Day Traders Diary

8/2/18

The U.S. stock market is on course for a solidly lower open, as the S&P 500 futures are trading 19 points, or 0.7%, below fair value. The tech-heavy Nasdaq 100 futures are in a similar spot, trading 61 points, or 0.8%, below fair value. Asian equities ended Thursday solidly lower, and European stocks are also in the red.

U.S.-China trade concerns are weighing on equity markets around the globe this morning after President Trump upped proposed tariffs on $200 billion worth of Chinese goods to 25% from 10%, citing China's refusal to meet U.S. trade demands. As it's done before, Beijing responded with threats of retaliation.

As for other markets, U.S. Treasuries are modestly higher, pushing yields lower across the curve; the benchmark 10-yr yield is down two basis points at 2.98% after hitting a more than two-month high on Wednesday. WTI crude futures are down 0.9% at $67.06/bbl, and the U.S. Dollar Index is up 0.4% at 94.81.

On the data front, investors will receive weekly Initial Claims (Briefing.com consensus 220K) at 8:30 AM ET and June Factory Orders (Briefing.com consensus +0.6%) at 10:00 AM ET. Looking ahead, the highly-influential Employment Situation report for July will be released on Friday.

In Europe, the Bank of England raised rates to 0.75% from 0.5% this morning, marking only its second rate hike in a decade, and said it would likely have to raise rates further despite continued uncertainty over Brexit. The British pound is down 0.7% against the U.S. dollar at 1.3041 after being down 0.4% ahead of the policy decision.

In U.S. corporate news:

• Tesla (TSLA 324.19, +23.35): +7.8% after above-consensus revenues and a reaffirmed outlook overshadowed disappointing earnings.
• DowDuPont (DWDP 68.73, +0.77): +1.1% after beating both top and bottom line estimates and issuing upbeat revenue guidance.
• TripAdvisor (TRIP 51.70, -5.95): -10.3% after reporting below-consensus revenues.
• Wayfair (W 101.01, -6.22): -5.8% after missing earnings estimates.
• Red Robin (RRGB 34.80, -11.05): -24.1% after lowering its guidance for Q2 and FY18.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a broadly lower note. Japan's Nikkei -1.0%, Hong Kong's Hang Seng -2.2%, China's Shanghai Composite -2.0%, India's Sensex -1.0%.
  • In economic data:
    • Australia's June trade surplus AUD1.87 billion (expected surplus of AUD910 million; last surplus of AUD725 million)
  • In news:
    • Property names in China remained weak amid speculation that the Chinese government will undertake new measures to control rising property prices. On a related note, China Securities Journal reported that analysts expect mortgage rates to increase during the second half of the year.
    • The People's Bank of China fixed the yuan midpoint at a higher level, but the currency retreated to a 14-month low regardless.
    • Nikkei reported that a survey conducted by the Development Bank of Japan showed a 38-year high in capital spending in Japan during fiscal 2018.
    • Japan sold 10-yr JGBs to weak demand and the Bank of Japan intervened in the market after selling drove Japan's 10-yr yield up to 0.14%.

• Major European indices trade lower across the board. France's CAC -0.7%, UK's FTSE -1.3%, Germany's DAX -1.7%.
  • In economic data:
    • Eurozone June PPI +0.4% month-over-month (expected 0.3%; last 0.8%); +3.6% year-over-year (expected 3.5%; last 3.0%)
    • UK's July Construction PMI 55.8 (expected 52.8; last 53.1)
    • Spain's July Unemployment Change -27,100 (expected -87,600; last -90,000)
    • Swiss June Retail Sales +0.3% year-over-year (expected 0.0%; last 0.4%), July SVME PMI 61.9 (expected 60.8; last 61.6), and Q3 SECO Consumer Climate -7 (expected 2; last 2)
  • In news:
    • Italy's Finance Minister Giovani Tria will reportedly hold a meeting with Deputy Prime Ministers Salvini and Di Maio and EU affairs minister Savona to discuss the demand for introducing a flat tax and a universal basic income for the poor.
    • The Bank of England voted unanimously to increase its official bank rate by 25 basis points to 0.75% while the market expected a 7-2 vote in favor of a rate hike.
  • Headlines provided by Briefing.com