Overnight Markets And News

Dec E-mini S&Ps (ESZ18 +0.40%) this morning are up +0.31% on support from a surge in Chinese stocks along with a decline in Italian government bond yields. European stocks are up +0.33% and moved higher after the 10-year Italian government bond yield fell to a 2-week low of 3.30% when Italian Finance Minister Tria said he's aware that Italy's spending plans don't comply with EU rules and he wants "constructive" talks on the issue with officials in Brussels. Italian political risks remain after an EU official with knowledge of the preparations said that EU Commissioners will discuss Italy's budget at a meeting on Tuesday and likely will issue a "negative opinion" and Italy will have three weeks to submit a revised budget. Gains in European stocks were also limited after the Bundesbank warned that German Q3 GDP likely stalled due to new emission-test procedures in the auto industry that left "deep marks" om industrial production. Asian stocks settled mostly higher: Japan +0.37%, Hong Kong +2.32%, China +4.09%, Taiwan +0.55%, Australia -0.58%, Singapore +0.51%, South Korea +0.28%, India =0.53%. China's Shanghai Composite rallied sharply to a 1-week high, which improved market sentiment in global stock markets, after China's President Xi Jinping vowed "unwavering" support for non-state firms and the government released a detailed draft plan to cut personal income taxes. Japanese stocks also moved higher on positive carry-over from the rally in Chinese equities along with the rally in USD/JPY (^USDJPY +0.28%) to a 1-week high, as the weaker yen boosted exporter stocks.

The dollar index (DXY00 +0.10%) is up +0.06%. EUR/USD (^EURUSD -0.11%) is down -0.13%. USD/JPY (^USDJPY+0.28%) is up +0.26% at a 1-week high.

Dec 10-year T-note prices (ZNZ18 +0-015) are little changed, down -0.5 of a tick.

In its monthly report, the Bundesbank said "the upswing in Germany is still fundamentally intact. However, it may have come to a temporary halt in the summer quarter of 2018" due to new emission-test procedures in the auto industry that left "deep marks" om industrial production.

U.S. Stock Preview

Key U.S. news today includes: (1) Sep Chicago Fed national activity index (expected +0.04 to 0.22, Aug unch at 0.18).

Notable Russell 2000 earnings reports today include: Halliburton (consensus $0.49), Hasbro (2.24), Kimberly-Clark (1.63).

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

Equity conferences during the remainder of this week: European Society for Medical Oncology Meeting on Mon, Well Characterized Biologics & Biological Assays Conference on Wed, Collaborative Robots, Advanced Vision and AI Conference on Wed-Thu.

Market Comments

Dec S&P 500 E-minis (ESZ18 +0.40%) this morning are up +8.50 points (+0.31%). Friday's closes: S&P 500 -0.04%, Dow Jones +0.26%, Nasdaq 100 -0.12%. The S&P 500 on Friday closed slightly lower on the U.S. Sep existing home sales report of -3.4% to a 2-3/4 year low of 5.15 million, weaker than expectations of -0.9% to 5.29 million. There was also concern that a slowdown in China's economy will drag global growth lower after China Q3 GDP eased to a 9-1/2 year low of +6.5% y/y, weaker than expectations of +6.6% y/y. Stocks found support on a rally in consumer staples stocks led by a 7% jump in Procter & Gamble after it reported stronger-than-expected Q1 sales. There was also strength in energy stocks as crude oil prices rose +0.68%.

Dec 10-year T-notes (ZNZ18 +0-015) this morning are down -0.5 of a tick. Friday's closes: TYZ8 -6.00, FVZ8 -4.25. Dec 10-year T-notes on Friday closed lower on negative carry-over from a sell-off in German bunds, which were undercut by reduced safe-haven demand after EU Commissioner Moscovici said the EU would not interfere in Italian economic policies. T-note prices were also undercut by hawkish comments from Dallas Fed President Kaplan who said the Fed should raise interest rates "another two, but more likely three times" over the next nine months to around a neutral setting. T-notes found support on the decline in U.S. Sep existing home sales to a 2-3/4 year low.

The dollar index (DXY00 +0.10%) this morning is up +0.055 (+0.06%), EUR/USD (^EURUSD -0.11%) is down -0.0015 (-0.13%), and USD/JPY (^USDJPY +0.28%) is up +0.29 (+0.26%) at a 1-week high. Friday's closes: Dollar Index -0.187 (-0.19%), EUR/USD +0.0061 (+0.53%), USD/JPY +0.34 (+0.30%). The dollar index on Friday closed lower on the decline in U.S. Sep existing home sales to a 2-3/4 year low. There was also strength in EUR/USD on reduced Italian political concerns after EU Commissioner Moscovici said the EU would not interfere in Italian economic policies.

Metals prices this morning are mixed with Dec gold (GCZ18 -0.24%) -2.3 (-0.19%), Dec silver (SIZ18 -0.10%) +0.005 (+0.03%) and Dec copper (HGZ18 +1.24%) +0.041 (+1.46%). Friday's closes: Dec gold -1.4 (-0.11%), Dec silver +0.046 (+0.31%), Dec copper +0.0315 (+1.15%). Metals on Friday settled mixed. Metals prices were boosted by a weaker dollar and by signs of tighter copper supplies after LME copper inventories fell -4,350 MT to a 2-1/3 year low of 153,950 MT. Metals prices were undercut by concern about Chinese copper demand after China Sep industrial production rose a weaker-than-expected +5.8% y/y, the slowest pace of increase in nearly 3 years.

Nov WTI crude oil prices (CLX18 +0.03%) this morning are up +14 cents (+0.20%) and Nov gasoline (RBX18 -0.54%) is -0.52 (-0.27%). Friday's closes: Nov crude oil +0.47 (+0.68%), Nov gasoline +2.28 (+1.21%). Nov crude oil and gasoline on Friday closed higher on a weaker dollar and on the increase in the crack spread to a 1-week high, which gives incentive to refiners to purchase crude oil to refine it into gasoline. Crude oil prices were undercut by news from the OPEC+ Joint Technical Committee that showed OPEC+ compliance with its crude production cuts fell to 110% in Sep from 129% in Aug.

Overnight U.S. Stock Movers

Chipotle Mexican Grill (CMG -0.74%) was upgraded to 'Outperform' from 'Sector Perform' at RBC Capital Markets with a price target of $510.

Occidental Petroleum (OXY +0.39%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James with a price target of $90.

Lennar (LEN -3.75%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank with a price target of $51.

Union Pacific (UNP +0.12%) was cut to 'Underweight' from 'Equal-Weight' at Morgan Stanley with a price target of $134.

Arco Platform Ltd (ARCE -1.04%) was rated a new 'Buy' at Goldman Sachs with a price target of $26.

RA Medical Systems (RMED +11.72%) was rated a new 'Buy' at SunTrust Robinson Humphrey with a price target of $16.

Urovant Sciences Ltd (UROV +4.02%) was rated anew 'Overweight' at JPMorgan Chase with a price target of $21.

Tribune Media (TRCO +0.28%) may open higher initially this morning after Gamco Investors reported a 5.47% stake in the company after the close of trading on Friday.

International Seaways (INSW +2.23%) may initially open lower this morning after it filed a $100 million mixed securities shelf after the close on Friday.

Bank OZK (OZK -26.77%) was downgraded by Morgan Stanley to 'Equal-Weight' from 'Overweight.'