Morning Call For Monday, Oct. 22

Overnight Markets And News

Dec E-mini S&Ps (ESZ18 +0.40%) this morning are up +0.31% on support from a surge in Chinese stocks along with a decline in Italian government bond yields. European stocks are up +0.33% and moved higher after the 10-year Italian government bond yield fell to a 2-week low of 3.30% when Italian Finance Minister Tria said he’s aware that Italy’s spending plans don’t comply with EU rules and he wants “constructive” talks on the issue with officials in Brussels. Italian political risks remain after an EU official with knowledge of the preparations said that EU Commissioners will discuss Italy’s budget at a meeting on Tuesday and likely will issue a “negative opinion” and Italy will have three weeks to submit a revised budget. Gains in European stocks were also limited after the Bundesbank warned that German Q3 GDP likely stalled due to new emission-test procedures in the auto industry that left “deep marks” om industrial production. Asian stocks settled mostly higher: Japan +0.37%, Hong Kong +2.32%, China +4.09%, Taiwan +0.55%, Australia -0.58%, Singapore +0.51%, South Korea +0.28%, India =0.53%. China’s Shanghai Composite rallied sharply to a 1-week high, which improved market sentiment in global stock markets, after China’s President Xi Jinping vowed “unwavering” support for non-state firms and the government released a detailed draft plan to cut personal income taxes. Japanese stocks also moved higher on positive carry-over from the rally in Chinese equities along with the rally in USD/JPY (^USDJPY +0.28%) to a 1-week high, as the weaker yen boosted exporter stocks.

The dollar index (DXY00 +0.10%) is up +0.06%. EUR/USD (^EURUSD -0.11%) is down -0.13%. USD/JPY (^USDJPY+0.28%) is up +0.26% at a 1-week high.

Dec 10-year T-note prices (ZNZ18 +0-015) are little changed, down -0.5 of a tick.

In its monthly report, the Bundesbank said “the upswing in Germany is still fundamentally intact. However, it may have come to a temporary halt in the summer quarter of 2018” due to new emission-test procedures in the auto industry that left “deep marks” om industrial production.