Barchart Morning Call

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OVERNIGHT MARKETS AND NEWS

Dec E-mini S&Ps (ESZ17 +0.26%) this morning are up +0.24% at a new record nearest-futures high and European stocks are up +0.77% at a 1-1/2 week high on optimism in the global economic outlook after the German Nov IFO business climate unexpectedly rose to a record high. Strength in energy stocks is also propelling the overall market higher with Jan WTI crude oil (CLF18 +1.38%) up +1.22% at a new 2-1/3 year high. Crude oil prices rallied on a report that said OPEC and Russia have crafted the outline of a deal to extend their crude production cuts to the end of next year. Metal producers and mining stocks are higher as well with Dec COMEX copper (HGZ17 +0.91%) up +0.91% at a 2-1/2 week high on signs of tighter supplies amid lower production. Copper prices rallied on a fall in LME copper inventories by -5,475 MT to a 2-1/4 month low of 213,600 MT, along with strikes by copper miners in Chile and Peru which lowers global copper output. Asian stocks settled mostly higher: Japan +0.12%, Hong Kong +0.53%, China +0.06%, Taiwan unch, Australia -0.06%, Singapore +0.55%, South Korea +0.28%, India +0.27%. China's Shanghai Composite recovered from a 2-3/4 month low and closed higher after energy stocks rallied on the jump in crude oil prices, and Japanese stocks found support on signs of strength in manufacturing activity after the Japan Nov Nikkei manufacturing PMI expanded at the fastest pace in 3-1/2 years.

The dollar index (DXY00 -0.20%) is down -0.12% at a 6-week low. EUR/USD (^EURUSD) is up +0.06% at a 6-week high after the German Nov IFO business climate unexpectedly rose to a record high, which is hawkish for ECB monetary policy. USD/JPY (^USDJPY) is up +0.25%.

Dec 10-year T-note prices (ZNZ17 -0.11%) are down -5.5 ticks on reduced safe-haven demand with the rally in equities.

The German Nov IFO business climate unexpectedly rose +0.7 to a record high of 117.5 (data from 1991), stronger than expectations of no change at 116.7. Nov IFO expectations rose +1.8 to a 7-year high of 111.0, stronger than expectations of -0.3 to 108.8. Nov IFO current assessment fell -0.4 to 124.4, weaker than expectations of +0.2 to 125.0.

The Japan Nov Nikkei manufacturing PMI rose +1.0 to 53.8, the fastest pace of expansion in 3-1/2 years and the fifteenth consecutive month of expansion.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) USDA weekly Export Sales, (2) (2) Markit Nov manufacturing PMI (expected +0.4 to 55.0, Oct +1.5 to 54.6) and Nov Markit services PMI (expected unch at 55.3, Oct unch at 55.3).

Notable Russell 1000 earnings reports today include: none.

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

Equity conferences this week: none.

OVERNIGHT U.S. STOCK MOVERS

Johnson & Johnson (JNJ -0.76%) may move higher this morning after China announced that it will remove the tariff on diapers and some baby formula imports as of Dec 1.

Bank of America (BAC -0.26%) was raised to A- from BBB+ by S&P with a stable outlook.

Marriott International (MAR -0.96%) was reinstated with a 'Buy' at Canaccord Genuity.

Kosmos Energy (KOS +1.52%) was initiated with an 'Outperform' at Exane BNP Paribas.

Frontline Ltd (FRO -2.39%) was downgraded to 'Sell' from 'Hold' at ABG Sundal Collier.

Vipshop Holdings ADRs ({=VIPS =}) was downgraded to 'Hold' from 'buy' at ICBC Research.

SandRidge (SD +5.29%) climbed over 5% in after-hours trading after DJ reported that Carl Icahn bought a 13% stake in the company.

DaVita (DVA +0.40%) gained over 2% in after-hours trading after Reuters reported the company is exploring the sale of its physician network business for as much as $4 billion.

Variety reported that 21st Century Fox (FOXA -0.87%) is continuing to engage in preliminary discussions with Comcast, Disney and other potential suitors for the sale of some of its assets.

MARKET COMMENTS

Dec S&P 500 E-mini stock futures (ESZ17 +0.26%) this morning are up +6.25 points (+0.24%) a a new record nearest-futures high. Wednesday's closes: S&P 500 -0.08%, Dow Jones -0.27%, Nasdaq +0.12%. The S&P 500 on Wednesday closed lower on the unexpected -0.5% decline in U.S. Oct capital goods orders nondefense ex-aircraft, a proxy for capital spending, weaker than expectations of +0.5% and the biggest decline in 13 months. Stocks were also undercut by the minutes of the Oct 31-Nov 1 FOMC meeting minutes where Fed policy makers saw a "near-term" rate hike as warranted.

Dec 10-year T-note prices (ZNZ17 -0.11%) this morning are down -5.5 ticks. Wednesday's closes: TYZ7 +13.50, FVZ7 +9.75. Dec 10-year T-notes on Wednesday closed higher on dovish comments from Fed Chair Yellen who said, "removing policy accommodation too quickly risks leaving inflation below our target." T-notes also received a boost from the weaker-than-expected U.S. Oct durable goods orders report.

The dollar index (DXY00 -0.20%) this morning is down -0.114 (-0.12%) at a 6-week low. EUR/USD (^EURUSD) is up +0.0007 (+0.06%) at a 6-week high and USD/JPY (^USDJPY) is up +0.28 (+0.25%). Wednesday's closes: Dollar Index -0.732 (-0.78%), EUR/USD +0.0084 (+0.72%), USD/JPY -1.23 (-1.09%). The dollar index on Wednesday fell to a 1-month low and closed lower on comments from Fed Chair Yellen that signal the pace of Fed tightening may be slow and gradual when she said, "removing policy accommodation too quickly risks leaving inflation below our target." USD/JPY slumped to a 1-3/4 month low on speculation the rise in crude oil prices to a 2-1/3 year high will boost Japanese inflation and prompt the BOJ to taper its QE program.

Jan crude oil (CLF18 +1.38%) this morning is up +71 cents (+1.22%) at a new 2-1/3 year high and Jan gasoline (RBF18+1.14%) is +0.0197 (+1.12%). Wednesday's closes: Jan WTI crude +1.19 (+2.09%), Jan gasoline -0.0030 (-0.17%). Jan crude oil and gasoline on Wednesday settled mixed with Jan crude at a 2-1/3 year nearest-futures high. Crude oil prices were boosted by a weaker dollar and the -1.83 million bbl decline in crude supplies at Cushing, the delivery point for WTI futures. Crude oil prices were also supported by OPEC's invitation of another 20 non-OPEC members to its Nov 30 meeting in Vienna to broaden global support for its crude production cuts. Crude oil prices were undercut by the +0.1% increase in U.S. crude production in the week ended Nov 17 to a 46-year high of 9.658 million bpd. Crude oil prices were also supported by the slump in the crack spread to a 1-1/4 month low, which reduces incentive for refineries to purchase crude oil to refine into gasoline.

Metals prices this morning are mixed with Dec gold (GCZ17 -0.29%-5.5 (-0.43%), Dec silver (SIZ17 -0.51%-0.107 (-0.63%) and Dec copper (HGZ17 +0.91%) +0.029 (+0.91%) at a 2-1/2 week high. Wednesday's closes: Dec gold +10.5 (+0.82%), Dec silver +0.152 (+0.90%), Dec copper +0.0085 (+0.27%). Metals on Wednesday closed higher with Dec copper at a 2-week high. Metals prices were boosted by a weaker dollar and signs of tighter supplies after LME copper inventories fell -8,100 MT to a 2-1/4 month low of 226,275 MT.

GLOBAL EVENT CALENDAR11/24/2017
Friday, Nov 24
US0830 ETUSDA weekly Export Sales.
0945 ETMarkit Nov manufacturing PMI expected +0.4 to 55.0, Oct +1.5 to 54.6. Nov Markit services PMI expected unch at 55.3, Oct unch at 55.3.
Monday, Nov 27
US1000 ETOct new home sales expected -7.4% to 618,000, Sep +18.9% to 667,000.
1030 ETNov Dallas Fed manufacturing activity expected -3.6 to 24.0, Oct +6.3 to 27.6.
1100 ETUSDA weekly grain export inspections.
1130 ETTreasury auctions $26 billion 2-year T-notes.
1300 ETTreasury auctions $34 billion 5-year T-notes.
1600 ETUSDA crop conditions and progress report.
U.S. STOCK CALENDAR11/24/2017
NameTickerTimeDescriptionPeriodEstimate
No stock events