Morning Call For February 1, 2016

OVERNIGHT MARKETS AND NEWS

March E-mini S&Ps (ESH16 -0.62%) are down -0.35% and European stocks are down -0.71% as Chinese economic concerns intensified after Chinese manufacturing activity last month contracted by the most in 3-1/3 years. Concerns over a slowdown in China have also undercut crude oil and copper prices and dragged energy and commodity producer stocks lower as well. On the positive side for European stocks, the German Jan Markit/BME manufacturing PMI was revised higher. Asian stocks settled mixed: Japan +1.98%, Hong Kong -0.45%, China -1.78%, Taiwan +0.14%, Australia +0.76%, Singapore -1.02%, South Korea +0.68%, India -0.18%. Japan’s Nikkei Stock Index climbed to a 3-week high on positive carryover from Friday’s decision by the BOJ to adopt negative interest rates on some of the deposits held at the central bank. The BOJ’s action also fueled buying of Japanese government bonds as the 10-year Japan bond yield fell to a record low of 0.05%.

The dollar index (DXY00 -0.23%) is down -0.21%. EUR/USD (^EURUSD) is up +0.31%. USD/JPY (^USDJPY) is up +0.20%.

Mar T-note prices (ZNH16 -0.06%) are down -2 ticks.

The German Jan Markit/BME manufacturing PMI was revised upward to 52.3 from the originally reported 52.1.

The China Jan manufacturing PMI fell -0.3 to 49.4, weaker than expectations of -0.1 to 49.6 and the steepest pace of contraction in 3-1/3 years.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Dec personal spending (expected +0.1%, Nov +0.3%) and Dec personal income (expected +0.2%, Nov +0.3%), (2) Dec PCE deflator (expected unch m/m and +0.6% y/y, Nov unch m/m and +0.4% y/y) and Dec core PCE deflator (expected +0.1% m/m and +1.4% y/y, Nov +0.1% m/m and +1.3% y/y), (3) Final-Jan Markit U.S. manufacturing PMI (expected unrevised from prelim-Jan +1.5 to 52.7), (4) Dec construction spending expected +0.6%, Nov -0.4% m/m, (5) Jan ISM manufacturing index (expected +0.5 to 48.5, Dec -0.4 to 48.0), and (6) Fed Vice Chair Stanley Fischer discusses the recent developments in the U.S. economy and monetary policy at a Council on Foreign Relations event.