OVERNIGHT MARKETS AND NEWS
September E-mini S&Ps (ESU15 +0.98%) are up +0.86% at a 1-week high and European stocks are up +2.18% at a 2-week high on the heels of a rally in Asian stock markets. Gains in commodity producers and miners led the overall market higher as the price of copper (HGZ15 +0.08%) climbed to a 1-1/2 month high. Asian stocks closed higher: Japan +7.71%, Hong Kong +4.10%, China +2.29%, Taiwan +3.57%, Australia +2.07%, Singapore +1.49%, South Korea +2.92%, India +1.59%. Japan’s Nikkei Stock Index surged nearly 8% to a 1-week high, the biggest one day rally in 7 years, after Prime Minister Abe pledged to lower the corporate tax rate by at least 3.3 percentage points next year and “aim to go beyond that if possible.” Japanese stocks also received a boost on speculation the BOJ may need to expand stimulus measures after people familiar with discussions said some BOJ officials see a growing likelihood they may have to lower their inflation outlook and delay the time frame for reaching its price target due to cheaper oil prices. China’s Shanghai Composite rose to a 2-week high after China’s finance ministry pledged to accelerate construction of some major projects and reduce companies’ tax burden.
The dollar index (DXY00 +0.37%) is up +0.29%. EUR/USD (^EURUSD) is down -0.49%. USD/JPY (^USDJPY) is up +0.67% at a 1-week high.
Dec T-note prices (ZNZ15 -0.20%) are down -7.5 ticks at a 1-week low as the rally in global stocks reduces demand for the safety of government debt.
Speaking at the World Economic Forum in Davos, Switzerland, Chinese Premier Li Keqiang said that while China’s economy faces large downward pressures in 2015, China won’t have systemic risks and will seek to improve the quality of growth to ensure an “appropriate” pace of expansion.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +11.3% with purchase sub-index +4.1% and refi sub-index +16.8%), (2) July JOLTS job openings (expected +51,000 to 5.300 million, Jun -108,000 to 5.249 million), and (3) the Treasury’s auction of $21 billion of 10-year T-notes.
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