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OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH16-1.52%) are down -1.50% at a 2-1/2 month low and European stocks are down -1.38% at a 3-month low as global stocks sell-off after China weakened its currency and heightened concerns about an economic slowdown. The yuan plunged to a 4-3/4 year low against the dollar after the PBOC reduced its daily reference rate for the yuan for the seventh day in a row. This raises the risks that other nations may need to lower their exchange rates to remain competitive with China. Technology stocks are also moving lower, led by a 2.8% decline in Apple in pre-market trading, after the Nikkei Asian Review reported that Apple would reduce Q1 output of its latest iPhones by about 30%. Geopolitical concerns also weighed on equity markets after North Korea said it successfully tested a hydrogen bomb. Asian stocks settled mostly lower: Japan -0.99%, Hong Kong -0.98%, China +2.25%, Taiwan -1.05%, Australia -1.18%, Singapore -1.06%, South Korea -0.65%, India -0.68%. Japan's Nikkei Stock Index fell to a 2-1/2 month low, but China's Shanghai Composite closed higher on speculation that Chinese regulators will extend a ban on stock sales by major shareholders that is due to expire Friday.
The dollar index (DXY00-0.06%) is down -0.05%. EUR/USD (^EURUSD) is unchanged. USD/JPY (^USDJPY) is down -0.60% at a 2-1/2 month low.
Mar T-note prices (ZNH16 +0.33%) are up +13.5 ticks at a 3-week high as the slide in global stocks boosts safe-haven demand for government debt.
The PBOC cut its daily reference rate on the yuan by 0.22 percent to 6.5314 per dollar, which sent the yuan falling to 6.5616 per dollar, a 4-3/4 year low.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +7.3% with purchase sub-index +4.1% and refi sub-index +10.8%), (2) Dec ADP employment (expected +195,000, Nov +217,000), (3) Nov U.S. trade deficit (expected -$44.00 billion, Oct -$43.89 billion), (4) final-Dec Markit U.S. services PMI (expected +0.3 to 54.0, prelim-Dec -2.4 to 53.7), (5) Dec ISM non-manufacturing index (expected +0.1 to 56.0, Nov -3.2 to 55.9), (6) Nov factory orders (expected -0.2%, Oct +1.5% and +0.2% ex transportation), and (7) minutes of the Dec 15-16 FOMC meeting.
There are 3 of the Russell 3000 companies that report earnings today: Monsanto (consensus $-0.23), RPM Intl (0.57), MSC Industrial Direct (0.87).
U.S. IPO's scheduled to price today: none.
Equity conferences this week: Goldman Sachs Global Energy Conference on Wed, and Citi Global Internet, Media & Telecommunications Conference on Wed-Thu.
OVERNIGHT U.S. STOCK MOVERS
Apple (AAPL-2.51%) fell nearly 3% in pe-market trading after the Nikkei Asian Review reported that Apple would reduce Q1 output of its latest iPhones by about 30%.
Freeport-McMoRan (FCX +2.44%) tumbled over 4% in pre-market trading after Moody's Investors Service placed the company's debt under review for possible downgrade.
Oracle (ORCL-0.31%) was upgraded to 'Buy' from 'Hold' at Evercore ISI.
Landec Corp. (LNDC-0.34%) reported Q2 EPS of 7 cents, higher than consensus of 6 cents, although Q2 revenue of $140.4 million was below consensus of $143.2 million.
Pioneer Natural Resources (PXD +0.66%) fell over 2% in after-hours trading after it announced an offering of $10.5 million of common stock.
Gilead (GILD +1.28%) said it terminated a Phase 2 study of its Simtuzumab in patients with Idiopathic Pulmonary Fibrosis saying the study showed no evidence of a treatment benefit.
Sonic Corp. (SONC-0.10%) climbed over 1% in after-hours trading after it reported Q1 adjusted EPS of 24 cents, better than consensus of 23 cents.
NuVasive (NUVA +2.28%) said it will acquire Ellipse Technologies MGEC in a transaction valued at $410 million.
Acadia (ACAD-0.46%) slid 4% in after-hours trading after it proposed a $300 million secondary offering of stock.
Sirius XM Holdings (SIRI-1.27%) rose 1% in after-hours trading after the company said it added 2.3 million new subscriptions in 2015, more than expectations of 2.0 million.
Epizyme (EPZM-1.05%) slumped 10% in after-hours trading after it proposed an offering of $120 million in stock.
Conatus Pharmaceuticals (CNAT-2.05%) surged over 15% in after-hours trading after it said its Emricasan drug in a Phase 2 liver cirrhosis study showed significant reductions in liver biomarkers versus a placebo after 3 months of treatment.
Mar E-mini S&Ps (ESH16-1.52%) this morning are down -30.25 points (-1.50%) at a 2-1/2 month low. Tuesday's closes: S&P 500 +0.20%, Dow Jones +0.06%, Nasdaq -0.30%. The S&P 500 index on Tuesday closed higher on strength in health-care companies and consumer staples stocks. Stock prices were undercut by carryover weakness from a -0.26% decline in China's Shanghai Composite to a 2-1/2 month low and by weakness in energy producers after crude oil fell to a 2-week low.
Mar 10-year T-notes (ZNH16 +0.33%) this morning are up +13.5 ticks at a 3-week high. Tuesday's closes: TYH6 +3.00, FVH6 +2.50. Mar T-notes on Tuesday closed higher on (1) carryover support from a rally in German bunds to a 1-1/2 week high after weaker-than-expected Eurozone Dec CPI bolstered speculation that the ECB may need to expand QE, and (2) the slump in China's Shanghai Composite to a 2-1/2 month low, which fueled ideas that the Fed might have to delay the next rate hike if the turmoil gets worse.
The dollar index (DXY00-0.06%) this morning is down -0.048 (-0.05%). EUR/USD (^EURUSD) is unch. USD/JPY (^USDJPY) is down -0.71 (-0.60%) at a 2-1/2 month low. Tuesday's closes: Dollar Index +0.535 (+0.54%), EUR/USD -0.0083 (-0.77%), USD/JPY -0.38 (-0.32%). The dollar index on Tuesday rallied to a 1-month high and closed higher on weakness in EUR/USD which fell to a 1-month low after Eurozone Dec CPI rose less than expected, which may prompt the ECB to boost stimulus measures. The dollar was also boosted by the fall in crude oil to a 2-week low, which fueled a sell-off in commodity currencies as the Canadian dollar plummeted to a 12-1/3 year low against the dollar.
Feb crude oil (CLG16-2.84%) this morning is down -90 cents (12.50%) at a 2-week low and Feb gasoline (RBG16-4.02%) is down -0.0437 (-3.48%) at a 2-week low. Tuesday's closes: CLG6 -0.62 (-1.69%), RBG6 -0.0411 (-3.18%). Feb crude and gasoline on Tuesday closed lower with Feb crude at a 2-week low. Crude oil prices were undercut by the rally in the dollar index to a 1-month high and by expectations that Wednesday's weekly EIA inventory report will show that crude oil supplies rose +1.0 million bbl, gasoline stockpiles climbed +2.0 million bbl, and supplies at Cushing rose +700,000 bbl.
GLOBAL EVENT CALENDAR01/06/2016
Weekly MBA mortgage applications, previous +7.3% with purchase sub-index +4.1% and refi sub-index +10.8%.
Dec ADP employment expected +195,000, Nov +217,000.
Nov trade balance expected -$44.00 billion, Oct -$43.89 billion.
Final-Dec Markit U.S. services PMI expected +0.3 to 54.0, prelim-Dec -2.4 to 53.7. Final-Dec Markit composite PMI, preliminary -2.4 to 53.5.
Dec ISM non-manufacturing index expected +0.1 to 56.0, Nov -3.2 to 55.9.
Nov factory orders expected -0.2%, Oct +1.5% and +0.2% ex transportation
EIA Weekly Petroleum Status Report.
Minutes of the Dec 15-16 FOMC meeting.
Revised German Dec Markit services PMI, preliminary -0.2 to 55.4.
Revised Eurozone Dec Markit composite PMI, preliminary -0.2 to 54.0.
Eurozone Nov PPI expected -0.2% m/m and -3.2% y/y, Oct -0.3% m/m and -3.1% y/y.
UK Dec Markit/CIPS services PMI expected -0.3 to 55.6, Nov 55.9.