Morning Call: U.S. and European stocks lower on Eurozone political risks; Dec E-mini S&Ps down -0.09%; EUR/USD down -0.61% to a 16-month low.
Related Stocks
 ESZ18 - S&P 500 E-Mini
SymLastChgPct
ESZ182,604.00+2.00+0.08%
CLZ1856.76s+0.30+0.53%
DXY0097.228-0.215-0.22%
ZNZ18120-145unchunch
GCZ181,237.0s-5.7-0.46%
SIZ1814.513s-0.216-1.47%
HGZ182.7400-0.0205-0.74%
RBZ181.4413s-0.0134-0.92%
SNV32.20-0.94-2.84%
ALGT118.44-2.40-1.99%
OIS16.11-1.28-7.36%
PHAS4.12+0.47+12.88%
AWI60.75-1.28-2.06%
FNSR21.75-0.39-1.76%
ISCA43.22+0.02+0.05%
JACK80.33-2.17-2.63%
GNC2.60+0.01+0.39%
MHLD1.73-0.21-10.82%
OPK3.29-0.12-3.52%

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 -0.06%) this morning are down -0.09% in quiet trade with cash forex and Treasury trading closed in the U.S. today for the Veteran's Day holiday. European stocks are down -0.44% and EUR/USD (^EURUSD -0.60%) fell -0.61% to a 16-month low on increased European political risks. GBP/USD is down -0.77% at a 1-week low as UK Prime Minister May is facing pressure to ditch her Brexit plan or face defeat in Parliament, while Italy's budget impasse with the EU shows no signs of being resolved after Italy's Deputy Prime Minsker Di Maio said respecting EU budget limits is suicidal and would bring on a recession. Losses were limited as energy stocks rose with Dec WTI crude oil (CLZ18 +0.60%) up +0.50% after Saudi Energy Minister Khalid Al-Falih said OPEC+ need to cut about 1 million bpd from Oct production levels on oversupply concerns. Asian stocks settled mostly higher: Japan +0.09%, Hong Kong +0.12%, China +1.22%, Taiwan +0.01%, Australia +0.33%, Singapore -0.32%, South Korea +0.09%, India -0.98%. Chinese stocks moved higher on the prospects for looser monetary policy after the PBOC said the global outlook is worsening and it will "preemptively adjust and fine-tine policies according to changing conditions." Japanese stocks gained, led by strength in exporters, as a rally in USD/JPY to a 5-week high improved the earnings prospects of exporters.

The dollar index (DXY00 +0.49%) is up +0.51% at a 16-month high. EUR/USD (^EURUSD -0.60%) is down -0.61% at a 16-month low. USD/JPY (^USDJPY +0.08%) is up +0.04% at a 5-week high.

Dec 10-year T-note prices (ZNZ18 +0-065) are up +6.5 ticks at a 1-week high on carry-over support from a rally in German bunds to a 1-week high as European political risks boost safe-haven demand for bunds.

Japan Oct PPI rose +0.3% m/m and +2.9% y/y, stronger than expectations of +0.1% m/m and +2.8% y/y.

Japan Oct machine tool orders fell -1.1% y/y, the first decline in nearly 2 years.

U.S. Stock Preview

Key U.S. news today includes: (1) Veterans Day (stock and commodity markets open, cash Treasury and forex trading closed), (2) San Francisco Fed President Mary Daly (voter) speaks on the economic outlook at a regional development conference in Idaho Falls, Idaho.

Notable Russell 1000 earnings reports today include: AXA Equitable (consensus $0.91), UGI (-0.04), AECOM (0.82).

U.S. IPO's scheduled to price today: Alzheon Inc (ALZH).

Equity conferences during the remainder of this week: Abu Dhabi International Petroleum Exhibition & Conference on Mon, American Heart Association Scientific Conference on Mon, BlackLine The Accounting & Finance Innovation Summit on Mon, J.P. Morgan Ultimate Services Investor Conference on Mon, UBS Global Technology Conference on Mon-Wed, Chrome Dev Summit 2018 on Mon-Wed, Edison Electric Institute Financial Conference on Tue, Needham Networking & Security Conference on Tue, eGain DX Conference on Tue, Morgan Stanley Consumer Conference on Tue, Morgan Stanley Global Chemicals Conference on Tue-Wed, Stifel Health Care Conference on Tue-Wed, Morgan Stanley Global Consumer & Retail Conference on Tue-Wed, RBC Technology, Internet, Media and Telecommunications Conference on Tue-Wed, Citi Financial Technology Conference on Tue-Wed, Credit Suisse Health Care Conference on Tue-Wed, JP Morgan Energy Technology Tour on Tue-Wed, Jefferies Health Care Conference on Wed, National Multifamily Housing Council OPTECH Conference on Wed, William Blair Benefit Technology Conference on Wed, Bank of America Merrill Lynch Global Energy Conference on Wed-Thu, Barclays Global Automotive Conference on Wed-Thu, Morgan Stanley European Technology, Media & Telecom Conference on Wed-Thu, Canaccord Genuity Medical Technologies and Diagnostics Forum on Thu, Deutsche Bank Lithium & Energy Storage Conference on Thu, Deutsche Bank Medtools & Diagnostics One-on-One Day on Thu, Bank of America Merrill Lynch Future of Financials Conference on Fri.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.06%) this morning are down -2.50 points (-0.09%). Friday's closes: S&P 500 -0.92%, Dow Jones -0.77%, Nasdaq 100 -1.64%. The S&P 500 on Friday closed lower on signs of price pressures at the factory level after U.S. Oct core PPI rose +0.5% m/m and +2.6% y/y, stronger than expectations of +0.2% m/m and +2.3% y/y with the +0.5% m/m gain being the largest monthly increase in 2-3/4 years. Energy stocks were also weak after crude oil prices tumbled -0.79% to an 8-3/4 month low. There was weakness in technology stocks, led by an 8% plunge in chipmaker Skyworks Solutions, after the company forecast slower-than-expected Q1 growth.

Dec 10-year T-notes (ZNZ18 +0-065) this morning are up +6.5 ticks at a 1-week high. Friday's closes: TYZ8 +11.00, FVZ8 +6.75. Dec 10-year T-notes on Friday closed higher on increased safe-haven demand with the sell-off in stocks. T-note prices were also boosted by carry-over support from a rally in 10-year German bunds to a 1-week high on increased safe-haven demand from Italy's budget crisis. T-note prices were undercut by the strong core PPI report of +0.5% m/m and +2.6% y/y.

The dollar index (DXY00 +0.49%) this morning is up +0.495 (+0.51%) at a 16-month high, EUR/USD (^EURUSD -0.60%) is down -0.0069 (-0.61%) at a 15-month low, and USD/JPY (^USDJPY +0.08%) is up +0.05 (+0.04%) at a 5-week high. Friday's closes: Dollar Index +0.181 (+0.19%), EUR/USD -0.0027 (-0.24%), USD/JPY -0.24 (-0.21%). The dollar index on Friday rose to a 1-week high and closed higher on the stronger-than-expected U.S. Oct PPI report, which was hawkish for Fed policy. There was also weakness in EUR/USD which fell to a 1-week low on increased Italian political risks as Italy's populist government refuses to bow to pressure from the European Commission to reduce its budget deficit for next year.

Metals prices this morning are mixed with Dec gold (GCZ18 -0.07%) -1.1 (-0.09%), Dec silver (SIZ18 -0.11%) -0.010 (-0.07%), and Dec copper (HGZ18 +0.28%) +0.008 (+0.30%). Dec Comex gold (GCZ18) on Friday closed down -$16.50 an ounce (-1.35%) and Dec Comex silver (SIZ18) closed down -0.283 (-1.96%). Dec gold on Friday tumbled to a 1-month low and Dec silver dropped to a 1-3/4 month low on fund selling. A rally in the dollar index to a 1-week high initially pressured metals prices and selling intensified after U.S. Oct PPI ex food & energy rose +0.5% m/m, stronger than expectations of +0.2% m/m and the largest monthly increase in 2-3/4 years, which bolsters the case for additional Fed rate hikes. Another bearish factor for silver prices is the ongoing fund liquidation of silver positions as silver held by ETFs fell to a 3-3/4 month low of 527.407 million troy ounces on Wednesday.

Dec WTI crude oil prices (CLZ18 +0.60%) this morning are up +30 cents (+0.50%) and Dec gasoline (RBZ18 +1.05%) is +1.33 (+0.82%). Dec WTI crude oil (CLZ18) on Friday closed down -$0.48 (-0.79%) per barrel and Jan Brent crude (CBF19) closed down -$0.94 (-1.33%). Dec RBOB gasoline (RBZ18) closed down -2.29 cents a gallon (-1.39%). Dec WTI crude oil on Friday sold off to an 8-3/4 month low, Jan Brent crude dropped to a 6-1/2 month low, and Dec RBOB gasoline plunged to a 13-month low on heavy fund selling. A rally in the dollar index to a 1-week high pressured energy prices and losses in Dec WTI crude accelerated on technical selling when prices fell below $60 a barrel and Jan Brent crude dropped below $70 a barrel. Negative sentiment in the energy market has increased on signs of global oversupply. Wednesday's EIA data showed a +5.78 million bbl increase in EIA crude inventories to a 5-month high and a +3.6% w/w increase in U.S. crude production in the week ended Nov 2 to a record high of 11.6 million bpd. OPEC crude production has also increased for 6 consecutive months and OPEC Oct crude output rose to a 1-3/4 year high of 33.33 million bpd. Crude prices continue to fall despite an upcoming meeting between OPEC+ producers this weekend in Abu Dhabi where producers will discuss crude production cuts for 2019.

Overnight U.S. Stock Movers

Synovus Financial (SNV -0.87%) was upgraded to 'Overweight' from 'Equal-Weight' at Morgan Stanley with a price target of $50.

Allegiant Travel (ALGT +1.53%) was rated a new 'Buy' at Goldman Sachs with a price target of $167.

Oil States International (OIS -0.17%) was upgraded to 'Buy' from 'Hold' at SunTrust Robinson Humphrey with a price target of $35.

PhaseBio Pharmaceuticals (PHAS unch) was rated a new 'Buy' at Citigroup with a price target of $18.

Armstrong World Industries (AWI -4.85%) was upgraded to 'Neutral’ from 'Underperform' at Bank of America Merrill Lynch with a price target of $75.

Finisar (FNSR +15.41%) may open higher initially this morning when it was upgraded to 'Neutral' from 'Sell' by Goldman Sachs after the close on Friday.

International Speedway (ISCA -1.11%) may open higher initially this morning after Nascar made a non-binding offer to buy the company for $42 a share, 7.5% above last Friday's closing price.

Jack in the Box (JACK -0.67%) may open higher initially this morning when activist investor Blue Harbor Group disclosed a 6.8% stake in Jack in the Box.

GNC Holdings (GNC -1.63%) tumbled 17% in after-hours trading after it reported Q3 adjusted EPS of 2 cents, well below consensus of 9 cents.

Maiden Holdings (MHLD -3.03%) may open lower initially this morning when it reported after the close Friday an unexpected Q3 adjusted operating loss per share of -$2.83, much weaker than expectations of +18 cents EPS.

OPKO Health (OPK -11.46%) climbed more than 6% in after-hours trading after it reported a Q3 loss of -5 cents per share, narrower than expectations of -8 cents.