Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -0.09%) this morning are down -0.04% and European stocks are down -0.05% in uninspired trade. Higher interest rates are weighing on equity prices after a jump in UK Aug consumer prices pushed the 10-year Gilt yield up to a 6-3/4 month high of 1.618%, which helped fuel an increase in the German 10-year bund yield to a 3-month high of 0.50%. Losses in European stocks were limited as carmakers rose after Eurozone Aug new car registrations climbed by the most since the data series began in 2004. Asian stocks settled mostly higher: Japan +1.08%, Hong Kong +1.19%, China +1.14%, Taiwan +0.90%, Australia +0.46%, Singapore +1.19%, South Korea +0.18%, India -0.45%. China's Shanghai Composite climbed to a 2-week high on signs that state-sponsored funds entered the market and bought blue chip stocks. Japan's Nikkei Stock Index rallied to a 7-3/4 month after Aug trade data showed Japan exports and imports both rose more than expected. Also, Japanese exporter stocks gained after USD/JPY (^USDJPY -0.02%) climbed to a new 1-3/4 month high, which boosts the earnings prospects of exporters.

The dollar index (DXY00 -0.08%) is down -0.20%. EUR/USD (^EURUSD +0.14%) is up +0.18%. USD/JPY (^USDJPY -0.02%) is up +0.05% at a new 1-3/4 month high as the yen weakened after BOJ Governor Kuroda said the BOJ won't stop easing until inflation reaches the BOJ's 2% target.

Dec 10-year T-note prices (ZNZ18 -0-020) are down -3 ticks at a new 3-3/4 month low.

UK Aug CPI rose +0.7% m/m and +2.7% y/y, stronger than expectations of +0.5% m/m and +2.4% y/y with e +0.7% m/m gain the biggest monthly increase in 1-1/2 years. Aug core CPI rose +2.1% y/y, stronger than expectations of +1.8% y/y.

Eurozone Aug new car registrations jumped +31.2% y/y to 1.134 million, the largest increase since the data series began in 2004.

The Japan Aug trade balance was in deficit by -444.6 billion yen, narrower than expectations of -483.2 billion yen. Aug exports rose +6.6% y/y, stronger than expectations of +5.2% y/y. Aug imports rose +15.4% y/y, stronger than expectations of +14.5% y/y.

The BOJ as expected kept its benchmark target interest rate at -0.1% and its 10-year yield target at 0% and BOJ Governor Kuroda said the BOJ won't quit easing before inflation reaches the BOJ's 2% target.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -1.8% to 337.4 with purchase sub-index up +0.9% to 233.5 and refi sub index down -5.9% to 884.3), (2) Q2 current account deficit (expected -$103.3 billion, Q1 -$124.1 billion), (3) Aug housing starts (expected +5.7% to 1.235 million, Jul +0.9% to 1.168 million), (4) EIA weekly Petroleum Status Report.

Notable Russell 2000 earnings reports today include: Red Hat (consensus $0.82), Copart (0.48).

U.S. IPO's scheduled to price today: Elanco Animal Health (ELAN).

Equity conferences during the remainder of this week: Gastech Conference - T1.7 on Tue-Wed, Autonomous Research Future of Commerce Symposium on Thu, BMO Capital Markets Real Estate Conference on Thu, Buckingham Industrials Conference on Thu, D.A Davidson Diversified Industrials & Services Conference on Thu, IAA Commercial Vehicles Trade Show on Thu, Keefe, Bruyette, & Woods Insurance Conference on Thu.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.09%) this morning are down -1.25 points (-0.04%). Tuesday's closes: S&P 500 +0.54%, Dow Jones +0.71%, Nasdaq 100 +0.80%. The S&P 500 on Tuesday rallied to a 2-week high and closed higher on a short-covering rally in global stocks after President Trump imposed a 10% tariff on $200 billion of Chinese imports, less than market expectations of a 25% tariff, although the tariff then steps up to 25% effective Jan 1. Stocks were also supported by the U.S. Sep NAHB housing market report of unchanged at 67, which was stronger than expectations of -1 to 66. Also, energy stocks rallied as crude oil prices rose +1.36%.

Dec 10-year T-notes (ZNZ18 -0-020) this morning are down -3 ticks at a fresh 3-3/4 month low. Tuesday's closes: TYZ8 -10.50, FVZ8 -4.75. Dec 10-year T-notes on Tuesday tumbled to a 3-3/4 month low and closed lower. T-note prices were undercut by increased inflation expectations after the 10-year breakeven inflation expectations rate rose to a 1-1/4 month high. T-note prices were also undercut by a drop in German 10-year bunds to a 1-1/2 month low.

The dollar index (DXY00 -0.08%) this morning is down -0.19 (-0.20%), EUR/USD (^EURUSD +0.14%) is up +0.0021 (+0.18%), and USD/JPY (^USDJPY -0.02%) is up +0.06 (+0.05%) at a new 1-3/4 month high. Tuesday's closes: Dollar Index +0.144 (+0.15%), EUR/USD -0.0016 (-0.14%), USD/JPY +0.51 (+0.46%). The dollar index on Tuesday closed higher on the increase in the 10-year T-note yield to a 3-3/4 month high, which improved the dollar's interest rate differentials. The dollar was also supported by the rally in stocks that pushed USD/JPY up to a 1-3/4 month high on reduced safe-haven demand for the yen.

Metals prices this morning are mixed with Dec gold (GCZ18 +0.37%) +4.9 (+0.41%), Dec silver (SIZ18 +0.21%) +0.030 (+0.21%) and Dec copper (HGZ18 -0.05%) -0.001 (-0.02%). Tuesday's closes: Dec gold -2.9 (-0.24%), Dec silver -0.038 (-0.27%), Dec copper +7.95 (+3.00%). Metals on Tuesday settled mixed with Dec copper at a 2-week high. Metals prices were boosted by signs of tighter copper supplies after LME copper inventories fell -7,575 MT to a 7-3/4 month low of 214,150 MT. Industrial metals were also supported by comments from China's National Development & Reform Commission that it will boost infrastructure spending to boost the domestic economy and offset the impact of tariffs. Metals prices were undercut by a stronger dollar and by ongoing fund liquidation of gold as long gold positions in ETFs fell to a nearly 1-year low on Monday.

Oct WTI crude oil prices (CLV18 -0.10%) this morning are up +4 cents (+0.06%) and Oct gasoline (RBV18 +0.08%) is +0.48 (+0.24%). Tuesday's closes: Oct crude oil +0.94 (+1.36%), Oct gasoline +2.81 (+1.42%). Oct crude oil and gasoline on Tuesday closed higher on reports that Saudi Arabia is comfortable with Brent oil prices rising above $80 a barrel as the global market adjusts to the loss of Iranian oil supplies from U.S. sanctions. Crude oil prices were also boosted by expectations for Wednesday's EIA crude inventories report to show a decline of -2.5 million bbl.

Overnight U.S. Stock Movers

LyondellBasell Industries NV (LYB -1.31%) was downgraded to 'Underweight' from 'Neutral' at JP Morgan Chase with a price target of $95.

Juniper (JNPR +2.11%) was upgraded to 'Buy' from 'Neutral' at Nomura Instinet with a price target of $34.

Tilray (TLRY +28.95%) climbed almost 5% in after-hours trading after the company received approval from the DEA to import cannabis into the U.S. for medical research.

Kaman (KAMN +1.17%) was rated a new 'Overweight' at Alembic Global Advisors with a price target of $80.

Evo Payments (EVOP -1.61%) fell almost 4% in after-hours trading after it announced a proposed underwritten offering of 6.0 million shares of its Class A common stock.

The oilfield services sector was raised to 'Attractive' from 'In-Line' at Morgan Stanley with 'Overweight' ratings on Baker Hughes a GE Co (BHGE +2.02%) , Halliburton (HAL +1.16%) , Cactus (WHD +3.58%) and Transocean Ltd (RIG+2.93%) .

ProQR Therapeutics NV (PRQR -6.48%) was rated a new 'Outperform' at Evercore ISI with a price target of $35.

Surface Oncology (SURF +2.54%) rose nearly 3% in after-hours trading after it was rated a new 'Outperform' at Baird with a price target of $23.

Internap (INAP -2.67%) was rated a 'Buy' at Suntrust Robinson Humphrey with a price target of $22.

Diamond Offshore Drilling (DO +3.12%) was rated a new 'Underweight' at Morgan Stanley with a price target of $15.

Resolute Forest Products (RFP +0.34%) was downgraded to 'Neutral' from 'Outperform' at CIBC Capital Markets.

Trivago NV (TRVG +5.54%) rallied more than 5% in after-hours trading after PAR Investment Partners reported a 34.5% stake in the company.