Morning Call For Friday, October 27

OVERNIGHT MARKETS AND NEWS

Dec E-mini S&Ps (ESZ17 +0.21%) this morning are up +0.25% and European stocks are up +0.63% at a 2-year high. U.S. stock index futures rose after the U.S. House passed a resolution that brings tax cuts a step closer. Also, technology stocks gained with Alphabet up 3% in pre-market trading and Amazon.com up 8% in pre-market trading after both companies reported stellar quarterly earnings results. European stocks gained on the slow approach by the ECB to reducing monetary stimulus along with the slump in EUR/USD to a 3-month low that gave European exporter stocks a boost. Asian stocks settled mostly higher: Japan +1.24%, Hong Kong +0.84%, China +0.27%, Taiwan -0.24%, Australia -0.22%, Singapore +0.90%, South Korea +0.69%, India +0.03%. China’s Shanghai Composite climbed to a 1-1/4 year high on optimism in the Chinese economic outlook after China Sep industrial profits surged +27.7% y/y, the largest increase in 5-3/4 years. Japan’s Nikkei Stock Index rallied to a 21-1/4 year high on strength in financial and telecommunication companies. Also. Japanese exporters surged as the yen fell to a 3-1/2 month low against the dollar, which boosted exporters’ earnings prospects.

The dollar index (DXY00 +0.37%) is up +0.28% to a 3-1/4 month high after the U.S. House passed a budget resolution on tax reforms ad on speculation that President Trump will nominate a hawk as the next Fed Chair. EUR/USD (^EURUSD) is down -0.31% at a 3-month low after the ECB extended its QE program to at least Sep of 2018. USD/JPY (^USDJPY) is up +0.12% at a 3-1/2 month high as a rally in global equity markets reduces the safe-haven demand for the yen.

Dec 10-year T-note prices (ZNZ17 +0.01%) are up +1 tick.

As expected, the Bank of Russia cut its benchmark rate by -25 bp to 8.25% from 8.50%.

China Sep industrial profits jumped +27.7% y/y, the most in 5-3/4 years.

German Sep import prices rose +0.9% m/m and +3.0% y/y, stronger than expectations of +0.5% m/m and +2.6% y/y with the +0.9% m/m gain the largest monthly increase in 8 months.