Monday, October 13th, 2014View Older Reports
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OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (ESZ14 +0.24%) rebounded upward from initial losses last night and are now trading slightly higher with a rally in European stocks this morning. The EuroStoxx 50 Index is up +0.51% this morning. Concerns about weak global economic growth continue but bullish factors this morning include the +15.3% y/y increase in Chinese Sep exports and supportive comments from Fed Vice Chair Stanley Fischer that the Fed will delay a rate hike if weak foreign growth hurts the U.S. economy. Asian stocks today closed mostly lower: Hong Kong +0.24%, China CSI 300 index -0.48%, Taiwan -2.84%, Australia -0.63%, Singapore -0.67%, South Korea -0.36%, India +0.33%, Turkey +1.63%. The Japanese markets were closed today for a public holiday. Dec 10-year T-note prices (ZNZ14 +0.31%) are sharply higher by +13 ticks. The dollar index (DXY00 -0.52%) is down -0.47% on technical selling while EUR/USD (^EURUSD) is up +0.48% and USD/JPY (^USDJPY) is down -0.27%.Commodity prices are slightly higher by +0.10% this morning. Nov WTI (CLX14 -1.55%) crude oil is down -1.43% and Nov gasoline (RBX14 -1.75%) is down -1.60%. Dec gold (GCZ14 +0.52%) is up +0.46%, Dec silver (SIZ14 +0.82%) is up +0.76%, and Dec copper (HGZ14 +0.25%) is up +0.12%. Grain prices are narrowly mixed and softs are trading higher.
China's Sep exports rose by +15.3% y/y, stronger than market expectations of +12.0% and Aug's report of +9.4%. Chinese imports rose by +7.0% y/y, stronger than market expectations of -2.0% y/y and Aug's report of -2.4% y/y. China's Sep trade surplus of $30.94 billion was a little below market expectations of $41.1 billion and was down from Aug's surplus of $49.8 billion.
Fed Vice Chairman Stanley Fischer said at a weekend IMF meeting that “If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise.”
The pro-democracy protests continue in Hong Kong with police today having to stop angry counter-protesters from attempting to break through barricades to halt the pro-democracy protests. Many of the counter-protesters were taxi and truck drivers and retailers who are losing business due to the protests. The Hong Kong government refuses to back down on the protesters' demand for the government to stop vetting candidates for Hong Kong's leadership vote.
Ebola fears grew over the weekend after a health care worker at Texas Health Presbyterian Hospital contracted Ebola from contact with the Liberian man, Thomas Eric Duncan, who died from the disease last week. The health care worker followed the CDC safety protocols but nevertheless ended up contracting Ebola, the first time Ebola has ever been contracted within the borders of the United States.
U.S. STOCK PREVIEW
Today is a partial holiday with the U.S. stock markets open but with the banks and U.S. government closed. None of the Russell 1000 companies report earnings today. Equity conferences this week include: Bio Japan 2014 on Wed, Bloomberg Next Big Thing Summit: East on Thu, and 5th Annual Global Automotive Forum on Thu.Dec E-mini S&Ps this morning are up +0.28% on support from higher European stocks, supportive weekend comments from Fed Vice Chair Fischer, and the +15.3% y/y increase in Chinese Sep exports. The S&P 500 index on Friday fell sharply for the second consecutive session and posted a new 2-1/4 month low: S&P 500 -1.15%, Dow Jones -0.69%, Nasdaq -2.33%. The markets continue to fret about weak global economic growth after weak German reports earlier last week and with the FOMC minutes indicating that the Fed is worried about weak global economic growth.
OVERNIGHT U.S. STOCK MOVERS
- NetScout Systems (NTCT -4.18%) will acquire Danaher's Communications business (DHR -1.25%) for $2.6 billi
- AB InBev (BUD +1.18%) has studied a potential deal to acquire PepsiCo (PEP +1.15%), according to Bloomberg.
- CSX (CSX -2.57%) was approached by Canadian Pacific (CP -4.96%) on a possible merger, according to WSJ.
- Deere (DE -0.21%) reported Sep US/Canada utility tractor sales were up more than 28%.
- General Electric ({=GE) could rally 25% over the next 12-18 month due to its industrial earnings, according to Barron's.
- Micron shares (MU -9.30%) look more attractive, according to Barron's, due to the recent 18% dip.
MARKET COMMENTS
Dec 10-year T-notes this morning are sharply higher by +13 ticks on supportive comments by Fed Vice Chair Fischer and on continued worries about weaker global economic growth. Dec 10-year T-note futures prices on Friday consolidated below Thursday’s contract high but still closed mildly higher. Closes: TYZ4 +3.5, FVZ4 +2. T-note prices continue to see support from weaker global economic growth, deferred expectations for Fed tightening, and increased safe-haven demand with the sharp sell-off in global stocks.The dollar index this morning is down -0.41 points (-0.47%) as EUR/USD rallied +0.0060 (+0.48%) on an upward rebound in European stocks. USD/JPY is down -0.29 (-0.27%). The dollar index on Friday closed slightly lower on some pre-weekend long liquidation pressure. Closes: Dollar index -0.102 (-0.12%), EUR/USD +0.0005 (+0.04%), USD/JPY -0.30 (-0.28%). The dollar has run into some selling pressure after the sharp July-Sep rally, but continues to be underpinned by the relative strength of the U.S. economy against the European and Japanese economies.
Nov WTI crude oil this morning is down by another -1.23 (-1.43%) and Nov gasoline is down -0.0361 (-1.60%) on continued concern about weaker global economic growth combined with the price war within OPEC. Nov crude and Nov gasoline prices on Friday closed mixed with Nov crude posting a new 1-1/2 year low and Nov gasoline posting a new 3-3/4 year low: CLX4 +0.05 (+0.06%), RBXX4 -0.0174 (-0.76%). Crude oil and gasoline prices continued to see downward pressure from worries about weaker global economic growth, which weakens fuel demand.
GLOBAL EVENT CALENDAR10/13/2014
| US | 1230 ET | Chicago Fed President Charles Evans speaks on current economic conditions and monetary policy to the National Council on Teacher Retirement conference in Indianapolis, IN. |
| n/a | Columbus Day; government offices closed but stock exchanges open. | |
| UK | 0430 ET | UK Sep Lloyds employment confidence, Aug 6. |
| 1901 ET | UK Sep BRC sales like-for-like, Aug +1.3% y/y. | |
| JPN | 1950 ET | Japan Sep PPI expected -0.1% m/m and +3.6% y/y, Aug -0.2% m/m and +3.9% y/y. |
| n/a | Japanese markets closed for Health-Sports Day holiday. |
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