Morning Call: Global stocks recover as trade tensions ease; Dec E-mini S&Ps up +1.02%; Dec COMEX copper up +0.54% at a 1-week high.
Barchart.com - Fri Oct 12, 6:35AM CDT
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 ESZ18 - S&P 500 E-Mini
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Overnight Markets and News

Dec E-mini S&Ps (ESZ18 +1.11%) this morning are up +1.02% and European stocks are up +0.38% as global equity markets recover from their 2-day rout. JPMorgan Chase is up 1% in pre-market trading to lead bank stocks higher after it reported Q3 adjusted EPS of $2.36, above consensus of $2.26. Strength in mining stocks and commodity producers are also higher with Dec COMEX copper (HGZ18 +0.70%) up +0.54% at a 1-week high. Stronger-than-expected Eurozone Aug industrial production and concern about tight supplies is pushing copper prices higher after LME copper inventories dropped -3,500 MT to a 2-1/3 year low of 166,600 MT. Concern about the impact of the U.S.-China trade war eased slightly and improved confidence in the global economic outlook after China's Sep imports remained robust and its Sep exports rose more than expected. Asian stocks settled higher: Japan +0.46%, Hong Kong +2.12%, China +0.91%, Taiwan +2.44%, Australia +0.2-%, Singapore +0.71%, South Korea +1.53%, India +2.15%. China's Shanghai Composite rebounded from a new 3-3/4 year low and closed higher on optimism that escalation of the U.S.-China trade war can be averted after a report said the U.S. Treasury advised Secretary Mnuchin that China is not manipulating the yuan. Chinese stocks also received a boost on a WSJ report that President Trump plans to meet Chinese President Xi late next month. The rebound in Chinese stocks lifted Japan's Nikkei Stock Index off of a 1-month low and into positive territory.

The dollar index (DXY00 +0.07%) is up +0.08%. EUR/USD (^EURUSD -0.10%) is down -0.09%. USD/JPY (^USDJPY +0.13%) is up +0.06%.

Dec 10-year T-note prices (ZNZ18 -0-095) are down -8 ticks.

Eurozone Aug industrial production rose +1.0% m/m, stronger than expectations of +0.5% m/m.

ECB President Drahi said preserving openness in trade is crucial if the global economy is to thrive and secure its growth potential and "the positive developments in the Eurozone are not independent of the global growth momentum."

The China Sep trade balance unexpectedly widened to a surplus of +$31.69 billion, more than expectations of a narrowing to +$19.20 billion. Sep exports rose +14.5% y/y, stronger than expectations of +8.2% y/y. Sep imports rose +14.3% y/y, weaker than expectations of +15.3% y/y.

The Japan Aug tertiary industry index rose +0.5% m/m, stronger than expectations of +0.3% m/m.

U.S. Stock Preview

Key U.S. news today includes: (1) Sep import price index (expected +0.2% m/m and +3.1% y/y, Aug -0.6% m/m and +3.7% y/y) and Sep import price index ex petroleum (expected -0.1% m/m, Aug -0.2% m/m), (2) Chicago Fed President Charles Evans (non-voter) takes part in a moderated discussion at a conference in Ann Arbor, Michigan, (3) preliminary-Oct University of Michigan U.S. consumer sentiment index (expected +0.4 to 100.5, Sep +3.9 to 100.1), (4) Atlanta Fed President Raphael Bostic (voter) discusses recruitment, economics and the public policy profession at a conference in Atlanta, (5) 2-day meeting concludes of G-20 finance ministers and central bank chiefs in Bali, Indonesia.

Notable Russell 2000 earnings reports today include: JPMorgan Chase (consensus $2.26), Citigroup (1.68), Wells Fargo (1.18), PNC Financial Services (2.72).

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

Equity conferences during the remainder of this week: none.


Market Comments

Dec S&P 500 E-minis (ESZ18 +1.11%) this morning are up sharply by +28.00 points (+1.02%). Thursday's closes: S&P 500 -2.06%, Dow Jones -2.13%, Nasdaq 100 -1.14%. The S&P 500 on Thursday plunged to 3-1/4 month low and closed sharply lower on continued concern about interest rates and on negative carry-over from a 5% sell-off in China's Shanghai Composite to a 3-3/4 year low on US/Chinese trade tensions. There was also increased market volatility that spurred concerns as the VIX volatility index jumped to a 6-1/4 month high. There was weakness in energy stocks as crude oil prices tumbled -3.01% to a 3-week low.

Dec 10-year T-notes (ZNZ18 -0-095) this morning are down -8 ticks. Thursday's closes: TYZ8 +20.50, FVZ8 +10.25. Dec 10-year T-notes on Thursday rose to a 1-week high and closed sharply higher on the plunge in the S&P 500 to a 3-1/4 month low, which boosted the safe-haven demand for T-notes and was dovish for Fed policy. T-notes were also supported by the weaker-than-expected U.S. Sep core CPI report and reduced inflation expectations after the 10-year T-note breakeven inflation rate fell to a 3-week low.

The dollar index (DXY00 +0.07%) this morning is up +0.073 (+0.08%), EUR/USD (^EURUSD -0.10%) is down -0.0010 (-0.09%), and USD/JPY (^USDJPY +0.13%) is up +0.07 (+0.06%). Thursday's closes: Dollar Index -0.491 (-0.51%), EUR/USD +0.0073 (+0.63%), USD/JPY -0.11 (-0.10%). The dollar index on Thursday fell to a 1-1/2 week low and closed lower on the plunge in stocks and the weaker-than-expected U.S. Sep core CPI report, which were both dovish for Fed policy. USD/JPY tumbled to a 3-week low as the slump in global stocks boosted the safe-haven demand for the yen.

Metals prices this morning are mixed with Dec gold (GCZ18 -0.22%) -4.1 (-0.33%), Dec silver (SIZ18 +0.61%) +0.034 (+0.23%) and Dec copper (HGZ18 +0.70%) +0.015 (+0.64%) at a 1-week high. Thursday's closes: Dec gold +34.2 (+2.87%), Dec silver +0.280 (+1.95%), Dec copper +0.0225 (+0.81%). Metals on Thursday closed higher with Dec gold at a 2-month high. Precious metals prices were boosted by increased safe-haven demand with the plunge in stocks and the fall in the dollar index to a 1-week low. Copper was boosted by supply tightness after LME copper inventories fell -3,400 MT to a 2-1/3 year low of 170,100 MT.

Nov WTI crude oil prices (CLX18 +0.85%) this morning are up +51 cents (+0.72%) and Nov gasoline (RBX18 +1.05%) is +1.70 (+0.88%). Thursday's closes: Nov crude oil -2.20 (-3.01%), Nov gasoline -8.77 (-4.34%). Nov crude oil and gasoline on Thursday closed lower with Nov crude at a 3-week low and Nov gasoline at a 1-month low. Crude oil prices were undercut by the sell-off in global equity markets, which undercut confidence in the economic outlook and energy demand. In addition, the EIA report was bearish with a +5.99 million bbl increase in EIA crude inventories (vs expectations of +2.5 million bbl) a +951,000 bbl increase in EIA gasoline supplies (vs expectations of unchanged) and a +0.9% increase in U.S. crude output the week of Oct 5 to a record 11.2 million bpd.

Overnight U.S. Stock Movers

JPMorgan Chase (JPM -3.00%) is up 1% in pre-market trading after it reported Q3 adjusted EPS of $2.36, higher than consensus of $2.26.

Eastman Chemical (EMN -2.60%) was upgraded to 'Overweight' from 'Neutral' at JPMorgan Chase with a price target of $95.

IAC/Interactive (IAC +0.80%) was rated a new 'Buy' at Nomura Instinet with a price target of $246.

Halliburton (HAL -2.19%) was rated a new 'Overweight' at Stephens with a price target of $55.

Match Group (MTCH +1.94%) was rated a new 'Buy' at Nomura Instinet with a price target of $66.

Marvell Technology Group Ltd (MRVL +1.96%) was upgraded to 'Buy' from 'Hold' at Stifel with a price target of $21.

Abeona Therapeutics (ABEO +0.05%) was rated a new 'Buy' at Mizuho Securities with a price target of $17.

Corium International (CORI -0.24%) surged 30% in after-hours trading after the company was acquired by Gurnet Point for $12.50 a share.

Two Harbors Investment (TWO -1.59%) was rated a new 'Outperform' at Raymond James with a price target of $16.50.

Foamix Pharmaceuticals Ltd (FOMX +0.40%) climbed almost 5% in after-hours trading after it was rated a new 'Overweight' at Cantor Fitzgerald with a price target of $15.

Progenics Pharmaceuticals (PGNX -2.79%) rose more than 4% in after-hours trading after it said it will advance its I-131 1095 drug for the treatment of metastatic prostate cancer, into a Phase 2 clinical study.

Tetraphase Pharmaceuticals (TTPH -0.83%) jumped more than 12% in after-hours trading after it announced the commercial launch of its Xerava, a new treatment for intra-abdominal infections.

Immune Design (IMDZ -1.41%) plunged 22% in after-hours trading after it announced that it will discontinue its "Synovate" trial after early analysis of the ongoing Phase 2 trial showed the treatment is not likely to show a survival benefit in relapsed synovial sarcoma patients.