Morning Call For May 9, 2016

OVERNIGHT MARKETS AND NEWS

Jun E-mini S&Ps (ESM16 +0.29%) are up +0.24% and European stocks are up +1.48% as a +2.15% rally in crude oil (CLM16 +1.34%) boosts energy producing stocks. The ongoing wildfire in Alberta, Canada has cut Canadian oil production by about 1 million bpd and has underpinned oil prices. Another positive for European stocks was the bigger-than-expected increase in Eurozone May Sentix investor confidence. On the negative side, however, copper prices (HGN16 -1.51%) dropped -1.53% to a 3-1/2 week low which has undercut mining stocks with Rio Tinto Group and Glencore Plc both down at last 3%. In addition, China Apr exports unexpectedly fell and China Apr imports fell for the 18th month in a row. Asian stocks settled mixed: Japan +0.68%, Hong Kong +0.23%, China -2.79%, Taiwan -0.18%, Australia +0.54%, Singapore +1.29%, South Korea -0.44%, India +1.82%. Chinese stocks were pressured by the weak Chinese trade data as the Shanghai Composite fell to a 1-3/4 month low, while Japanese stocks finished higher as exporters rallied after USD/JPY climbed to a 1-week high, which improves the earnings prospects of exporter companies.

The dollar index (DXY00 +0.19%) is up +0.13% at a 1-week high. EUR/USD (^EURUSD) is down -0.13% at a 1-week low. USD/JPY (^USDJPY) is up +0.88% at a 1-week high.

Jun T-note prices (ZNM16 +0.12%) are up +1.5 ticks.

Speaking at the International Financial Services Forum in London, Chicago Fed President Evans said that U.S. economic fundamentals are “good” and “wait and see” stance for monetary policy is appropriate. He said the U.S. economy should grow at a 2.5% pace for the rest of 2016, which “should support a gradual resumption of U.S. policy rate increases later this year.”

New York Fed President Dudley said that while Friday’s U.S. employment report was “a touch softer,” it won’t affect his economic outlook and that it remains a “reasonable expectation” that the Fed will raise interest rates twice this year.