Overnight Markets And News

Dec S&P 500 E-minis (ESZ18 -0.28%) are down -0.3% this morning on continued US/Chinese tensions and reports that UK Prime Minister May is planning to postpone Tuesday's Parliament Brexit vote. Asian stocks sold off sharply on market worries that the recent US/Canadian arrest of Huawei's CFO could kill the US/Chinese trade talks and result in new tariffs. There was also concern about weak Chinese economic data released over the weekend. Asian stocks today closed sharply lower across the board: Japan Nikkei -2.12%, Hong Kong Hang Seng -1.19%, Shanghai Composite -0.82%, Taiwan -1.16%, Australian S&P 200 -2.27%.

The dollar index (DXY00 +0.15%) this morning is mildly higher by +0.18 (+0.19%) while EUR/USD (^EURUSD +0.30%) is up +0.0035 (+0.31%) and USD/JPY (^USDJPY unch) is slightly lower by -0.05 (-0.04%). March 10-year T-notes (ZNH19 -0-010) are unchanged.

Commodity prices are down by -0.44% on average this morning. Jan WTI crude oil prices are down -0.88 (-1.67%) and Jan gasoline is down -0.89 (-1.44%) as support fades from last Friday's OPEC+ agreement to cut 2019 oil production by 1.2 million bpd. Feb gold this morning is down 1.5 (-0.12%), March silver is down -0.086 (-0.59%), and March copper is down -0.024 (-0.87%) on the mildly stronger dollar. Grains this morning are lower and softs are mixed.

The euro is seeing some support from today's German trade report where Oct exports rose by +0.7% m/m (stronger than expectations of +0.4%) and Oct imports rose by +1.3% m/m (stronger than expectations of +0.5%). Germany's Oct trade surplus eased slight to 18.3 bln euros from Sep's preliminary report of 18.4 bln euros, but was larger than expectations for a decline to 17.1 bln euros.

China's weekend economic data was soft and fueled ongoing worries about the weaker Chinese economy. China's Nov exports rose by +5.4% y/y, weaker than expectations of +9.4%, and Nov imports rose +3.0% y/y, weaker than expectations of +14.0%. China's Nov CPI eased to +2.2% y/y from Oct's +2.5% and was weaker than expectations of +2.4%. China's Nov PPI eased to +2.7% y/y from Oct's +3.3%, which was in line with market expectations. On the brighter side, China's Nov reserves rose to $3.061 trillion from Oct's $3.053 billion, which was larger than market expectations for a decline to $3.044 trillion.

U.S. Stock Preview

Key U.S. news today includes: (1) Oct JOLTS job openings (expected +91,000 to 7.100 million, Sep -284,000 to 7.009 million).

Notable Russell 1000 earnings reports today include: Casey's General Stores (consensus $1.59).

U.S. IPO's scheduled to price today: Mercantil Bank Holding Corp (AMTB).

Equity conferences during the remainder of this week: Capital Link Invest in Greece Forum on Mon, Object Management Group Technical Committee Meeting on Mon, Parks Associates Digital Media Conference on Mon, Q2B Conference on Mon, Cowen Network and Cybersecurity Conference on Tue, Growth Marketing Conference on Tue, BMO Prescriptions for Success Healthcare Conference on Wed, Imperial Capital Security Investor Conference on Wed.

Market Comments

Dec S&P 500 E-minis are down -0.3% this morning. Friday's closes: S&P 500 -2.33%, Dow Jones -2.34%, Nasdaq 100 -3.30%. The S&P 500 on Friday closed sharply lower on continued US/China trade tensions after White House adviser Navarro said tariffs on Chinese goods will increase if there's no trade deal after the 90-day truce expires and after the recent U.S.-instigated arrest of Huawei's high-profile CFO. Stocks were also undercut by the weaker-than-expected U.S. Nov payroll report of +155,000 vs expectations of +198,000. Technology stocks were led lower by a -3.5% plunge in Apple to a 7-1/4 month low.

March 10-year T-notes are unchanged. Friday's closes: TYH9 +10.00, FVH9 +8.75. Mar 10-year T-notes on Friday closed higher on the smaller-than-expected +155,000 increase in U.S. Nov non-farm payrolls, which was dovish for Fed policy, and on the sell-off in stocks, which boosted the safe-haven demand for T-notes.

The dollar index this morning is mildly higher by +0.18 (+0.19%) while EUR/USD is up +0.0035 (+0.31%) and USD/JPY is slightly lower by -0.05 (-0.04%). Friday's closes: Dollar Index -0.296 (-0.31%), EUR/USD +0.0005 (+0.04%), USD/JPY +0.01 (+0.01%). The dollar index on Friday closed lower on the weaker-than-expected U.S. Nov non-farm payroll report, which was dovish for Fed policy, and on the slide in stocks, which undercut USD/JPY on increased safe-haven demand for the yen.

Feb gold this morning is down 1.5 (-0.12%), March silver is down -0.086 (-0.59%), and March copper is down -0.024 (-0.87%) on the mildly stronger dollar. Friday's closes: Feb Comex gold (GCG19) on Friday closed up +9.0 (+0.72%) and Mar Comex silver (SIH19) closed up +0.187 (+1.29%). Feb gold on Friday climbed to a 4-1/2 month high due to a weaker dollar and after the weaker-than-expected U.S. Nov non-farm payroll report of +155,000 (vs expectations of +198,000) bolstered speculation the Fed will pursue a slower pace of interest rate hikes. Gains in gold were contained after a rally in equities reduced safe-haven demand for gold. Gains in silver were limited by fund selling after long silver positions in ETFs fell to a 3-1/2 week low of 527.961 mln troy ounces on Thursday.

Jan WTI crude oil prices are down -0.88 (-1.67%) and Jan gasoline is down -0.89 (-1.44%) as support fades from last Friday's OPEC+ agreement to cut 2019 oil production by 1.2 million bpd. Friday's closes: Jan WTI crude oil (CLF19) on Friday closed up sharply by +$1.12 per barrel (+2.18%) and Feb Brent crude (CBG19) closed up +$1.37 (+2.28%). Jan RBOB gasoline (RBF19) closed up by +5.24 cents per gallon (+3.66%). The energy complex rallied sharply Friday with Jan gasoline at a 2-week high after OPEC+ agreed to a larger-than-expected cut in crude output. OPEC+ said at Friday's meeting in Vienna that they agreed to cut crude production by -1.2 million bpd, a bigger cut than the -1.0 million bpd cut in production proposed by Saudi Arabia. Crude prices also moved higher Friday on a weaker dollar and an increase in the crack spread to a 2-week high, which boosts the incentive for refiners to purchase crude to refine into gasoline. Crude prices also have support from Thursday's weekly EIA data that showed U.S. crude inventories plunged by -7.23 million bbl, a much bigger than decline than expectations of -2.0 million bbl.

Overnight U.S. Stock Movers

Facebook (FB -1.58%) gained more than 1% in after-hours trading when it announced a new $9 billion stock buyback program.

Papa John's (PZZA -1.62%) may see support after an SEC filing released after the close Friday showed founder John Schnatter engaged a financial adviser Nov 30 to "assist him in reviewing the financial prospects of the company and in assessing alternatives for increasing shareholder value," including merger or other corporate transactions.

Fluor (FLR -2.17%) won a $145.7 million contract from the U.S. Army for the building of a weapons storage and maintenance facility in Laramie, WY.

Hillenbrand (HI -2.70%) may move higher initially this morning after its board authorized a new $200 million stock buyback program.