Morning Report

Sep E-mini S&Ps (ESU17 -0.55%) this morning are down -0.62% at a 1-week low and European stocks are down -1.32% at a 5-3/4 month low as global stocks plunge after North Korea fired a ballistic missile over Japan. The VIX volatility index jumped to a 1-week high and Dec COMEX gold (GCZ17 +0.90%) soared +0.81% to a 9-1/2 month high on increased safe-haven demand. Japan called North Korea’s latest provocation an “unprecedented, grave and serious threat” and asked the United Nations Security Council to hold an emergency meeting, while Japanese Prime Minister Abe told reporters he spoke with President Trump for 40 minutes and they agreed to increase pressure on North Korea. Asian stocks settled mostly lower: Japan -0.45%, Hong Kong -0.35%, China +0.08%, Taiwan -0.28%, Australia -0.72%, Singapore -0.56%, South Korea -0.29%, India -1.14%. A -0.62% slide in USD/JPY to a 4-1/4 month low also undercut Japanese stocks as the Nikkei Stock Index tumbled to a 3-3/4 month low. Japanese exporters slumped due to the surging yen, which rallied on increased safe-haven demand from North Korea’s missile firing over Japan.

The dollar index (DXY00 -0.50%) is down -0.41% at a 2-1/2 year low. EUR/USD (^EURUSD) is up +0.48% at a 2-1/2 year high. USD/JPY (^USDJPY) is down -0.62% at a 4-1/4 month low.

Sep 10-year T-note prices (ZNU17 +0.36%) are up +12 ticks at a 9-1/2 month nearest-futures high as the slump in global stocks over the North Korean crisis boosts safe-haven demand for government debt.

Japan Jul overall household spending unexpectedly fell -0.2% y/y, weaker than expectations of +0.7% y/y.

The Japan Jul jobless rate was unch at 2.8%, right on expectations and the lowest in 23-years. The Jul job-to-applicant ratio rose +0.01 to 1.52, right on expectations and the highest since Feb 1974.

German Sep GfK consumer confidence rose +0.1 to 10.9, stronger than expectations of no change at 10.8 and the highest since the data series began in 2005.

U.S. Stock Preview

Key U.S. news today includes: (1) Jun S&P CoreLogic composite-20 house prices (expected +0.1% m/m and +5.60% y/y, May +0.1% m/m and +5.69% y/y), (2) Conference Board Aug U.S. consumer confidence index (expected -0.2 to 120.9, Jul +3.8 to 121.1), (3) Treasury auctions $28 billion 7-year T-notes.

Notable Russell 1000 earnings reports today include: Hain Celestial (consensus $0.403), Best Buy (0.63), H&R Block (-0.62).

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

Equity conferences this week: Jefferies Investor Summit on Tue, The European Society of Cardiology Meeting on Tue, Jefferies Semiconductor Hardware Summit on Tue-Wed, The Simmons European Energy Conference on Tue-Wed, Simmons European Energy Conference on Wed.

Market Comments

Sep S&P 500 E-mini stock futures (ESU17 -0.55%) this morning are down -15.25 points (-0.62%) at a 1-week low. Monday’s closes: S&P 500 +0.05%, Dow Jones -0.02%, Nasdaq +0.27%. The S&P 500 on Monday closed slightly higher on a rally in pharmaceutical stocks on speculation of increased M&A activity after Gilead Science acquired Kite Pharma for $11.9 billion. There was also strength in mining stocks after gold prices rose +1.34% to a 9-1/2 month high and copper prices rose +0.97% to a 2-3/4 year high. Stocks were undercut by weakness in homebuilder stocks on concern that Tropical Storm Harvey will push back building projects in southern Texas that account for 10% of all new U.S. construction in 2017, according to Trulia. There were also losses in insurance stocks as disaster modeler Enki Research estimates that losses from Tropical Storm Harvey could climb to as high as $30 billion.

Sep 10-year T-note prices (ZNU17 +0.36%) this morning are up +12 ticks to a 9-1/2 month nearest-futures high. Monday’s closes: TYU7 +6.00, FVU7 +2.50. Sep 10-year T-notes on Monday closed higher on carry-over support from a rally in German bunds to a 2-month high and on strong demand for the Treasury’s $34 billion auction of 5-year T-notes that had a bid-to-cover ratio of 2.58, above the 12-auction average of 2.46.

The dollar index (DXY00 -0.50%) this morning is down -0.377 (-0.41%) to a 2-1/2 year low. EUR/USD (^EURUSD) is up +0.0057 (+0.48%) to a 2-1/2 year high and USD/JPY (^USDJPY) is down -0.68 (-0.62%) toa 4-1/4 month low. Monday’s closes: Dollar Index -0.533 (-0.57%), EUR/USD +0.0055 (+0.46%), USD/JPY -0.11 (-0.10%). The dollar index on Monday dropped to a fresh 1-1/4 year low and closed lower on carry-over weakness from Friday when Fed Chair Yellen refrained from providing clues as to when the Fed would raise interest rates again or begin to unwind its balance sheet. EUR/USD saw strength and climbed to a new 3-1/2 year high after ECB President Draghi refrained from talking down the euro at the Fed symposium at Jackson Hole, WY over the weekend.

Oct crude oil (CLV17 +0.02%) this morning is down -12 cents (-0.26%) and Oct gasoline (RBV17 -0.92%) is -0.0176 (-1.12%). Monday’s closes: Oct WTI crude -1.30 (-2.72%), Oct gasoline +0.0305 (+1.98%). Energy prices on Monday settled mixed with Oct crude at a 2-week low and Oct gasoline at a 6-1/2 month high. Crude oil and gasoline prices were supported by the slump in the dollar index to a 1-1/4 year low. Gasoline prices were boosted by the fact that Tropical Storm Harvey forced the closure of refineries on the Texas Gulf coast, home to 10% of U.S. refining capacity. Crude oil prices fell on concern that the shutdown of pipelines and refineries in Texas due to Tropical Storm Harvey may boost crude supplies at Cushing, OK, delivery point for WTI futures.

Metals prices this morning are higher with Dec gold (GCZ17 +0.90%) +10.6 (+0.81%) at a 9-1/2 month high, Sep silver (SIU17 +0.77%) +0.069 (+0.40%) to a 2-1/4 month high and Sep copper (HGU17 +0.78%) +0.018 (+0.59%). Monday’s closes: Dec gold +17.4 (+1.34%), Sep silver +0.392 (+2.30%), Sep copper +0.0295 (+0.97%). Metals prices on Monday closed higher with Dec gold at a 9-1/2 month high, Sep silver at a 2-1/2 month high and Sep copper at a 2-3/4 year nearest-futures high. Metals prices were boosted by the fall in the dollar index to a 1-1/4 year low and by fund buying of gold as long gold positions in ETFs rose to a 5-week high Friday.

Overnight U.S. Stock Movers

Intellia Therapeutics (NTLA +19.24%) was downgraded to ‘Neutral’ from ‘Buy’ at Chardan Capital Markets.

JA Solar Holdings Co Ltd (JASO unch) was downgraded to ‘Sell’ from ‘Hold’ at Axion Capital with a price target of $5.

Mellanox Technologies (MLNX +1.80%) was initiated a new ‘Buy’ at Benchmark Company LLC with a 12-month target price of $60.

Juno Therapeutics (JUNO +18.71%) was upgraded to ‘Outperform’ from ‘Neutral’ at Wedbush.

Best Buy (BBY +0.97%) jumped 5% in pre-market trading after it reported Q2 revenue of $8.94 billion, better than consensus of $8.66 billion, and said it sees Q3 revenue of $9.3 billion-$9.4 billion, above consensus of $8.99 billion.

Jack Henry & Associates (JKHY +0.40%) was initiated at an ‘Overweight’ at Cantor Fitzgerald with a 12-month target price of $112.

Avexis (AVXS -0.28%) slipped 3% in after-hours trading after it was initiated as a new ‘Reduce’ at Nomura Instinet.

Catalent (CTLT +0.45%) jumped over 10% in after-hours trading after it reported Q4 net revenue of $616.9 million, higher than consensus of $574.4 million, and then raised its full-year revenue estimate to $2.16 billion-$2.24 billion, above consensus of $2.13 billion.

Finish Line (FINL -2.34%) sank over 20% in after-hours trading after it cut its full-year adjusted EPS forecast to 50 cents-60 cents from a prior view of $1.12-$1.13, well below consensus of $1.12. Other athletic shoe makers fell in after-hours trading as well with Foot Locker (FL -0.50%) down -3% and Nike (NKE -0.32%) down over 1%.

Prospect Capital (PSEC -1.26%) fell nearly 4% in after-hours trading after it reported Q4 net investment income of 19 cents per share, weaker than consensus of 21 cents.