Morning Call: U.S. and European stocks slightly lower; Dec E-mini S&Ps down -0.04%; Dec 10-year T-notes down -5 ticks ahead of $59 billion of T-note auctions.
Barchart.com - Wed Oct 10, 6:38AM CDT
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 ESZ18 - S&P 500 E-Mini
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DXY0094.986-0.073-0.08%
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NUS68.77+0.11+0.16%
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NIO7.82+0.36+4.83%
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Overnight Markets and News

Dec E-mini S&Ps (ESZ18 +0.04%) this morning are down -0.04% and European stocks are down -0.23% as T-note yields move higher after New York Fed President Williams said "further gradual increases in interest rates" are the best way to foster a sustained expansion and also reduce risk-taking in financial markets. Supply pressures are also pushing up T-note yields ahead of today's auctions of $36 billion in 3-year T-notes and $23 billion in 10-year T-notes. Asian stocks settled mostly higher: Japan +0.16%, Hong Kong +0.08%, China +0.18%, Taiwan closed for holiday, Australia +0.14%, Singapore -1.11%, South Korea -0.71%, India +1.35%. Chinese stocks edged higher on short covering and Japanese stocks gained after four days of losses when Japan Aug core machine orders rose more than expected, a sign of strength in business spending.

The dollar index (DXY00 -0.03%) is down -0.02%. EUR/USD (^EURUSD +0.13%) is up +0.08%. USD/JPY (^USDJPY +0.26%) is up +0.22%.

Dec 10-year T-note prices (ZNZ18 -0-055) are down -5 ticks.

New York Fed President Williams said "further gradual increases in interest rates" are the best way to foster a sustained expansion and also reduce risk-taking in financial markets.

UK Aug industrial production rose +0.2% m/m and +1.3% y/y, stronger than expectations of +0.1% m/m and +1.0% y/y.

UK Aug manufacturing production unexpectedly fell -0.2% m/m, weaker than expectations of +0.1% m/m.

UK Aug construction output fell -0.7% m/m, weaker than expectations of -0.5% m/m.

Japan Aug core machine orders rose +6.8% m/m and +12.6% y/y, stronger than expectations of -3.9% m/m and +1.8% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous unch at 352.6 with purchase sub-index +0.1% to 240.7 and refi sub-index -0.1% to 945.9), (2) Sep PPI final demand (expected +0.2% m/m and +2.7% y/y, Aug -0.1% m/m and +2.8% y/y) and Sep PPI ex food & energy (expected +0.2% m/m and +2.5% y/y, Aug -0.1% m/m and +2.3% y/y), (3) revised Aug wholesale inventories (prelim-Aug +0.8%) and Aug wholesale trade sales (Jul unch m/m), (4) Treasury auctions $36 billion of 3-year T-notes and $23 billion of 10-year T-notes, (5) Chicago Fed President Charles Evans (non-voter) speaks on the economy and monetary policy at the Flint & Genesee Chamber of Commerce Luncheon, (6) Atlanta Fed President Raphael Bostic (voter) discusses the economic outlook at a National Association of Corporate Directors event in Atlanta.

Notable Russell 2000 earnings reports today include: Fastenal (consensus $0.67).

U.S. IPO's scheduled to price today: Allogene Therapeutics (ALLO), Osmotica Pharmaceuticals (OSMT).

Equity conferences during the remainder of this week: none.


Market Comments

Dec S&P 500 E-minis (ESZ18 +0.04%) this morning are down -1.25 points (-0.04%). Tuesday's closes: S&P 500 -0.14%, Dow Jones -0.21%, Nasdaq 100 +0.26%. The S&P 500 on Tuesday closed lower on the IMF's cut in its 2018 global GDP estimate to 3.7% from a 3.9% projection in July, citing escalating trade tensions and stresses in emerging markets. Stocks were also undercut by pessimistic comments from ECB Governing Council member Vasiliauskas who said the global "economic outlook is becoming gloomier, especially in terms of international trade." A positive factor was a rebound in technology stocks after a 3-day rout.

Dec 10-year T-notes (ZNZ18 -0-055) this morning are down -5 ticks. Tuesday's closes: TYZ8 +3.50, FVZ8 -0.25. Dec 10-year T-notes on Tuesday closed higher on the IMF's downgrade of its global 2018 GDP estimate and on increased safe-haven support with the sell-off in stocks.

The dollar index (DXY00 -0.03%) this morning is down -0.016 (-0.02%), EUR/USD (^EURUSD +0.13%) is up +0.0009 (+0.08%), and USD/JPY (^USDJPY +0.26%) is up +0.25 (+0.22%). Dollar Index -0.093 (-0.10%), EUR/USD -0.0001 (-0.01%), USD/JPY -0.27 (-0.24%). The dollar index on Tuesday closed lower on lower T-note yields, which weakened the dollar's interest rate differentials. There was also strength in GBP/USD which climbed to a 1-week high on a report that Brexit negotiators believe the UK and EU could settle an exit agreement by Monday.

Metals prices this morning are mixed with Dec gold (GCZ18 +0.08%) +0.4 (+0.03%), Dec silver (SIZ18 +0.17%) +0.005 (+0.03%) and Dec copper (HGZ18 +0.05%) -0.007 (-0.25%). Tuesday's closes: Dec gold +2.9 (+0.24%), Dec silver +0.071 (+0.50%), Dec copper +0.0395 (+1.43%). Metals on Tuesday closed higher on concern about a slowdown in the global economy that may prompt the world's central banks to pursue easier monetary policies after the IMF cut its global 2018 GDP estimate to 3.7% from a July estimate of 3.9%. Copper was supported by tighter supplies after LME copper inventories fell -4,125 MT to a 2-1/3 year low of 177,856 MT.

Nov WTI crude oil prices (CLX18 -0.09%) this morning are down -14 cents (-0.19%) and Nov gasoline (RBX18 +0.26%) is -0.28 (-0.13%). Tuesday's closes: Nov crude oil +0.67 (+0.90%), Nov gasoline -1.63 (-0.78%). Nov crude oil and gasoline on Tuesday settled mixed. Crude oil prices were undercut by the rally in the dollar index to a 1-1/2 month high and by the decline in the crack spread to a 2-week low, which reduces the incentive for refiners to purchase crude to refine into gasoline. A bullish factor is Hurricane Michael that is speeding north through the Gulf of Mexico and has shuttered 40% of crude production in the Gulf as oil platforms closed ahead of the approaching storm.

Overnight U.S. Stock Movers

Freeport-McMoRan (FCX -0.83%) was rated a new 'Underweight' at Barclays witha price target of $12.

WellCare Health Plans (WCG +0.18%) was rated a new 'Outperform' at Evercore ISI with a price target of $365.

McDonald's (MCD +1.23%) was ugraded to 'Buy' from 'Neutral' at Guggenheim Securities with a price target of $200.

Cripr Therapeutics AG (CRSP +0.79%) was rated a new 'Outperform' at Wells Fargo Securities with a price target of $65.

PPG Industries (PPG -10.06%) climbed nearly 6% in after-hours trading after Trian Fund Management LP disclosed it now owns a 2.9% stake in the company.

Spark Therapeutics (ONCE +1.50%) was rated a new 'Buy' at Guggenheim Securities with a price target of $70.

Nu Skin (NUS -3.68%) was rated a 'Buy' at D.A. Davidson with a price target of $92.

Avrobio (AVRO -5.44%) was rated a new 'Buy' at Guggenheim Securities with a price target of $35.

Nio Inc (NIO +22.35%) jumped almost 8% in after-hours trading after Baillie Gifford & Co announced that it now owns a 7.7% stake in the company.

IDT Corp (IDT +0.57%) soared 14% in after-hours trading after it reported Q4 income from operations was $10.5 million versus $3.7 million in the same period last year.

Vipshop Holdings Ltd (VIPS -2.91%) lost 2% in after-hours trading after it was downgraded to 'Neutral' from 'Overweight' at JPMorgan Chase.

Scorpio Tankers (STNG +0.96%) dropped more than 10% in after-hours trading after it announced that it intends to offer $250 million of common shares through an underwritten public offering.