Morning Call: Global stocks mostly lower on trade concerns and increased U.S.-Saudi Arabia tensions; Dec E-mini S&Ps down -0.42%; Dec COMEX gold up +1.10% at a 2-1/2 month high.
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 ESZ18 - S&P 500 E-Mini

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 -0.08%) this morning are down -0.42% on concern about escalation of U.S.-China trade tensions after President Trump on a "60 Minutes" television interview Sunday night said, "I want China to negotiate a fair deal with us. I want them to open their markets like out markets are open" and that more tariffs "might" be in the mix. Increased political tensions with Saudi Arabia pushed Nov WTI crude oil (CLX18 +0.80%) up +0.67% when Saudi Arabia vowed to hit back at any punitive measures against it after President Trump warned the U.S. may take "stern action" against Saudi Arabia for the disappearance of journalist Khashoggi. European stocks recovered from a fresh 1-3/4 year low and are up +0.09% as a rally in metals producers and mining stocks lifts the overall market. Dec COMEX gold (GCZ18 +0.88%) is up +1.10% at a 2-1/2 month high on global trade concerns and mounting Saudi Arabian tensions. Asian stocks settled mostly lower: Japan -1.87%, Hong Kong -1.38%, China -1.49%, Taiwan -1.44%, Australia -0.99%, Singapore -0.76%, South Korea -0.78%, India +0.38%. A slide in USD/JPY to a 1-month low undercut Japanese exporter stocks that led the Nikkei Stock Index down to a 1-month low and trade concerns weighed on Chinese stocks.

The dollar index (DXY00 -0.18%) is down -0.23%. EUR/USD (^EURUSD +0.30%) is up +0.29%. USD/JPY (^USDJPY -0.27%) is down -0.36% at a 1-month low.

Dec 10-year T-note prices (ZNZ18 -0-050) are down -3 ticks.

PBOC Governor Yi Gang said China's monetary policy stance is prudent and neutral and China's money supply growth shows policy "is not easing." He added "economic growth, employment, inflation and the two-way fluctuation of the yuan are within reasonable range."

ECB Governing Council member Rehn said, "the latest figures on core inflation were somewhat disappointing and that we'll have to watch very carefully how underlying inflation materializes from now on."

U.S. Stock Preview

Key U.S. news today includes: (1) Sep retail sales (expected +0.6% and +0.4% ex autos, Aug +0.1% and +0.3% ex autos), (2) Oct Empire manufacturing survey general business conditions (expected +1.0 to 20.0, Sep -6.6 to 19.0), (3) Aug business inventories (expected +0.5%, Jul +0.6%).

Notable Russell 2000 earnings reports today include: Bank of America (consensus $0.62), Schwab (0.65), JB Hunt Transportation (1.40).

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

Equity conferences during the remainder of this week: Electric Power Industry Conference on Mon, WEPTAC Conference on Mon, GreenBiz VERGE Conference on Tue, MRO Europe on Tue, Arm TechCon Conference on Tue-Thu, Connected Health Conference on Wed, CXO Summit on Thu, European Society for Medical Oncology Meeting on Fri.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.08%) this morning are down -11.75 points (-0.42%). Friday's closes: S&P 500 +1.42%, Dow Jones +1.15%, Nasdaq 100 +2.77%. The S&P 500 on Friday closed higher on carry-over support from a rebound in Chinese stocks after China Sep exports rose +14.5% y/y, stronger than expectations of +8.2% y/y, which slightly eased concerns about the impact to global growth from the U.S.-China trade rift. Stocks were also supported by underlying confidence about the economy and earnings after upbeat comments from Chicago Fed President Evans who said we are "looking at a very strong economy and strong fundamentals." Stocks were undercut by a late slide in the Euro Stoxx 50 index to a new 1-3/4 year low and by the unexpected -1.1 point decline in the prelim-Oct University of Michigan U.S. consumer sentiment index to 99.0 (weaker than expectations of +0.4 to 100.5).

Dec 10-year T-notes (ZNZ18 -0-050) this morning are down -3 ticks. Friday's closes: TYZ8 -1.50, FVZ8 -0.50. Dec 10-year T-notes on Friday closed lower on the rally in stocks, which reduced safe-haven demand for T-notes, and on hawkish comments from Chicago Fed President Evans who said the Fed may need to lift rates "maybe 50 basis points above neutral" as we are "looking at a very strong economy, strong fundamentals and we're adjusting the policy stance."

The dollar index (DXY00 -0.18%) this morning is down -0.221 (-0.23%), EUR/USD (^EURUSD +0.30%) is up +0.0033 (+0.29%), and USD/JPY (^USDJPY -0.27%) is down -0.40 (0.36%) at a 1-month low. Friday's closes: Dollar Index +0.204 (+0.21%), EUR/USD -0.0033 (-0.28%), USD/JPY +0.05 (+0.04%). The dollar index on Friday closed higher on comments from Chicago Fed President Evans who said the Fed may need to lift rates "maybe 50 basis points above neutral." The dollar was also boosted by a rise in T-note yields, which improved the dollar's interest rate differentials.

Metals prices this morning are higher with Dec gold (GCZ18 +0.88%) +13.4 (+1.10%) at a 2-1/2 month high, Dec silver (SIZ18 +0.68%) +0.135 (+0.92%) and Dec copper (HGZ18 +0.43%) +0.007 (+0.23%). Friday's closes: Dec gold -5.6 (-0.46%), Dec silver +0.029 (+0.20%), Dec copper -0.0025 (-0.09%). Metals on Friday settled mixed. Metals prices were undercut by a stronger dollar and by the sharp rebound in stock prices, which curbed the safe-haven demand for precious metals. Copper prices were supported by news that LME copper inventories fell -3,500 MT to a 2-1/3 year low of 166,600 MT.

Nov WTI crude oil prices (CLX18 +0.80%) this morning are up +48 cents (+0.67%) and Nov gasoline (RBX18 +0.51%) is +0.99 (+0.51%). Friday's closes: Nov crude oil +0.37 (+0.52%), Nov gasoline +0.93 (+0.48%). Nov crude oil and gasoline on Friday closed higher on the rebound in equity prices, which supported confidence in the economic outlook and energy demand. Crude oil prices were also supported by ongoing supply concerns with the collapse in Venezuelan crude production and with Iranian oil exports already down by a third ahead of full U.S. sanctions on Nov 5. Crude oil prices were undercut by the IEA's cut in its global 2018 oil demand forecast by -110,000 bpd to 1.3 million bpd and by the slump in the crack spread to a 3-1/4 month low, which reduces the incentive for refiners to purchase crude to refine into gasoline.

Overnight U.S. Stock Movers

Bank of America (BAC +0.35%) slid 1% in pre-market trading after it reported Q3 trading revenue of $3.10 billion, below consensus of $3.15 billion.

Rockwell Automation (ROK +1.28%) was downgraded to 'Underperform' from 'Market Perform' at Cowen with a price target of $150

Activision Blizzard (ATVI +5.51%) was upgraded to 'Overweight' from 'Equal-Weight' at Barclays with a price target of $86.

Parker-Hannifin (PH +1.03%) was downgraded to 'Underperform' from 'Market Perform' with a price target of $150.

Boston Properties (BXP +0.29%) was upgraded to 'Buy' from 'Hold' at Jefferies with a price target of $139.

PNC Financial Services Group (PNC -5.58%) was upgraded to 'Outperform' from 'Market Perform' at Bernstein with a price target of $145.

Ralph Lauren (RL +3.20%) was upgraded to 'Overweight' from 'Neutral' at JPMorgan Chase with a price target of $150.

Mallinckrodt PLC (MNK +3.78%) may open higher initially this morning after D.E. Shaw said after the close Friday that it raised its passive stake in the company to 5.1% from 0.13% on June 30.

Kala Pharmaceuticals (KALA +6.20%) rose nearly 2% in after-hours trading after Longitude Capital reported a 9.0% stake in the company.

Intellia Therapeutics (NTLA +3.33%) fell 1% in after-hours trading after it filed to offer up to $100 million of the company's common stock in an underwritten public offering.

Progenics Pharmaceuticals (PGNX -0.54%) lost nearly 2% in after-hours trading after it entered into a "controlled equity offering" sales pact with Cantor Fitzgerald for the sale of up to $75 million of Progenics' common stock.

AcelRx Pharmaceuticals (ACRX +6.78%) surged 17% in after-hours trading after advisers to the FDA approved the company's Dsuvia painkiller, saying its benefits outweigh any safety risks.