Morning Call: U.S. stocks extend Thursday's sharp rebound; Mar E-mini S&Ps up +0.60% at a 1-week high; Dollar index down -0.27% at a 1-week low.
Barchart.com - Fri Dec 28, 6:32AM CST
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 ESH19 - S&P 500 E-Mini
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Overnight Markets and News

Mar E-mini S&Ps (ESH19 +0.55%) this morning are up +0.60% at a 1-week high and European stocks are up +1.78%. U.S. stock indexes extended their rebound from late Thursday, led by gains in technology stocks. Energy stocks also pushed higher with Feb WTI crude oil (CLG19 +1.03%) up +1.88%. Asian stocks settled mostly higher: Japan -0.31%, Hong Kong +0.10%, China +0.44%, Taiwan +0.89%, Australia +1.02%, Singapore +0.29%, South Korea +0.54%, India +0.75%. Most Asian bourses settled higher today although Japanese stocks closed lower as they were weighed down by economic concerns after Nov industrial production declined and Nov retail sales fell by the most in 6 months.

The dollar index (DXY00 -0.29%) is down -0.27% at a 1-week low. EUR/USD (^EURUSD +0.34%) is up +0.29%. USD/JPY (^USDJPY -0.64%) is down -0.68%.

Mar 10-year T-note prices (ZNH19 -0-035) are down -4 ticks.

Japan Nov industrial production fell -1.1% m/m, a smaller decline than expectations of -1.5% m/m.

Japan Nov retail sales fell -1.0% m/m, weaker than expectations of -0.4% m/m and the biggest decline in 6 months.

The Japan Nov jobless rate unexpectedly rose +0.1 to 2.5%, weaker than expectations of no change at 2.4%. The Nov job-to-applicant ratio rose +0.01 to 1.63, right on expectations.

Japan Oct vehicle production rose +6.3% y/y, the largest increase in a year.

U.S. Stock Preview

Key U.S. news today includes: (1) Nov wholesale (inventories expected +0.5%, Oct +0.7%), (2) Dec Chicago PMI (expected -6.1 to 60.3, Nov +8.0 to 66.4), (3) Nov pending home sales (expected +1.0% m/m, Oct -2.6% m/m and -4.6% y/y), (4) EIA weekly Petroleum Status Report.

Notable Russell 1000 earnings reports today include: none.

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

Equity conferences during the remainder of this week: none.

Market Comments

Mar S&P 500 E-minis (ESH19 +0.55%) this morning are up +15.00 points (+0.60%) at a 1-week high. Thursday's closes: S&P 500 +0.86%, Dow Jones +1.14%, Nasdaq 100 +0.41%. The S&P 500 on Thursday recovered from early losses and closed higher on technical short-covering after the S&P 500 failed to take out Wednesday's lows. Stocks were also supported by some optimism about US/Chinese trade tensions after China's Ministry of Commerce said that U.S. and China trade negotiators have been in close contact and the U.S. will send its negotiating team to Beijing the week of Jan 7. Stocks were undercut by the Dec Conference Board U.S. consumer confidence report that fell -8.3 to a 5-month low of 128.1, weaker than expectations of -2.2 to 133.5. There was also weakness in energy stocks after crude oil prices tumbled -3.48%.

Mar 10-year T-notes (ZNH19 -0-035) this morning are down -4 ticks. Thursday's closes: TYH9 +16.00, FVH9 +10.00. Mar 10-year T-notes on Thursday closed higher on the the larger-than-expected decline in U.S Dec consumer confidence to a 5-month low and on the drop in the 10-year T-note breakeven inflation expectations rate to a 17-1/4 month low.

The dollar index (DXY00 -0.29%) this morning is down -0.265 (-0.27%) at a 1-week low. EUR/USD (^EURUSD +0.34%) is up +0.0033 (+0.29%). USD/JPY (^USDJPY -0.64%) is down -0.75 (-0.68%). Thursday's closes: Dollar Index -0.569 (-0.59%), EUR/USD +0.0077 (+0.68%), USD/JPY -0.36 (-0.32%). The dollar index on Thursday closed lower on the larger-than-expected decline in U.S Dec consumer confidence to a 5-month low and by lower T-note yields, which was negative for the dollar's interest rate differentials.

Metals prices this morning are mixed. Feb gold (GCG19 +0.01%) is -0.3 (-0.02%), Mar silver (SIH19 +0.49%) is +0.075 (+0.49%), and Mar copper (HGH19 +1.14%) is +0.030 (+1.11%). Thursday's closes: Feb Comex gold (GCG19) on Thursday closed up +8.1 (+0.64%) and March silver closed up +0.187 (+1.24%). Metals prices moved higher Thursday with Feb gold just below Wednesday's 6-1/4 month high and Mar silver climbing to a 4-1/2 month high as a sharp decline in U.S. equity markets fueled safe-haven demand for precious metals. A weaker dollar Thursday was another supportive factor for metals. In addition, U.S. political risks are boosting demand for gold as store of wealth as the partial shutdown of the U.S. government enters its sixth day with no prospect for a resolution. President Trump said he won't relent on the partial government shutdown unless Congress funds his border wall, which raises the prospect for an extended shutdown. The turmoil in global equity markets increased demand for gold as a store of wealth as long gold positions in ETFs rose to a 6-1/4 month high Wednesday. A negative for silver prices is ongoing fund selling as long silver positions in ETFs fell for a seventh consecutive session to a 10-1/2 month low on Wednesday.

Feb crude oil prices (CLG19 +1.03%) this morning are up +84 cents (+1.88%) and Feb gasoline (RBG19 +0.53%) is up +1.57 (+1.22%). Thursday's closes: Feb WTI crude oil (CLF19) on Thursday closed down by -1.61 (-3.48%) and Feb Brent crude (CBG19) closed down -2.31 (-4.24%). Feb RBOB gasoline (RBF19) closed down -3.49 cents per gallon (-2.64%). The energy complex moved lower Thursday on negative carry-over from the early decline in U.S. stock indexes, which reduced confidence in the economic outlook and energy demand. Comments from Russian Energy Minister Novak were another negative for crude prices when Novak said Russia may keep its 2019 oil production flat year-on-year at 11.166 million bpd, even under the current OPEC+ agreement to cut output. Crude oil prices found underlying support on Thursday from a weaker dollar and expectations that Friday's weekly EIA data will show that U.S. crude inventories fell -3.0 million bbl last week. Regarding products, the consensus is for Friday's EIA report to show a +850,000 bbl gain in gasoline inventories and -1.5 mln bbl decline in distillate inventories. U.S. oil production in last week's EIA report (for the week ended Dec 14) was 11.6 million bpd, which was just slightly below November's record high of 11.7 million bpd.

Overnight U.S. Stock Movers

Adobe (ADBE +0.98%) was upgraded to 'Buy' from 'Hold' at DZ Bank AG with a price target of $260.

Wingstop (WING -0.35%) was upgraded to 'Outperform' from 'Neutral' at Wedbush with a price target of $69.

Casella Waste Systems (CWST +0.34%) was upgraded to 'Buy' from 'Hold' at Stifel with a price target of $32.

First Republic Bank (FRC -0.55%) climbed more than 2% in after-hours trading when it was announced it will replace Scana in the S&P 500 effective prior to the open of trading on Wednesday, Jan 2.

Oxford Industries (OXM +1.61%) was rated a new 'Buy' at CL King with a price target of $80.

Aphria (APHA -4.30%) surged 30% in after-hours trading after Green Growth Brands Ltd was said to plan a hostile takeover of Aphria and purchase the company for about $2.1 billion.

OPKO Health (OPK -0.39%) jumped 9% in after-hours trading after the CEO said the company will pay $5.5 million to settle SEC claims the company generated millions of dollars from unlawful stock sales in long-running pump-and-dump schemes.