Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -0.20%) this morning are down -0.14% and European stocks are down -0.33% due to the prospects of a prolonged trade war between China and the U.S. after China called off planned trade talks. After the U.S. implemented its 10% tariff on $200 billion of Chinese goods as of 12:01 today, China canceled trade talks that were scheduled with the U.S. for this week and said negotiations "cannot be carried out under the threat of tariffs." Losses in the overall market were contained as energy producers gained as Nov WTI crude oil (CLX18 +1.70%) jumped +1.65% to a 2-1/2 month high after OPEC said it will only boost production if customers ask for it. After meeting with fellow oil ministers on Sunday, Saudi Energy Minister Khalid Al-Falih said: "Our plan is to meet demand and that the reason Saudi Arabia does not increase oil production more is because our customers are receiving all of the barrels they want." Also, compliance among OPEC and non-OPEC oil producers with their production cuts increased to 129% in August from 109% in July. Asian stocks settled mostly lower: Japan, China, Taiwan, and South Korea closed for holiday, Hong Kong -1.62%, Australia -0.12%, Singapore +0.05%, India -1.46%.

The dollar index (DXY00 -0.11%) is down -0.14%. EUR/USD (^EURUSD +0.15%) is up +0.15% after ECB Governing Council member Nowotny said the ECB should normalize monetary policy quicker than planned. USD/JPY (^USDJPY+0.05%) is up +0.02%.

Dec 10-year T-note prices (ZNZ18 -0-025) are down -2.5 ticks.

ECB Governing Council member Nowotny said the ECB is still enforcing a "crisis mode" monetary policy when Europe is currently in a very good economic situation and that policy normalization should come a bit quicker than currently planned.

The German Sep IFO business climate fell 0.2 to 103.7, stronger than expectations of -0.6 to 103.2.

UK Sep CBI trends total orders fell -8 to -1, weaker than expectations of -3 to 4.

U.S. Stock Preview

Key U.S. news today includes: (1) Aug Chicago Fed national activity index (expected +0.07 to 0.20, Jul -0.35 to 0.13), (2) Sep Dallas Fed manufacturing activity index (expected +0.1 to 31.0, Aug -1.4 to 30.9), (3) Treasury auctions $37 billion 2-year T-notes.

Notable Russell 2000 earnings reports today include: none.

U.S. IPO's scheduled to price today: Viomi Technology (VIOT).

Equity conferences during the remainder of this week: AdvaMed MedTech Conference on Mon, ASC Technical Conference on Mon, Asia Rising Dragons Forum on Mon, Rio oil and gas expo and conference 2018 on Mon, NFV & Carrier SDN: Automation & Monetization on Mon, SPE - Annual Technical Conference and Exhibition on Mon, Denver Gold Forum on Mon-Tue, International Association for the Study of Lung Cancer Conference on Mon-Tue, Bank of America Merrill Lynch Real Estate Conference on Mon-Wed, Credit Suisse 4th Annual Oil & Gas “Non-Bus Tour” on Tue, Johnson Rice Energy Conference on Tue, Waters Informatics Seminar 2018 on Tue, Deutsche Bank Retail One-on-One Day on Tue, Capital Link Shipping, Marine Services & Offshore Forum on Tue, APEX Expo on Tue, Credit and Equities Emerging Markets Conference on Tue, Dreamforce Conference on Tue-Wed, Bernstein Strategic Decisions CEO Conference on Wed, MUFG Utilities Corporate Access Day on Wed, Bloomberg Global Business Forum on Wed, Barrington Research Fall Investment Conference on Thu, Contracting & Outsourcing Conference on Thu, Wells Fargo Securities Consumer Forum & Beauty Day on Thu.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.20%) this morning are down -4.25 points (-0.14%). Friday's closes: S&P 500 -0.04%, Dow Jones +0.32%, Nasdaq 100 +0.50%. The S&P 500 on Friday rose to a new all-time high but gave up its gains and closed slightly lower. Stocks were undercut by weakness in technology stocks and by concern that trade tensions between the U.S. and China won't end anytime soon after President Trump said, "It's time to take a stand on China." Stocks received support from strength in mining stocks and raw-material producers after copper prices jumped +4.29% to a 1-1/2 month high. Stocks were also supported by the U.S. Sep Markit manufacturing PMI report of +0.9 to 55.6, stronger than expectations of +0.3 to 55.0.

Dec 10-year T-notes (ZNZ18 -0-025) this morning are down -2.5 ticks. Friday's closes: TYZ8 +2.50, FVZ8 +1.50. Dec 10-year T-notes on Friday closed higher on the slightly lower close in the stocks and on carry-over support from a rally in German bunds after the Eurozone Sep Markit manufacturing PMI fell to a 2-year low. T-note prices were undercut by increased inflation expectations after the 10-year T-note breakeven inflation rate jumped to a 3-1/2 month high.

The dollar index (DXY00 -0.11%) this morning is down -0.136 (-0.14%), EUR/USD (^EURUSD +0.15%) is up +0.0018 (+0.15%), and USD/JPY (^USDJPY +0.05%) is up +0.02 (+0.02%). Friday's closes: Dollar Index +0.308 (+0.33%), EUR/USD -0.0028 (-0.24%), USD/JPY +0.10 (+0.09%). The dollar index on Friday closed higher on weakness in GBP/USD which fell to a 1-week low after UK Prime Minister May warned that Brexit negotiations were at an impasse. There was also weakness in EUR/USD after the Eurozone Sep Markit manufacturing PMI fell -1.3 to 53.3, the slowest pace of expansion in 2 years, which was dovish for ECB policy.

Metals prices this morning are mixed with Dec gold (GCZ18 +0.25%) +2.5 (+0.21%), Dec silver (SIZ18 +0.04%) +0.006 (+0.04%) and Dec copper (HGZ18 -0.47%) -0.013 (-0.45%). Friday's closes: Dec gold -10.0 (-0.83%), Dec silver +0.054 (+0.38%), Dec copper +11.75 (+4.29%). Metals on Friday settled mixed with Dec gold at a 1 week low and Dec copper at a 1-1/2 month high. Metals prices were undercut by a stronger dollar and by fund liquidation of gold as long gold positions in ETFs fell to a 1-year low Thursday. Copper prices rallied sharply on tighter supplies after weekly Shanghai copper inventories dropped -23,537 MT to a 10-3/4 month low of 111,029 MT.

Nov WTI crude oil (CLX18 +1.70%) prices this morning are up +$1.17 a barrel (+1.65%) at a 2-1/2 month high and Nov gasoline is +3.74 (+1.87%). Friday's closes: Nov crude oil +0.46 (+0.65%), Nov gasoline (RBX18 +1.86%) +0.08 (+0.04%). Nov crude oil and gasoline on Friday closed higher on carry-over support from signs of tight U.S. crude supplies after Wednesday's EIA data showed U.S. crude inventories fell to a 3-1/2 year low. Crude oil prices were also supported by global supply concerns as looming U.S. sanctions on Iran have curbed Iran's crude exports. Crude oil prices were undercut by a Reuters report that OPEC and non-OPEC members are discussing a +500,000 bpd crude production increase when they meet this weekend in Algiers.

Overnight U.S. Stock Movers

Nike (NKE +0.21%) was downgraded to 'Neutral' from 'Outperform' at MainFirst Bank AG with a price target of $80.

Chuy's Holdings (CHUY -2.33%) was downgraded to 'Underperform' from 'Market Perform' at BMO Capital Markets with a price target of $23.

Praxair (PX +0.17%) was rated a new 'Underperform' at Bernstein with a price target of $132.

Darden Restaurants (DRI -3.06%) was downgraded to 'Underperform' from 'Market Perform' at BMO Capital Markets with a price target of $96.

Hartford Financial Services Group (HIG +0.32%) was upgraded to 'Buy' from 'Neutral' at B Riley FBR with a price target of $60.

Applied Genetic Technologies (AGTC unch) was upgraded to 'Outperform' from 'Market Perform' at Wells Fargo Securities with a price target of $20.

Plains All American Pipeline LP (PAA -0.36%) was upgraded to 'Buy' from 'Hold' at Stifel with a price target of $28.

Texas Roadhouse (TXRH -0.77%) was downgraded to 'Underperform' from 'Market Perform' at BMO Capital Markets.

Caesars Entertainment (CZR -1.37%) was rated a new 'Sell' at UBS with a price target of $9.

Generac (GNRC -0.09%) may move higher initially this morning after its board announced after the close of trading Friday that it had authorized a $250 million stock buyback program.

Harris Corp (HRS +1.00%) won a 7-year contract from the U.S. Defense Logistics Agency valued at up to $255.4 million for B-52 and C-130 Special Operation Forces aircraft parts.