Morning Call For Wednesday, July 5

OVERNIGHT MARKETS AND NEWS

Sep E-mini S&Ps (ESU17 +0.02%) this morning are little changed, up +0.05%, and European stocks are up +0.13% as the markets await the minutes of the Jun 13-14 FOMC meeting for clues as to when the Fed may start to shrink its balance sheet. On the positive side for European stocks was the upward revision to the Eurozone Jun composite PMI to 56.3 from the previously reported 55.7. Weakness in energy stocks has limited the upside for equities as the price of Aug WTI crude oil (CLQ17 -1.40%) falls -1.78%. Crude oil prices came under pressure after Russia said it wants to stick to the current OPEC deal and would oppose any proposal for deeper crude production cuts when OPEC meets later this month. Asian stocks settled mostly higher: Japan +0.25%, Hong Kong +0.52%, China +0.76%, Taiwan +0.55%, Australia -0.36%, Singapore +1.17%, South Korea +0.42%, India +0.11%. China’s Shanghai Composite rallied to a 2-1/2 month high on signs of ample liquidity in the financial system after China’s seven-day repo rate fell -5.45 bp to 2.708%, a 2-1/2 month low. Japan’s Nikkei Stock Index recovered from a 2-week low and closed higher as exporter stocks rallied after USD/JPY climbed to a 1-1/2 month high, which boosts the earnings prospects of exporters.

The dollar index (DXY00 +0.16%) is up +0.24%. EUR/USD (^EURUSD) is down -0.19%. USD/JPY (^USDJPY) is up +0.27% to a 1-1/2 month high.

Sep 10-year T-note prices (ZNU17 -0.02%) are down -1 tick to a 1=1/2 month low.

The Eurozone Jun Markit composite PMI was revised higher to 56.3 from the previously reported 55.7.

The UK Jun Markit/CIPS services PMI fell -0.4 to 53.4, weaker than expectations of -0.3 to 53.5.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) May factory orders (expected -0.5%, Apr -0.2% and +0.1% ex transportation), (2) minutes of the Jun 13-14 FOMC meeting.

Notable Russell 2000 earnings reports today include: Yum Brands (consensus $0.61).

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