDA for its epinephrine pre-filled syringe for the emergency treatment of allergic reactions.

MARKET COMMENTS

Sep E-mini S&Ps (ESU17 +0.13%) this morning are up +3.50 points (+0.14%). Thursday’s closes: S&P 500 -0.22%, Dow Jones -0.07%, Nasdaq -0.46%. The S&P 500 on Thursday closed lower on weaker tech stocks, long liquidation, political uncertainty, and the Fed’s intent to continue with its rate-hike regime. In addition, U.S. May manufacturing production fell by -0.4%, weaker than expectations of +0.1%.

Sep 10-year T-notes (ZNU17 -0.06%) this morning are down -2 ticks. Thursday’s closes: TYU7 -9.00, FVU7 -6.00. Sep 10-year T-notes on Thursday closed lower on signs of strength in the U.S. labor market after weekly jobless claims fell -5,000 to 237,000, more than expectations of -4,000 to 241,000. In addition, there was a +20.8-point increase in the U.S. Jun Empire manufacturing index to 19.8, the highest in 2-3/4 years.

The dollar index (DXY00 -0.07%) this morning is down -0.116 (-0.12%). EUR/USD (^EURUSD) is up +0.0034 (+0.31%) and USD/JPY (^USDJPY) is up +0.35 (+0.32%) at a 2-week high. Thursday’s closes: Dollar index +0.494 (+0.51%), EUR/USD -0.0073 (-0.65%), USD/JPY +1.35 (+1.23%). The dollar index on Thursday rose to a 2-week high and closed higher. The dollar was boosted by the stronger-than-expected U.S. jobless claims report and Jun Empire manufacturing index.

Jul WTI crude oil prices (CLN17 +1.03%) this morning are up +27 cents (+0.61%) and July gasoline (RBN17 +1.69%) is +0.0209 (+1.46%). Thursday’s closes: Jul crude -0.27 (-0.60%), Jul gasoline +0.0030 (+0.21%). Jul crude oil and gasoline on Thursday settled mixed with Jul crude at a 1-1/4 month low. Crude oil prices were undercut by a stronger dollar and by negative carry-over from Wednesday’s EIA data that showed a -1.66 million bbl decline in EIA crude inventories (vs expectations of -2.4 million bbl) and an unexpected +2.1 million bbl increase in EIA gasoline stockpiles (vs expectations for a -1.15 million bbl decline). Gasoline closed higher after operations were halted at Pemex’s Salina Cruz 330,000 bpd refinery, Mexico’s largest refinery, due to an ongoing fire.

 

GLOBAL EVENT CALENDAR06/16/2017
Friday, June 16
US 0830 ET May housing starts expected +4.1% to 1.22 million, Apr -2.6% to 1.172 million. May building permits expected +1.7% to 1.249 million, Apr -2.5% to 1.228 million.
1000 ET Prelim-Jun University of Michigan U.S. consumer sentiment expected -0.1 to 97.0, May +0.1 to 97.1.
1245 ET Dallas Fed President Robert Kaplan (voter) speaks to the Park Cities Rotary Club.
Monday, June 19
US 0800 ET New York Fed President William Dudley (voter) holds a business roundtable discussion with the North Country Chamber of Commerce and North Country Regional Economic Development Council in Plattsburgh, NY.
1100 ET USDA weekly grain export inspections.
1600 ET USDA crop conditions and planting progress.
1900 ET Chicago Fed President Charles Evans (voter) discusses current economic conditions and monetary policy at a Money Marketeers of New York University event.

U.S. STOCK CALENDAR06/16/2017
Company Ticker Time Event Description Period Estimate
Corning Inc GLW US 08:00 Investor Meeting
Centene Corp CNC US 08:30 Investor Day
Principal Financial Group Inc PFG US 11:00 Roadshow
CommerceHub Inc CHUBA US Annual General Meeting
DaVita Inc DVA US Annual General Meeting