Barchart Morning Call
Barchart.com - Mon Sep 18, 6:41AM CDT
OVERNIGHT MARKETS AND NEWS
Dec E-mini S&Ps (ESZ17 +0.18%) this morning are up +0.22% at a new record nearest-futures high and European stocks are up +0.38% at a 2-month high. Increased M&A activity is giving equity markets a boost after Northrop Grumman agreed to buy Orbital ATK for $7.8 billion. European stocks found support on an upbeat monthly report from the Bundesbank that said, "the German economy may continue its path of strong expansion in Q3 of 2017." The rally in global equity markets has reduced the safe-haven demand for gold with Dec COMEX gold (GCZ17 -0.48%) down -0.48%at a 2-week low. Asian stocks settled mostly higher: Japan closed for holiday, Hong Kong +1.27%, China +0.28%, Taiwan +0.48%, Australia +0.45%, Singapore +1.01%, South Korea +1.67%, India +0.47%. Chinese stocks rose, led by gains in developers and property stocks, on the prospects of less property restrictions after China Aug new home prices showed the smallest amount of increases since Jan.
The dollar index (DXY00 -0.03%) is down -0.02%. EUR/USD (^EURUSD) is up +0.19%. USD/JPY (^USDJPY) is up +0.37% at a 1-1/2 month high.
In its monthly report for Sep, the Bundesbank said, "the German economy may continue its path of strong expansion in Q3 of 2017, even if with slightly less momentum than in the first half of the year."
China Aug new home prices rose in 46 of 70 cities tracked by the government, down from 56 cities that rose in Jul, the smallest number of increases since Jan.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Sep NAHB housing market index (expected -1 to 67, Aug +4 to 68), (2) USDA weekly grain export inspections, (3) USDA crop conditions and progress report.
Notable Russell 1000 earnings reports today include: none.
U.S. IPO's scheduled to price today: none.
Equity conferences this week: Stephens Bank CEO Forum on Mon-Tue, CECP CEO Investor Forum on Tue, Forum International Supply Chain Expo on Tue, J.P. Morgan U.S. All Stars Conference on Tue, Raymond James North America Equities Conference on Tue, D.A. Davidson Engineering & Construction Conference on Wed, Electronic Design Process Symposium on Thu.
OVERNIGHT U.S. STOCK MOVERS
Orbital ATK (OA +1.52%) surged 20% in pre-market trading after the company was acquired by Northrop Grumman for $7.8 billion, or $134.50 a share.
Tech Data (TECD +1.09%) was initiated a new 'Buy' at Needham & Co. with a 12-month target price of $100.
Caterpillar (CAT +0.74%) was upgraded to 'Buy' from 'Neutral' at UBS with a price target of $140.
Resolute Energy (REN +9.21%) was downgraded to 'Market Perform' from 'Outperform' at BMO Capital Markets.
Finish Line (FINL +2.84%) was downgraded to 'Underweight' from 'Neutral' with a 12-month target price of $8.
Applied Materials (AMAT +0.19%) was upgraded to 'Outperform' from 'Sector Perform' at RBC Capital Markets with a target price of $55.
Brookfield Infrastructure Partners LP (BIP +0.07%) rose over 2% in after-hours trading after Exame reported that it is weighing a possible bid for JBS SA, the world's largest meat producer
Weibo (WB -0.81%) lost -0.3% in after-hours trading after Chief Financial Officer Herman Yu resigned to "pursue other opportunities."
Horizon Pharma (HZNP -1.46%) gained almost 1% in after-hours trading after Reuters reported that people familiar with the situation said the company was working with Morgan Stanley to review strategic options for its primary care unit, including a potential sale.
Equifax (EFX -3.81%) said its Chief Information Officer David Webb and Chief Security Officer Susan Mauldin are retiring effective immediately.
Neos Therapeutics (NEOS +2.22%) rose over 3% but then reversed course and dropped 6% in after-hours trading. The stock rallied initially after it received FDA approval for its Adzenys ER drug for treatment of Attention Deficit Hyperactivity Disorder in patients 6 years and older. However, the stock erased its gains and headed lower after a BMO Capital Markets analyst said there may be some "financing overhang" on the stock as the company may need additional funding in the future to get to breakeven.
MARKET COMMENTS
Dec S&P 500 E-mini stock futures (ESZ17 +0.18%) this morning are up +5.50 points (+0.22%) at a new record-nearest-futures high. Friday's closes: S&P 500 +0.18%, Dow Jones +0.29%, Nasdaq +0.32%. The S&P 500 on Friday rose to a new all-time high and closed higher on strength in technology stocks and on the stronger-than-expected Sep Empire manufacturing index of -0.8 to 24.4 (stronger than expectations of -7.2 to 18.0). There was also technical buying with the new all-time high. Stocks were undercut by geopolitical tensions after North Korea fired another missile over Japan and by the unexpected -0.2% decline in the U.S. Aug retail sales report (vs expectations of +0.1%).
Dec 10-year T-note prices (ZNZ17 -0.06%) this morning are down -2.5 ticks. Friday's closes: TYZ7 -3.00, FVZ7 -2.75. Dec 10-year T-notes on Friday closed lower on negative carry-over from a rise in global yields after the 10-year UK Gilt yield rose to a 7-1/4 month high and the German bund yield climbed to a 1-month high. There was also reduced safe-haven demand for T-notes after the S&P 500 rose to a new record high. T-notes were supported by the unexpected declines in U.S Aug retail sales and Aug manufacturing production.
The dollar index (DXY00 -0.03%) this morning is down -0.014 (-0.02%). EUR/USD (^EURUSD) is up +0.0023 (+0.19%) and USD/JPY (^USDJPY) is up +0.41 (+0.37%) at a 1-1/2 month high. Friday's closes: Dollar Index -0.252 (-0.27), EUR/USD +0.0026 (+0.22%), USD/JPY +0.59 (+0.54%). The dollar index on Friday closed lower on the weaker-than-expected U.S. Aug retail sales and manufacturing production reports, which were dovish for Fed policy. There was also strength in GBP/USD which soared to a 14-1/2 month high on carry-over from Thursday's BOE meeting where the BOE said it sees scope for stimulus reduction in the coming months.
Oct crude oil (CLV17 -0.54%) this morning is down -7 cents (-0.14%) and Oct gasoline (RBV17 -0.26%) is +0.0021 (+0.13%). Friday's closes: Oct WTI crude unch, Oct gasoline +0.0330 (+2.03%). Oct crude oil and gasoline on Friday settled mixed. Crude oil prices were supported by the weaker dollar and by an increase in the crack spread for the first time in the last 3 sessions, which may boost refinery demand for crude to refine into gasoline. Crude oil prices were undercut by the weaker-than-expected U.S. Aug retail sales and manufacturing production reports, which signaled reduced energy demand.
Metals prices this morning are mixed with Dec gold (GCZ17 -0.48%) -6.3 (-0.48%) at a 2-week low, Dec silver (SIZ17-0.71%) -0.121 (-0.68%) at a 2-week low and Dec copper (HGZ17 +0.76%) +0.022 (+0.75%). Friday's closes: Dec gold -4.1(-0.31%), Dec silver -0.088 (-0.49%), Dec copper -0.0085 (-0.29%). Metals on Friday closed lower with Dec copper at a 1-month low. Metals prices were undercut by the rally in the S&P 500 to a new record high, which curbed safe-haven demand for precious metals, and by the unexpected decline in U.S. Aug manufacturing production, which signals reduced demand for industrial metals.
GLOBAL EVENT CALENDAR09/18/2017
| Monday, Sep 18 | ||
| US | 1000 ET | Sep NAHB housing market index expected -1 to 67, Aug +4 to 68. |
| 1100 ET | USDA weekly grain export inspections. | |
| 1600 ET | USDA crop conditions and progress report. | |
| Tuesday, Sep 19 | ||
| US | 0830 ET | Aug housing starts expected +1.7% to 1.175 million, Jul -4.8% to 1.155 million. Aug building permits expected -0.8%to 1.220 million, Jul -3.5% to 1.230 million. |
| 0830 ET | Aug import price index expected +0.4% m/m and +2.2%, July +0.1% m/m and +1.5% y/y. Aug import price index ex-petroleum expected +0.2%, July unchanged. Aug export price index expected +0.2% m/m, Jul +0.4% m/m and +0.8% y/y. | |
| 0830 ET | Q2 current account balance expected -$112.4 billion, Q1 -$116.8 billion | |
| 1030 ET | EIA Weekly Petroleum Status Report. | |
| 1030 ET | FOMC begins 2-day policy meeting. |
