Barchart Morning Call

Mar E-mini S&Ps (ESH17 +0.79%) are up +0.78% and European stocks are up +0.27% at a 1-year high on signs of strength in the global economy. A gauge of manufacturing in China climbed at its fastest pace in 4-years last month, while UK manufacturing activity last month expanded at the fastest pace in 2-years. That strength in manufacturing activity has also boosted commodity prices and mining stocks on optimism over increased demand for industrial metals as Mar COMEX copper (HGH17 +0.90%) rose +0.92% to a 2-week high. Another positive for equities is the rally in crude oil which has boosted energy producing stocks with Feb WTI crude (CLG17 +2.31%) up +2.20% at a 17-3/4 month high on signs that OPEC is delivering on their promise to reduce crude output. The Al-Anba newspaper reported that Kuwait has cut its crude production by 130,000 bpd to 2.75 million bpd and Oman’s Oil Ministry Director of Marketing said Oman has cut its crude production by 45,000 bpd. Asian stocks settled higher: Japan closed for holiday, Hong Kong +0.68%, China +1.04%, Taiwan +0.21%, Australia +1.19%, Singapore +0.63%, South Korea +1.00%, India +0.18%.

The dollar index (DXY00 +0.64%) is up +0.56%. EUR/USD (^EURUSD) is down -0.65%. USD/JPY (^USDJPY) is up +0.59% at a 2-week high.

Mar 10-year T-note prices (ZNH17 -0.47%) are down -16 ticks.

The UK Dec Markit manufacturing PMI unexpectedly rose +2.5 to 56.1, stronger than expectations of -0.1 to 53.3 and the fastest pace of expansion in 2-1/2 years.

The China Dec Caixin manufacturing PMI unexpectedly rose +1.0 to 51.9, stronger than expectations of no change at 50.9 and the fastest pace of expansion in 4 years.

Key U.S. news today includes: (1) final-Dec U.S. Markit manufacturing PMI (expected unrevised at 54.2, prelim-Dec +0.1 to 54.2), (2) Dec U.S. ISM manufacturing index (expected +0.5 to 53.7, Nov +1.3 to 53.2), (3) Nov construction spending (expected +0.5% m/m, Oct +0.5% m/m), (4) USDA weekly grain export inspections.

Russell 1000 earnings reports today include: none.

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

Equity conferences this week include: Citi Global Internet, Media and Telecommunications Conference on Tue-Thu, Wolfe Research Refiners Conference on Wed, Goldman Sachs CEOs Unplugged Conference on Thu, J.P. Morgan CES Tech Forum on Thu, JP Morgan Chase & Co., Inc. International Tech Forum on Thu.

Disney (DIS -0.33%) was upgraded to ‘Buy’ from ‘Hold’ at Evercore ISI with a 12-month target price of $120.

Facebook (FB -1.12%) was rated a new ‘Buy’ at Aegis Capital with a 12-month target price of $150.

QEP Resources (QEP -1.60%) was upgraded to ‘Outperform’ from ‘Market Perform’ at FBR Capital Markets with a 12-month target price of $20.

eBay (EBAY -0.97%) was rated a new ‘Buy’ at Aegis Capital with a 12-month target price of $36.

21st Century Fox (FOXA -0.85%) was upgraded to ‘Outperform’ from ‘Market Perform’ at Wells Fargo Securities.

Boot Barn Holdings (BOOT -1.34%) was upgraded to ‘Buy’ from ‘Neutral’ at B Riley with a price target of $15.50.

CR Bard (BCR +0.24%) was upgraded to ‘Overweight’ from ‘Equal-Weight’ at Morgan Stanley with a price target of $260.

CenturyLink (CTL -1.04%) was upgraded to ‘Overweight’ from ‘Neutral’ at JPMorgan Chase with a 12-month target price of $28.

Verizon Communications (VZ -0.67%) was upgraded to ‘Buy’ from ‘Neutral’ at Citigroup.

Avis Budget Group (CAR -1.40%) was rated a new ‘Overweight’ at Consumer Edge Research with a price target of $45.

Wright Medical Group NV (WMGI -0.69%) was downgraded to ‘Neutral’ from ‘Buy’ at Guggenheim Securities.

Cardinal Health (CAH -0.53%) was downgraded to ‘Neutral’ from ‘Buy’ at Mizuho Securities USA was a target price of $79.

Xilinx (XLNX -0.61%) was downgraded to ‘Reduce’ from ‘Neutral’ at Nomura with a 12-month target price of $45.

Mar E-mini S&Ps (ESH17 +0.79%) this morning are up +17.50 points (+0.78%) Friday’s closes: S&P 500 -0.46%, Dow Jones -0.29%, Nasdaq -1.11%. The S&P 500 on Friday fell to a 3-week low and closed lower on the -3.0 point decline in the Dec Chicago PMI to 54.6 (weaker than expectations of -0.8 to 56.8) and on weakness in crude oil prices, which undercut energy producer stocks.

Mar 10-year T-notes (ZNH17 -0.47%) this morning are down -16 ticks. Friday’s closes: TYH7 +11.00, FVH7 +5.25. Mar 10-year T-notes on Friday climbed to a 2-week high and settled higher on the weaker-than-expected Dec Chicago PMI report and on increased safe-haven demand as the S&P 500 fell to a 3-week low.

The dollar index (DXY00 +0.64%) this morning is up +0.580 (+0.56%). EUR/USD (^EURUSD) is down -0.0068 (-0.65%). USD/JPY (^USDJPY) is up +0.69 (+0.59%) at a 2-week high. Friday’s closes: Dollar index -0.470 (-0.46%), EUR/USD +0.0027 (+0.26%), USD/JPY +0.42 (+0.36%). The dollar index on Friday fell to a 2-week low and closed lower on the larger-than-expected decline in the Dec Chicago PMI report and the rally in EUR/USD to a 2-week high as year-end rebalancing of currency positions in a thin holiday market exacerbated price movements. The dollar index was also undercut by a fall in the 10-year T-note yield to a 2-week low, which reduced the dollar’s interest rate differentials.

Feb WTI crude oil prices (CLG17 +2.31%) this morning are up +$1.18 a barrel (+2.20%) at a 17-3/4 month high and Feb gasoline (RBG17 +1.74%) is +0.0305 (+1.83%). Friday’s closes: Feb crude -0.05 (-0.09%), Feb gasoline -0.0059 (-0.35%). Feb crude oil and gasoline on Friday closed lower on the 2-rig increase in active U.S. oil rigs for a ninth consecutive week as data from Baker Hughes showed that U.S. active oil rigs rose to a 1-year high. Crude oil prices were also undercut by the fall in the S&P 500 to a 3-week low and the weaker-than-expected Dec Chicago PMI report. Crude oil prices found some support on the slide in the dollar index to a 2-week low.