Market Snapshot
Asia: Japan closed. Hong Kong -0.4% to 27641. China -1.6% to 4231. India -2.6% to 26717.
Europe: London +0.3%. Paris +0.6%. Frankfurt +0.8%.
Futures: Dow +0.3%. S&P +0.3%. Nasdaq +0.1%. Crude +2.5% to $61.89. Gold -0.3% to $1189.90.
Ten-year Treasury Yield +4 bps to 2.18%
Economic News
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Productivity and Costs
8:30 Gallup U.S. Job Creation Index
10:30 Petroleum Inventories
Key earnings before the open
ANSS, ARQL, ATHM, AVA, AYR, BAM, BUD, CEQP, CHH, CHK, CKSW, CLH, CMLP, CRNT, CRZO, CSTE, DAVE, DDD, DNR, EE, EGAN, ENB, EXK, GDP, GLOG, HAIN, HCLP, HFC, HSC, HSNI, HTA, IMN, INFI, KELYA, LAMR, LG, LINC, MEMP, MPO, MSI, MWE, NOR, NXTM, OXY, PERI, PGNX, POWR, RDC, RHP, SBGI, SCMP, SE, SNH, SODA, STRA, SUP, SWC, TMHC, OTCQB:TRXC, VG, VOYA, VSI, WCG, WD, WEN, WIX, WMC, WPX, XLS, XRAY
Key earnings after the close
ACAS, ALB, ALDW, AMTG, ANAC, AREX, ATML, ATO, ATVI, AUQ, AWK, BEAT, BGC, BNFT, BREW, BRKR, BWC, CCRN, CECO, CF, CHEF, CHGG, CJES, CKP, CLR, CLVS, CODI, CPA, CPE, CSLT, CSOD, CUZ, CXW, CZR, DMD, DPM, ECR, EFC, EGN, ENSG, EPAM, EPM, EQC, ESS, ETE, ETP, EXTR, EXXI, FLTX, FNGN, FNV, FOXA, FRSH, GBDC, GMCR, GUID, HIVE, HR, HUBS, IL, IO, IVR, JKHY, JONE, KIM, KND, KW, LCI, LGCY, LHCG, MASI, MCHX, MELI, MET, MITT, MRIN, MRO, MTDR, NEWP, NLY, NP, NSIT, NSTG, NUS, OAS, ORA, OSUR, PAYC, PDLI, PEGA, PFMT, PGTI, PHH, PMT, PNNT, PRAA, PRI, PRU, PSEC, PTLA, QLTY, QTM, REG, RIG, RIGP, RST, RYN, SBY, SD, SGM, SLH, SN, SQNM, SUN, SWM, SXL, SZYM, TCAP, THRX, TRIP, TROX, TSLA, TTPH, TUMI, TWO, VECO, VNDA, VRNS, VVC, WBMD, WFM, WGL, WTI, XNPT
Markets
U.S. stocks are largely marking time this morning after yesterday’s weakness, with futures nudging higher ahead of the ADP employment report, which will be closely watched for clues to Friday’s key nonfarm-payrolls number.
A worldwide sell-off in government bonds deepened today, buoyed by rising German Bund yields that recently hit record highs and narrowed their gap with U.S. Treasuries. Benchmark 10-year Bunds now trade at 0.53%, having hit a record low of 0.05% last month, when many expected them to turn negative. The vicious bond market meltdown is also raising pressing questions for investors – is this a correction or merely a trend change?
Greece has made a €200M interest payment to the IMF that fell due on Wednesday, although concerns over its future continued to rattle European markets. Athens faces another €750M repayment obligation to the IMF on May 12 and many commentators are struggling to see where the money is going to come from. The cash-strapped country still remains in a deadlock with creditors over its next tranche of bailout funding.
U.K. services growth unexpectedly accelerated this month, countering signs that the economy was slowing before Thursday’s knife-edge general election. Markit’s services PMI climbed to an eight-month high of 59.5 in April from 58.9 in March, beating forecasts for a decline to 58.5. The latest opinion polls seem to show the Conservatives with a slight lead over Labour, although neither are on track to command a majority in the parliament.
Asian stocks outside of Japan (which is closed for a holiday) fell in another session, marking the second heavy sell-off this week after the RBA cut rates and reports that Chinese brokerages are tightening margin requirements. Data on Tuesday showed that the U.S. trade deficit widened in March to its highest level in more than six years, sending Wall Street down to its biggest one-day percentage decline since March.
Crude prices hit fresh 2015 highs overnight, continuing a rally that has surprised many investors almost as much as the steep sell-off that bottomed in mid-March. After gains of 20% for Brent and 25% for WTI in April, oil bulls pushed prices higher again this week, despite indications that OPEC would keep production unchanged at its meeting next month. The EIA is scheduled to issue official stockpiles data at 10:30 a.m. EST. Crude futures +2.5% at 61.89/bbl.
Stocks
U.S. antitrust officials are scrutinizing Apple’s (AAPL) efforts to line up deals with record labels as it prepares to debut a new version of the Beats Music streaming service this summer. The FTC is now examining whether Apple is using its position as the largest seller of music downloads through its iTunes store to put rival music services at a disadvantage.
The FAA is planning to announce an initiative today to study drone flights beyond the sight of an operator, WSJ reports. Until now, the agency has virtually banned such flights, including for research, and even proposed rules earlier this year that would prohibit them. Both Amazon (AMZN) and Google (GOOG, GOOGL), which are seeking to use drones for package delivery, say U.S. regulators have recently become more receptive to their efforts.
The EU will unveil its wide-ranging “digital single market” probe today, aiming to update copyright rules and ensure European online businesses can compete with their bigger U.S. rivals. The inquiry differs from the EU’s antitrust investigation into Google (GOOG, GOOGL), in that it is not aimed at enforcing existing law through penalties. It will rather look at whether Internet platforms are transparent enough in how they display search results and if they promote their own services to the detriment of competitors.
According to its latest quarterly filing, JPMorgan (JPM) is in “advanced stages” of settlement talks with the DOJ and Federal Reserve over previously disclosed foreign exchange investigations. The bank said the amount it may lose related to litigation in excess of legal reserves could be as much as $5.5B as of March 31, down from $5.8B three months earlier.
Microsoft (MSFT) is rumored to be evaluating a bid for cloud software provider Salesforce (CRM) after it was approached by another potential suitor. Salesforce is reportedly working with two banks to determine a response.
Occidental Petroleum (OXY) has announced a CEO succession plan, which will see the appointment of Vicki Hollub as chief executive after a “thorough transition period.” Hollub has served as EVP and President of Oxy Oil and Gas Americas since 2014 and will be the first female CEO of a major U.S. oil producer.
Petrobras (PBR) has confirmed plans to report its first-quarter earnings on May 15, at the end of a 45-day reporting window mandated by Brazilian securities regulator CVM. Following months of delays, Petrobras’ audited third- and fourth-quarter earnings were reported on April 22, after it negotiated with auditor PwC over how to account for its vast corruption scandal.
CFO Anthony Noto is taking control of Twitter’s (TWTR) marketing department from SVP of product Kevin Weil. The Verge states Noto “took over marketing after months of fruitless searching for a chief marketing officer,” and observes he’s already in charge of corporate development, corporate strategy, and real estate (in addition to finance).
Western Union (WU) is in early-stage talks to acquire smaller rival MoneyGram (MGI), as both companies contend with stiff competition from upstart money-transfer companies. Prior to its discussion with Western Union, MoneyGram explored a sale in 2013 and was the target of an unsolicited offer in 2007.