Shares across both Europe and Asia rose overnight as investors weighed the prospect of a US interest rate cut, a US-Mexico deal on migrant flows and a new Chinese government stimulus proposal, against cautious optimism in the America-China trade arena.
In Asia, Chinese equities had outperformed global markets following a newly introduced series of measures set out by China’s government to support the country’s economy as it reels from the effects of an unwelcome US-China trade dispute.
State news agency, Xinhua, said on Monday that local governments and financial institutions were “encouraged to use special bonds and other market-based financing methods to support key areas and major projects”.
This comes after President Trump’s seemingly swift resolution with neighboring country Mexico; however, sentiment remains cautiously optimistic in the eyes of US-China negotiations, with the G-20 summit in Japan set to be the next station of discussion between the world’s two largest economies.
Keeping tensions elevated, Trump told reporters on Monday that he could impose tariffs of 25%, or “much higher than 25%” on $300 billion worth of Chinese goods.
These moves in pre-market look to extend upon Wall Street's Monday victory, where the S&P 500 scored a five-day winning streak amid signs of a reprieve in US-Mexico tensions.
Despite being up by more than +1% in intraday trading, the S&P 500’s rally cooled during the afternoon session, but remained enough to see the benchmark close up +0.46% higher, adding to its longest winning streak in two months.
Ahead, in today’s economic calendar, Tuesday includes; Producer Price Index figures for May at 8:30am EST.
In earnings; Dave & Buster's Entertainment (PLAY), H&R Block (HRB) and Casey's General Stores (CASY) are amongst the major companies scheduled to report their latest financials today.
ECONOMIC CALENDAR
08:30AM - ★★☆ - Core PPI (MoM) (May) (Previous: 0.1%)
08:30AM - ★★★ - PPI (MoM) (May) (Previous: 0.2%)
STOCKS IN THE SPOTLIGHT
Casey’s General Stores (CASY): [EARNINGS] Reported quarterly profit of 68 cents per share, well above the consensus estimate of 46 cents a share. The convenience store operator’s revenue also topped forecasts.
HD Supply Holdings (HDS): [EARNINGS] Reported adjusted quarterly profit of 84 cents per share, 3 cents a share above estimates, with revenue very slightly above Wall Street forecasts. Organic sales were up 5.8% from the year-ago quarter.
Barnes & Noble (BKS): [NEWS] A new bidder has emerged for bookstore chain Barnes & Noble, according to the Wall Street Journal. Book distributor Readerlink is said to be working toward a bid that would top Elliot Management’s deal to acquire Barnes & Noble for $6.50 per share or $475 million in cash.
Broadcom (AVGO): [NEWS] Announced a two-year supply deal with Apple, agreeing to provide components for smartphones, tablets, and smart watches.
Beyond Meat (BYND): [NEWS & DOWNGRADE] Short sellers have lost more than $400 million betting against the plant-based burger maker’s stock since it went public, according to research firm S3 Partners. The stock is up about 600% from its $25 per share IPO price. Separately, J.P. Morgan Securities downgraded the stock to “neutral” from “overweight,” saying its above-the-Street estimates now appear to be priced into the stock.
Shutterfly (SFLY): [BUYOUT] Agreed to be bought by private-equity firm Apollo Global (APO) for $51 per share, or about $1.7 billion. Apollo is also buying another online photo service, Snapfish, for about $300 million and plans to combine the two.
Facebook (FB): [UPGRADE] Upgraded the stock to “buy” from “neutral,” reversing a call it had made last September. The firm said that multiple concerns it had expressed at that time have been addressed.
Chico’s FAS (CHS): [EARNINGS] Reported adjusted quarterly profit of 5 cents per share, 2 cents a share above estimates. Revenue also beat Street forecasts, however, a comparable store sales decline of 7% was larger than the 6.6% drop that analysts had anticipated.
Ascena Retail (ASNA): [EARNINGS] Reported an adjusted quarterly loss of 26 cents per share, smaller than the 37 cents a share loss expected by Wall Street analysts. The parent of the Ann Taylor and Lane Bryant clothing brands saw revenue come in below estimates, however, and the company reported flat same-store sales.
Zynga (ZNGA): [NEWS] Proposed a $600 million private debt offering, with that debt convertible into cash, stock, or a combination of the two. The mobile gaming company said the proceeds would be used for general corporate purposes.
Dollar Tree (DLTR): [UPGRADE] Upgraded to “overweight” from “neutral” at J.P. Morgan Securities, based on good metrics and improvements being implemented at the discount retailer’s Family Dollar chain.
Wells Fargo (WFC): [DOWNGRADE] Downgraded to “underweight” from “neutral” at Atlantic Equities, based on a decreased outlook for interest rates and increased competition for deposits.
MOMENTUM STOCKS
GAINERS: BYND, DXCM, ZM, AAN, ADI, KHC
DECLINERS: ONCE, LLY
TODAY'S IPOs
None.
