Morning Call For November 1, 2016

OVERNIGHT MARKETS AND NEWS

Dec E-mini S&Ps (ESZ16 +0.25%) are up +0.29% and European stocks are up +0.34% after an unexpected increase in China Oct manufacturing activity eased global growth concerns. The China Oct manufacturing PMI unexpectedly rose +0.8 to 51.2, the fastest pace of expansion in 2-1/4 years. Gains were limited as crude oil prices (CLZ16 -0.11%) posted a fresh 1-month low, which undercut energy producing stocks. Crude oil prices remain under pressure after last week’s talks in Vienna between OPEC and non-OPEC members failed to result in a cut in oil production targets. Dec ROB gasoline futures prices (RBZ16 +11.07%) are up over 10% after a fire and explosion at a Colonial Pipeline mainline in Alabama, the largest U.S. fuel pipeline in the U.S., was shut. The Colonial Pipeline mainline supplies gasoline and refined products to New York Harbor from Houston and an extended shutdown may mean shortages of gasoline and refined products on the U.S. East Coast. Asian stocks settled mostly higher: Japan +0.10%, Hong Kong +0.93%, China +0.71%, Taiwan -0.19%, Australia -0.51%, Singapore -0.01%, South Korea +0.02%, India -0.19%. Japan’s Nikkei Stock Index climbed to a 6-month high on positive economic data from China, along with a dovish policy statement from the BOJ, which bolsters speculation the BOJ may boost stimulus measures.

The dollar index (DXY00 -0.31%) is down -0.25% at a 1-week low. EUR/USD (^EURUSD) is up +0.21% at a 1-week high. USD/JPY (^USDJPY) is up +0.11%.

Dec 10-year T-note prices (ZNZ16 -0.08%) are down -3.5 ticks.

The BOJ kept its monetary policy and its asset purchase targets unchanged following today’s policy meeting and said that “risks to both economic activity and prices are skewed to the downside.” The BOJ also said that consumer prices ex-fresh food would “increase toward 2%” in the second half of a period that runs through March 2019, later than a previous target date of March 2018.