Morning Call: Global stocks mostly higher ahead of FOMC decision; Dec E-mini S&Ps up +0.21%; Japan's Nikkei Stock Index up +0.39% at an 8-month high.
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 ESZ18 - S&P 500 E-Mini

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 +0.21%) this morning are up +0.21% and European stocks are up +0.17% ahead of the conclusion of today's FOMC meeting where the market is expecting a 25 bp rate hike in the fed funds rate target. The main focus will be the Fed's updated projections for the economy and monetary policy and the language of the post-meeting statement as to whether policy makers intend to increase interest rates again at the December FOMC meeting. Weakness in energy stocks is limiting the upside in stock indexes with Nov WTI crude oil (CLX18 -0.32%) down -0.28% after the API reported late Tuesday that U.S. crude inventories rose +2.9 million bbl last week. Asian stocks settled mostly higher: Japan +0.39%, Hong Kong +1.15%, China +0.92%, Taiwan-0.04%, Australia +0.10%, Singapore +0.09%, South Korea closed for holiday, India -0.30%. China's Shanghai Composite rallied to a 1-3/4 month high after MSCI said it's considering increasing the weight of mainland Chinese shares in its global indexes. Japan's Nikkei Stock Index rose to an 8-month high on reduced trade concerns after Japanese Economy Minister Motegi said he and U.S. Trade Representative Lighthizer agreed on the general direction of trade relations after bilateral trade talks in New York on Tuesday.

The dollar index (DXY00 +0.18%) is up +0.15%. EUR/USD (^EURUSD -0.19%) is down -0.16%. USD/JPY (^USDJPY -0.03%) is down -0.04%.

Dec 10-year T-note prices (ZNZ18 +0-035) are up +3.5 ticks.

China said it will cut import tariffs on 1,585 kinds of goods from Nov 1 and lower the overall tariff rate on the goods to 7.5% from 9.8%.

UK Sep CBI retailing reported sales fell -6 to 23, stronger than expectations of -10 to 19.

Japan Aug machine tool orders were revised downward to +5.1% y/y from the previously reported +5.3% y/y, the slowest pace of increase in 19 months.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +1.6% to 342.7 with the purchase sub-index up +0.3% to 234.2 and the refi sub-index+3.7% to 917.1), (2) Aug new home sales (expected +0.5% to 630,000, Jul -1.7% to 627,000), (3) EIA weekly Petroleum Status Report, (4) FOMC announces interest rate decision (expected +25 bp increase in fed funds target range to 2.00%-2.25%), (5) Fed Chair Jerome Powell holds press conference following FOMC meeting.

Notable Russell 2000 earnings reports today include: CarMax (consensus $1.22).

U.S. IPO's scheduled to price today: Sutro Biopharma (STRO), Urovant Sciences (UROV), RA Medical Systems (RMED), Arvinas Holding Co (ARVN), LAIX Inc (LAIX).

Equity conferences during the remainder of this week: Bank of America Merrill Lynch Real Estate Conference on Mon-Wed, Dreamforce Conference on Tue-Wed, Bernstein Strategic Decisions CEO Conference on Wed, MUFG Utilities Corporate Access Day on Wed, Bloomberg Global Business Forum on Wed, Barrington Research Fall Investment Conference on Thu, Contracting & Outsourcing Conference on Thu, Wells Fargo Securities Consumer Forum & Beauty Day on Thu.

Market Comments

Dec S&P 500 E-minis (ESZ18 +0.21%) this morning are up +6.25 points (+0.21%). Tuesday's closes: S&P 500 -0.13%, Dow Jones -0.26%, Nasdaq 100 +0.19%. The S&P 500 on Tuesday closed lower on concern the US/China trade war may deepen after President Trump said the U.S. trade deficit with China "is just not acceptable." Stocks were also undercut by higher interest rates after the 10-year T-note yield rose to a 4-1/4 month high of 3.11%. Stocks found support on the unexpected +3.7 point increase in the Conference Board's U.S. Sep consumer confidence to an 18-year high of 138.4, stronger than expectations of -1.3 to 132.1. There was also strength in energy stocks after WTI crude oil prices climbed +0.28% to a new 2-1/2 month high.

Dec 10-year T-notes (ZNZ18 +0-035) this morning are up +3.5 ticks. Tuesday's closes: TYZ8 -5.50, FVZ8 -3.25. Dec 10-year T-notes on Tuesday tumbled to a 4-1/4 month low and closed lower on technical selling of T-notes in anticipation of a 25 bp Fed rate hike on Wednesday and on negative carry-over from a sell-off in 10-year German bunds to a 4-month low. T-notes were also undercut by the unexpected increase in the U.S. Sep consumer confidence to an 18-year high.

The dollar index (DXY00 +0.18%) this morning is up +0.14 (+0.15%), EUR/USD (^EURUSD -0.19%) is down -0.0019 (-0.16%), and USD/JPY (^USDJPY -0.03%) is down -0.05 (-0.04%). Tuesday's closes: Dollar Index -0.006 (-0.01%), EUR/USD +0.0019 (+0.16%), USD/JPY +0.17 (+0.15%). The dollar index on Tuesday closed lower on concern the U.S./China trade rift will drag on after President Trump said the U.S. trade deficit with China "is just not acceptable." There was also strength in the Russian ruble which rallied to a 1-1/2 month high against the dollar as a rally in crude prices to a 2-1/2 month high was positive for the ruble.

Metals prices this morning are mixed with Dec gold (GCZ18 -0.26%) -2.4 (-0.20%), Dec silver (SIZ18 +0.05%) +0.017 (+0.12%) and Dec copper (HGZ18 +0.04%) +0.009 (+0.32%). Tuesday's closes: Dec gold +0.7 (+0.06%), Dec silver +0.152 (+1.06%), Dec copper -1.25 (-0.44%). Metals on Tuesday settled mixed with Dec silver at a 3-week high. Metals prices were boosted by a weaker dollar and by increased inflation expectations that boosted demand for gold as an inflation hedge after the 10-year T-note breakeven inflation rate jumped to a 4-month high. Metals prices were undercut by concern the ongoing trade spat between China and the U.S. will curb economic growth and industrial metals demand and by expectations for the Fed to raise interest rates by 25 bp at the conclusion of the 2-day FOMC meeting on Wednesday.

Nov WTI crude oil prices (CLX18 -0.32%) this morning are down -20 cents (-0.28%) and Nov gasoline (RBX18 -0.55%) is -1.20 (-0.58%). Tuesday's closes: Nov crude oil +0.20 (+0.28%), Nov gasoline +1.34 (+0.66%). Nov crude oil and gasoline on Tuesday closed higher with Nov crude at a new 2-1/2 month high. Crude oil prices were boosted by a weaker dollar and by expectations for Wednesday's EIA crude inventories to fall -500,000 bbl and for crude supplies at Cushing to fall by -150,000 bbl. Crude prices were knocked back after President Trump tried jawboning prices lower when he said OPEC is "ripping off the world" with high crude prices.

Overnight U.S. Stock Movers

International Business Machines (IBM -0.75%) was upgraded to 'Buy' from 'Hold' at UBS with a price target of $180.

Burlington Stores (BURL +1.54%) was rated a new 'Buy' at D.A. Davidson with a price target of $187.

PVH Corp (PVH -0.33%) was rated a new 'Buy' at D.A. Davidson with a price target of $167.

TJX Cos (TJX +0.55%) was rated a new 'Buy' at D.A. Davidson with a price target of $130.

Nike (NKE +0.62%) slid more than 3% in pre-market trading after it reported Q1 gross margin of +44.2%, below consensus of +44.3%.

AAR Corp (AIR +2.31%) rose more than 4% in after-hours trading after it reported Q1 sales of $466.3 million, better than consensus of $453 million.

Ross Stores (ROST +0.23%) was rated a new 'Neutral' at D.A. Davidson with a price target of $96.

CyrusOne (CONE -0.90%) fell 4% in after-hours trading after it announced that it had commenced a public offering of 8 million shares of its common stock.

Yelp (YELP +2.03%) was rated a new 'Buy' at William O'Neill & Co.

KB Home (KBH -0.94%) climbed more than 3% in after-hours trading after it reported Q3 order growth of 3%, stronger than consensus of 1.2%. Lennar (@symbolPercentChange(LEN also moved up by 2% on the better-than-expected KB Home sales.

Nielson Holdings PLC (NLSN +0.18%) gained 2% in after-hours trading on signs that Blackstone Group LP and Carlyle Group LP are both interested in purchasing Nielson.

Verastem (VSTM -19.98%) jumped nearly 8% in after-hours trading after it received an upfront payment of $15 million and will receive additional payments of $30 million, plus potential sales milestone payments, after it signed a license pact with CSPC to develop and commercialize its COPIKTRA drug in China for treatment of patients with relapsed or refractory chronic lymphocytic leukemia.