Morning Call For Monday, Dec. 18

OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 +0.36%) this morning are up +0.33% at a new record nearest-futures high and European stocks are up +1.20% at a 1-week high. Optimism U.S. lawmakers will pass legislation to reduce corporate and individual tax rates is fueling gains in equities. The House and Senate will vote on the tax reform plan mid-week with expectations that the Republican majority has the votes to pass the legislation. Asian stocks settled higher: Japan +1.55%, Hong Kong +0.70%, China +0.05%, Taiwan +0.14%, Australia +0.70%, Singapore -0.06%, South Korea +0.11%, India +0.41%. Asian stock markets found support from Friday’s rally in U.S. equities to record highs. Japanese stocks also gained after trade data showed Japan Nov exports rose more than expected. China’s Shanghai Composite recovered from a 4-month low to eke out a small gain as homebuilding stocks and property developers rose after China Nov new home prices declined in fewer cities than in Oct.

The dollar index (DXY00 -0.27%) is down -0.27%. EUR/USD (^EURUSD) is up +0.38% on hawkish comments from ECB Governing Council member Liikanen who said the strong recovery in the Eurozone supports inflation converging towards the ECB’s target. USD/JPY (^USDJPY) is down -0.07%.

Mar 10-year T-note prices (ZNH18 -0.16%) are down -5.5 ticks.

ECB Governing Council member Liikanen said “the strong recovery in the Eurozone and reduction of economic slack support confidence in inflation converging towards our inflation aim in due course.”

The UK Dec CBI trends total orders was unchanged at 17, stronger than expectations of -2 to 15. Dec CBI trends selling prices rose +6 to a 6-month high of 23.

China Nov new-home prices rose in 50 of 70 cities tracked by the government, unch from Oct. Nov new-home prices fell in 10 cities, less than 14 that fell in Oct.

The Japan Nov trade balance shrank to a surplus of +113.4 billion yen, more than expectations of a -$40.0 billion-yen deficit. Nov exports rose +16.2% y/y, stronger than expectations of 14.7% y/y. Nov imports rose +17.2% y/y, weaker than expectations of +18.0% y/y.