Day Traders Diary

5/31/18

The U.S. stock market is on track for a flattish start to today's session following a volatile start to the week that featured a 1.2% decline for the S&P 500 on Tuesday followed by a 1.3% surge on Wednesday. The S&P 500 futures are currently trading two points, or 0.1%, above fair value.

In Washington, the Trump administration is expected to impose steel and aluminum tariffs on Canada, Mexico, and the European Union this morning. These tariffs, including a 25% duty on steel imports and a 10% duty on imports of aluminum, were originally announced back in March, but President Trump gave a period of exemption to Canada, Mexico, the EU, Brazil, Australia, and Argentina in hopes of striking a better trade deal. Steel and aluminum names, including U.S. Steel (X 38.00, +1.75), AK Steel (AKS 4.76, +0.18), and Century Aluminum (CENX 17.75, +0.60), are higher in pre-market trading.

On the data front, investors are set to receive the report on personal income (Briefing.com consensus +0.3%) and personal spending (Briefing.com consensus +0.3%) for April, which includes the Fed's preferred gauge of inflation -- the PCE Price Index (Briefing.com consensus +0.2%). The report will be released alongside the weekly Initial Claims report (Briefing.com consensus 227K) at 8:30 AM ET. In addition, the Chicago PMI for May (Briefing.com consensus 57.9) and Pending Home Sales for April (Briefing.com consensus +0.7%) will be released at 9:45 AM ET and 10:00 AM ET, respectively.

U.S. Treasuries are down for the second consecutive day, but still remain higher for the week following Tuesday's huge rally. The yield on the benchmark 10-yr Treasury note is three basis points above its Wednesday close at 2.87%, but down six basis points for the week. Yields move inversely to prices. Meanwhile, the U.S. Dollar Index is also lower for the second straight session, slipping 0.3% to 93.79. The greenback rallied to its highest level since November on Tuesday, with a good chunk of that gain coming against the euro due to a political crisis in Italy.

Elsewhere, West Texas Intermediate crude futures are down 0.9% at $67.63 per barrel after the API reported on Wednesday evening that U.S. crude stockpiles rose by 1.0 million barrels last week. The official weekly inventory report from the government will be released today at 11:00 AM ET -- one day later than usual due to the Memorial Day holiday.

In U.S. corporate news:

• Dollar General (DG 90.62, -5.90): -6.1% after missing earnings and revenues estimates for Q1.
• Dollar Tree (DLTR 89.89, -6.46): -6.7% after missing earnings estimates for Q1 and lowering its profit guidance.
• General Motors (GM 40.63, +2.80): +7.4% following news that the Softbank Vision Fund (SFTBY) will invest $2.25 billion in GM Cruise Holdings.
• Express (EXPR 10.49, +1.33): +14.5% after beating both top and bottom line estimates for Q1.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note. Japan's Nikkei +0.8%, Hong Kong's Hang Seng +1.4%, China's Shanghai Composite +1.8%, India's Sensex +1.2%.
  • In economic data:
    • China's May Manufacturing PMI 51.9 (expected 51.4; last 51.4) and non-Manufacturing PMI 54.9 (expected 54.8; last 54.8)
    • Japan's April Industrial Production +0.3% month-over-month (expected 1.5%; last 1.4%). Weekly foreign investment in Japanese stocks -JPY380 billion (last JPY97.10 billion). April Housing Starts +0.3% year-over-year (expected -8.8%; last -8.3%). April Construction Orders +4.0% year-over-year (last -4.0%)
    • South Korea's April Industrial Production +3.4% month-over-month (expected 1.0%; last -2.2%); +0.9% year-over-year (expected -1.2%; last -4.0%). April Retail Sales -1.0% month-over-month (last 2.9%)
    • Australia's Q1 Private New Capital Expenditure +0.4% quarter-over-quarter (expected 0.8%; last 0.2%). Private Sector Credit +0.4% month-over-month, as expected (last 0.5%)
    • New Zealand's May ANZ Business Confidence -27.2 (last -23.4)
    • Hong Kong's April Retail Sales +12.3% year-over-year (last 11.4%) and M3 Money Supply +13.6% (last 9.6%)
  • In news:
    • Market participants received a heavy dose of economic data, which was headlined by better than expected Manufacturing and Non-Manufacturing PMI readings from China.
    • North Korea's former spy chief Kim Yong-chol met with Secretary of State Mike Pompeo in New York, as the two sides attempt to put the June 12 summit back on track.
    • Korea Development Institute said South Korea's monetary policy should remain accommodative.

• Major European indices trade in mixed fashion with Germany's DAX (-0.5%) struggling to keep pace. France's CAC +0.1%, UK's FTSE +0.3%, Italy's MIB +0.8%.
  • In economic data:
    • UK's April Mortgage Lending GBP3.89 billion (expected GBP3.80 billion; last GBP3.96 billion). April Mortgage Approvals 62,460 (expected 63,000; last 62,800). BoE Consumer Credit GBP1.83 billion (expected GBP1.30 billion; last GBP425 million). May Nationwide HPI -0.2% month-over-month (expected 0.3%; last 0.1%); +2.4% year-over-year (expected 3.0%; last 2.6%)
    • Eurozone April Unemployment Rate 8.5% (expected 8.4%; last 8.6%). May CPI +1.9% year-over-year (expected 1.6%; last 1.2%) and core CPI +1.1% year-over-year (expected 1.0%; last 0.7%)
    • France's May CPI +0.4% month-over-month (expected 0.2%; last 0.2%); +2.0% year-over-year (last 1.6%). April PPI -0.6% month-over-month (last 0.4%)
    • Italy's May CPI +0.4% month-over-month (expected 0.2%; last 0.3%); +1.1% year-over-year (expected 0.8%; last 0.5%). April Unemployment Rate 11.2% (expected 10.9%; last 11.1%)
    • Spain's Q1 GDP +0.7% quarter-over-quarter, as expected (last 0.7%); +3.0% year-over-year (expected 2.9%; last 3.1%)
    • Swiss April Retail Sales +2.2% year-over-year (expected -1.4%; last -1.1%). Q1 GDP +0.6% quarter-over-quarter (expected 0.5%; last 0.6%); +2.2% year-over-year (expected 2.3%; last 1.9%)
  • In news:
    • Automakers have been pressured by news indicating President Trump has no plans to extend steel and aluminum tariff exemptions for the European Union, Canada, and Mexico.
    • In Italy, leaders of M5S and Lega are making another attempt at forming a government.
    • British Chancellor Philip Hammond said the UK will keep newly-established European privacy rules following Brexit.

Headlines provided by Briefing.com