Overnight Markets And News

Sep E-mini S&Ps (ESU18 +0.37%) this morning are up +0.37% and European stocks are up +0.66% as strength in technology stocks lifts the overall market ahead of the unveiling Wednesday of Apple's newest iPhone. Stocks also moved higher as the U.S. failed to impose new tariffs on China over the weekend after President Trump had signaled he's ready to target more Chinese goods for new tariffs. Asian stocks settled mixed: Japan +0.30%, Hong Kong -1.33%, China -1.21%, Taiwan -1.12%, Australia -0.03%, Singapore -0.43%, South Korea +0.29%, India -1.22%. Japanese stocks moved higher after Japan Q2 GDP was revised upward to its fastest pace of growth in more than 2-years. China's Shanghai Composite fell to a 3-week low and the Chinese yuan tumbled to a 2-week low on concern about escalation of China/U.S. trade tensions after President Trump said he's ready to impose an additional $267 tariffs of Chinese goods on short notice on top of the $200 billion in imports he's already considering.

The dollar index (DXY00 -0.03%) is unchanged. EUR/USD (^EURUSD +0.19%) is up +0.19%. USD/JPY (^USDJPY +0.10%) is up +0.11%.

Dec 10-year T-note prices (ZNZ18 +0-010) are little changed, up +0.5 of a tick.

Eurozone Sep Sentix investor confidence fell -2.7 to 12.0, weaker than expectations of -0.4 to 14.3.

Boston Fed President Rosengren said with unemployment low and likely to keep falling, and with inflation at the Fed's 2.0% target and likely to rise, "I don't see any reason why we wouldn't continue to gradually increase interest rates."

The China Aug trade balance unexpectedly shrunk to a surplus of +$27.91 billion, narrower than expectations of +31.00 billion. Aug exports rose +9.8% y/y, weaker than expectations of +10.0% y/y, and Aug imports rose +20.0% y/y, stronger than expectations of +17.7% y/y.

China Aug CPI rose +2.3% y/y, stronger than expectations of +2.1% y/y and the fastest pace of increase in 6-months. Aug PPI rose +4.1% y/y, stronger than expectations of +4.0% y/y.

Japan Q2 GDP was revised upward to +3.0% (q/q annualized), stronger than expectations of +2.6% (q/q annualized) and the fastest pace of expansion since Q1 of 2016.

U.S. Stock Preview

Key U.S. news today includes: (1) Atlanta Fed President Raphael Bostic (voter) discusses the economic outlook with the Albany Chamber of Commerce, (2) Jul consumer credit (expected +$14.4 billion, Jun +$10.211 billion).

Notable Russell 2000 earnings reports today include: Casey's General Stores (consensus $1.69).

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

Equity conferences during the remainder of this week: International Manufacturing Technology Show on Mon, 18th Annual EmTech Conference on Tue, Wells Fargo Net Lease REIT Forum on Tue, Houston IT Symposium on Tue, Credit Suisse Basic Materials Conference on Tue-Thu, Bank of America Merrill Lynch Global Health Care Conference on Wed-Thu, CL King & Associates Best Ideas Conference on Wed-Thu, Deutsche Bank Technology Conference on Wed-Thu, Goldman Sachs Communacopia Conference on Wed-Thu, Barclays Global Financial Services Conference on Wed-Fri, Morgan Stanley Global Health Care Conference on Wed-Fri, Morgan Stanley Laguna Conference on Wed-Fri, BMO Capital Markets Back to School Conference on Thu.

Market Comments

Sep S&P 500 E-minis (ESU18 +0.37%) this morning are up +10.75 points (+0.37%). Friday's closes: S&P 500 -0.22%, Dow Jones -0.31%, Nasdaq 100 -0.31%. The S&P 500 on Friday fell to a 2-week low and closed lower on heightened U.S./China trade tensions after President Trump said additional tariffs on $276 billion of Chinese goods could be added on short notice to the $200 billion tranche of Chinese goods already targeted. There was also weakness in energy stocks as crude oil prices fell to a 2-week low. Stocks were supported by the U.S. Aug non-farm payroll report of +201,000, stronger than expectations of +190,000, and the Aug hourly earnings report of a 9-year high of +2.9% y/y, which was supportive for consumer confidence and spending.

Dec 10-year T-notes (ZNZ18 +0-010) this morning are up +0.5 of a tick. Friday's closes: TYZ8 -17.0, FVZ8 -12.00. Dec 10-year T-notes on Friday fell to a 1-month low and closed lower on the stronger-than-expected U.S. Aug payroll report, which keeps the Fed on track to raise interest rates at the Sep 25-26 FOMC meeting. T-notes were also undercut by hawkish comments from Dallas Fed President Kaplan who said the Dallas Fed sees the neutral rate of interest at 2.50%/2.75%, which would take about three more rate hikes to reach that level and "everything in the Aug jobs report causes me to reaffirm that view."

The dollar index (DXY00 -0.03%) this morning is unch, EUR/USD (^EURUSD +0.19%) is up +0.0022 (+0.19%), and USD/JPY (^USDJPY +0.10%) is up +0.12 (+0.11%). Friday's closes: Dollar Index +0.3443 (+0.36%), EUR/USD -0.0070 (-0.60%), USD/JPY +0.24 (+0.22%). The dollar index on Friday closed higher on the stronger-than-expected U.S. Aug non-farm payroll report and Aug hourly earnings report, which were hawkish for Fed policy. There was also weakness in EUR/USD after German Jul industrial production unexpectedly fell -1.1% m/m, which was dovish for ECB policy.

Metals prices this morning are mixed with Dec gold (GCZ18 -0.23%) -1.3 (-0.11%), Dec silver (SIZ18 +0.35%) +0.065 (+0.46%) and Dec copper (HGZ18 -0.44%) -0.007 (-0.25%). Friday's closes: Dec gold -3.9 (-0.32%), Dec silver -0.011 (-0.08), Dec copper -1.40 (-0.53%). Metals on Friday closed lower on the stronger-than-expected U.S. Aug non-farm payroll report that boosted the chances of a Fed rate hike later this month and fueled a rally in the dollar. Metals prices were also undercut by comments from President Trump who said he's ready to impose tariffs on an additional $267 billion of Chinese goods on short notice on top of a proposed $200 billion of Chinese goods that the administration is in the process of finalizing. Copper prices were supported by signs of tighter supplies after LME copper inventories fell -6,175 MT to a 7-1/2 month low and weekly Shanghai copper inventories fell -1,950 MT to a 10-month low.

Oct WTI crude oil prices (CLV18 +0.44%) this morning are up +48 cents (+0.71%) and Oct gasoline (RBV18 +0.49%) is +1.68 (+0.85%). Friday's closes: Oct crude oil -0.02 (-0.03%), Oct gasoline +1.90 (+1.97%). Oct crude oil and gasoline on Friday settled mixed with Oct crude at a 2-week low. Crude oil prices were undercut by a stronger dollar and by concern that the turmoil in emerging markets will slow global growth and energy demand. Crude prices rebounded from their worst levels after IEA Director Fatih Birol said: "with expected robust global oil demand growth, coupled with some supply-side concerns we have, means we may well see some further tightening of global oil markets by the end of the year."

Overnight U.S. Stock Movers

Foot Locker (FL -2.87%) was upgraded to 'Outperform' from 'Market Perform' at Wells Fargo Securities with a price target of $58.

American Electric Power (AEP -0.89%) was upgraded to 'Buy' from 'Neutral' at Guggenheim Securities with a price target of $77.

Darden Restaurants (DRI +0.29%) was downgraded to 'Neutral' from 'Outperform' at Baird.

Torchmark (TMK -0.25%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs.

Neurocrine Biosciences (NBIX -3.60%) was rated 'Overweight' at Morgan Stanley with a price target of $145.

Exelixis (EXEL -0.38%) was rated a new 'Underweight' at Morgan Stanley with a price target of $19.

Tesla (TSLA -6.30%) climbed 3% in pre-market trading after Baird named the stock a fresh pick with an 'Outperform' rating and a price target of$411.

Aridis Pharmaceuticals (ARDS -8.87%) was rated anew 'Overweight' at Cantor Fitzgerald with a price target of $25.

Weight Watchers International (WTW +1.04%) rose 4% in after-hours trading when it was announced that it would replace KLX Inc in the S&P MidCap 400.

Eastgroup Properties (EGP -0.65%) may move higher initially this morning when the company boosted its quarterly dividend after the close Friday to 72 cents a share from 64 cents, higher than expectations of a boost to 67 cents.

Teva Pharmaceuticals (TEVA -1.15%) may move higher initially this morning when the FDA after the close of trading on Friday approved Teva'a Cassipa for the maintenance treatment of opioid dependence.