Barchart Morning Call
Barchart.com - Fri Oct 6, 6:42AM CDT
OVERNIGHT MARKETS AND NEWS
Dec E-mini S&Ps (ESZ17 -0.06%) this morning are down -0.04% ahead of this morning's U.S. Sep payrolls report as the market consolidates this week's sharp gains to a new record high Thursday. European stocks are down -0.22%, led by losses in Spanish banks, as the financial and political squeeze on the separatist government in Catalonia tightens. Catalan President Puigdemont risks economic damage and isolation if he goes ahead with plans to declare independence based on a referendum that was considered illegal under Spain's constitution. Other Spanish companies may join Spain's banks in deciding to relocate their headquarters out of Catalonia as the crisis persists. Losses in European stocks were limited on signs of strength in the German economy, Europe's largest, after German Aug factory orders rose +3.6% m/m, the biggest increase in 8-months. GBP/USD tumbled -0.40% to a 4-week low on concern the political movement in the UK to try to remove Prime Minister May from power would throw the Brexit negotiations into chaos. Asian stocks settled higher: Japan +0.30%, Hong Kong +0.28%, Taiwan +0.14%, Australia +1.04%, Singapore +0.90%, India +0.70%. China and South Korea remain closed for holidays. Japan's Nikkei Stock Index climbed to a new 2-year high on carry-over support from the rally in U.S. stocks Thursday to a record high.
The dollar index (DXY00 +0.01%) is up +0.04% at a 1-1/2 month high. EUR/USD (^EURUSD) is down -0.04% at a 1-1/2 month low as the political crisis in Spain weighs on the euro. USD/JPY (^USDJPY) is up +0.10%.
UK Q2 unit labor costs rose +1.6% y/y, the slowest pace of increase since Q4 of 2015.
Japan Aug labor cash earnings rose +0.9% y/y, stronger than expectations of +0.5% y/y and the biggest increase in 13-months.
The Japan Aug leading index CI rose +1.6 to 106.8, weaker than expectations of +1.9 to 107.1 but still a 3-1/2 year high. The Aug coincident index rose +1.9 to 117.6, stronger than expectations of +1.8 to 117.5.
German Aug factory orders jumped +3.6% m/m, stronger than expectations of +0.7% m/m and the largest increase in 8-months.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Sep non-farm payrolls (expected +80,000, Aug +156,000) and Sep unemployment rate (expected unch at 4.4%, Aug +0.1 to 4.4%), (2) Sep avg hourly earnings (expected +0.3% m/m and +2.5% y/y, Aug +0.1% m/m and +2.5% y/y), (3) Atlanta Fed President Raphael Bostic (non-voter) speaks at the “Investing in America’s Workforce” conference, (4) Aug wholesale trade sales (expected unch m/m, Jul -0.1% m/m), (5) New York Fed President William Dudley (voter)will deliver a speech on “The Monetary Policy Outlook and the Importance of Higher Education for Economic Mobility” at an event in New York, (6) Dallas Fed President Robert Kaplan (voter) speaks in a moderated Q&A at an “Investing in America’s Workforce” conference in Dallas, (7) Aug consumer credit expected +$15.54 billion, Jul +$18.499 billion.
Notable Russell 1000 earnings reports today include: Costco (consensus $2.02), Constellation Brands (2.17), Global Payments (1.10), Yum China Holdings (0.56).
U.S. IPO's scheduled to price today: Switch (SWCH).
Equity conferences this week: Petaluma Area Chamber of Commerce Business Conference on Fri.
OVERNIGHT U.S. STOCK MOVERS
Goldman Sachs (GS +2.39%) was downgraded to 'Market Perform' from 'Market Outperform' at Vining Sparks.
Bank of America (BAC +1.63%) was downgraded to 'Market Outperform' from 'Strong Buy' at Vining Sparks.
Albemarle (ALB +1.04%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.
Kraft Heinz (KHC +0.62%) was upgraded to 'Overweight' from 'Neutral' at Piper Jaffray with a price target of $90.
Microchip (MCHP -0.33%) was initiated as a new 'Buy' at Argus with a price target of $106.
Marathon Petroleum (MPC -0.11%) was upgraded to 'Buy' from 'Hold' at Edward Jones with a price target of $63.
Green Dot (GDOT +2.71%) was initiated with a 'Buy' rating at Craig-Hallum with a price target of $70.
Valero Energy (VLO -0.54%) was downgraded to 'Neutral' from 'Overweight' at JPMorgan Chase.
HollyFrontier (HFC -2.56%) was downgraded to 'Underweight' from 'Neutral' at JPMorgan Chase.
Yum China Holdings (YUMC +0.20%) climbed almost 4% in after-hours trading after it reported Q3 revenue of $2.04 billion, higher than consensus of $1.98 billion.
Costco Wholesale (COST +1.13%) fell over 1% in after-hours trading even after it reported Q4 revenue of $43.3 billion, better than consensus of $41.62 billion.
Annaly Capital Management (NLY +0.41%) slid nearly 3% in after-hours trading after it announced that it intends to make a public offering of 65 million shares of its common stock.
Synchronoss Technologies (SNCR -0.09%) surged nearly 20% in after-hours trading after it entered into an exclusivity pact with Siris Capital Group.
MARKET COMMENTS
Dec S&P 500 E-mini stock futures (ESZ17 -0.06%) this morning are down -1.00 point (-0.04%). Thursday's closes: S&P 500 +0.56%, Dow Jones +0.50%, Nasdaq +0.97%. The S&P 500 on Thursday accelerated up to a new record high and settled higher on the -12,000 fall in U.S. weekly jobless claims to 260,000, a bigger decline than expectations of -7,000 to 265,000, and on the U.S. Aug factory orders report of +1.2%, stronger than expectations of +1.0%. There was also strength in energy stocks after crude oil prices rose +1.62%.
Dec 10-year T-note prices (ZNZ17 -0.11%) this morning are down -4 ticks. Thursday's closes: TYZ7 -5.50, FVZ7 -3.75. Dec 10-year T-notes on Thursday closed lower on the stronger-than-expected U.S. Aug factory orders report of +1.2%, and on comments from Philadelphia Fed President Harker who said that he has already "penciled in" a third 25 bp Fed rate hike in Dec and that he projects three more rate increases in 2018. T-notes were also undercut by reduced safe-haven demand with the rally in the S&P 500 to a new record high.
The dollar index (DXY00 +0.01%) this morning is up +0.038 (+0.04%) at a 1-1/2 month high. EUR/USD (^EURUSD) is down -0.0005 (-0.04%) at a 1-1/2 month low and USD/JPY (^USDJPY) is up +0.11 (+0.10%). Thursday's closes: Dollar Index +0.503 (+0.54%), EUR/USD -0.0048 (-0.41%), USD/JPY +0.06 (+0.05%). The dollar index on Thursday closed higher on hawkish comments from Philadelphia Fed President Harker who said he has already "penciled in" a third 25 bp rate hike by the Fed in Dec. The dollar index was also boosted by the increase in 10-year T-note yields, which boosts the dollar's interest rate differentials.
Nov crude oil (CLX17 -0.91%) this morning is down -53 cents (-1.04%) and Nov gasoline (RBX17 +0.24%) is +0.0007 (+0.04%). Thursday's closes: Nov WTI crude +0.81 (+1.62%), Nov gasoline +0.0309 (+1.96%). Nov crude oil and gasoline on Thursday closed higher with Nov gasoline at a 1-week high. Crude oil prices were supported by the prospects for an extension of crude oil production cuts between OPEC and Russia after Saudi King Salman bin Abdulaziz made a trip to Moscow to meet Russian President Putin and said Saudi Arabia wants to continue cooperation with Russia to maintain stability on the world oil market. Crude oil prices were also boosted by the increase in the crack spread to a 1-week high, which gives incentive for refiners to increase their crude purchases to refine crude oil into gasoline.
Metals prices this morning are mixed with Dec gold (GCZ17 -0.13%) -1.5 (-0.12%), Dec silver (SIZ17 -0.02%) -0.003 (-0.02%) and Dec copper (HGZ17 -0.05%) +0.002 (+0.05%) at a 3-week high. Thursday's closes: Dec gold -3.6 (-0.28%), Dec silver +0.014 (+0.08%), Dec copper +0.0875 (+2.96%). Metals on Thursday settled mixed with Dec copper at a 3-week high. Metals prices were boosted by the stronger-than-expected U.S. Aug factory orders report of +1.2% that was positive for industrial metals demand, and by the -2,450 MT decline in LME copper inventories, a sign of tighter supplies. Metals prices were undercut by a stronger dollar and by reduced safe-haven demand for stocks with the rally in the S&P 500 to a new record high.
GLOBAL EVENT CALENDAR10/06/2017
| Friday, Oct 6 | ||
| US | 0830 ET | Sep non-farm payrolls expected +80,000, Aug +156,000. Sep private payrolls expected +72,000, Aug +165,000. Sep manufacturing payrolls expected +8,000, Aug +36,000. Sep unemployment rate expected unch at 4.4%, Aug +0.1 to 4.4%. |
| 0830 ET | Sep avg hourly earnings expected +0.3% m/m and +2.5% y/y, Aug +0.1% m/m and +2.5% y/y. Sep avg weekly hours all-employees expected unch at 34.4 hours, Aug -0.1 to 34.4 hours. | |
| 0915 ET | Atlanta Fed President Raphael Bostic (non-voter) speaks at the Investing in Americas Workforce conference. | |
| 1000 ET | Aug wholesale trade sales expected unch m/m, Jul -0.1% m/m. Revised Aug wholesale inventories expected unchanged at +1.0%, prelim-Aug +1.0% m/m. | |
| 1215 ET | New York Fed President William Dudley (voter)will deliver a speech on The Monetary Policy Outlook and the Importance of Higher Education for Economic Mobility at an event in New York. | |
| 1245 ET | Dallas Fed President Robert Kaplan (voter) speaks in a moderated Q&A at an Investing in Americas Workforce conference in Dallas. | |
| 1500 ET | Aug consumer credit expected +$15.54 billion, Jul +$18.499 billion. | |
| Monday, Oct 9 | ||
| US | n/a | U.S. government offices and cash Treasury trading closed for Columbus Day. Exchanges open. |
U.S. STOCK CALENDAR10/06/2017
| Name | Ticker | Time | Description | Period | Estimate |
|---|---|---|---|---|---|
| Constellation Brands Inc | STZ US | Bef-mkt | Q2 2018 Earnings Release | Q2 18 | 2.166 |
| Leucadia National Corp | LUK US | 08:30 | Investor Meeting | ||
| Clorox Co/The | CLX US | 09:00 | Analyst Day | ||
| Constellation Brands Inc | STZ US | 10:30 | Q2 2018 Earnings Call | Q2 18 | |
| Telephone & Data Systems Inc | TDS US | Roadshow - Day 4 | |||
| United States Cellular Corp | USM US | Roadshow - Day 4 | |||
| RPM International Inc | RPM US | Annual General Meeting | |||
| Global Payments Inc | GPN US | Q3 2017 Earnings Release | Q3 17 | 1.098 | |
| Leucadia National Corp | LUK US | Investor Day | |||
| Symantec Corp | SYMC US | 12:00 | Annual General Meeting | ||
| Oracle Corp | ORCL US | 14:00 | Analyst Meeting | ||
| Costco Wholesale Corp | COST US | 16:15 | Q4 2017 Earnings Release | Q4 17 | 2.017 |
| Yum China Holdings Inc | YUMC US | 16:30 | Q3 2017 Earnings Release | Q3 17 | 0.564 |
| Costco Wholesale Corp | COST US | 17:00 | Q4 2017 Earnings Call | Q4 17 | |
| Yum China Holdings Inc | YUMC US | 20:00 | Q3 2017 Earnings Call | Q3 17 |
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