Overnight Markets And News

Dec E-mini S&Ps (ESZ18 +0.19%) this morning are up +0.09% at a 2-1/2 week high and European stocks are up +0.74% at a 2-week high as strength in energy stocks pushes the overall market higher. Energy stocks gained on the heels of a rally in Oct WTI crude oil (CLV18 +0.66%) by +0.66% to a 2-1/4 month high on concern about tight global oil supplies after U.S. crude inventories fell for a fifth week to a 3-1/2 year low and as U.S. sanctions reduce Iran’s crude exports. Another positive for stocks is the sign that China may act to further open its markets after people familiar with the matter said that China plans to cut the average tariff on imports from the majority of its trading partners as soon as next month. Stronger-than-expected UK Aug retail sales pushed GBP/USD up +0.66% to a 2-month high. On the negative side, the OECD cut its global 2018 GDP forecast to 3.7% from a May estimate of 3.8%, citing deterioration in emerging markets and intensification of global trade tensions. Asian stocks settled mixed: Japan +0.01%, Hong Kong +0.26%, China -0.06%, Taiwan -0.24%, Australia -0.33%, Singapore +0.12%, South Korea +0.81%, India -0.45%.

The dollar index (DXY00 -0.39%) is down -0.35% at a 1-1/2 month low on signs that the U.S. and Canada are unlikely to reach a deal on NAFTA this week. EUR/USD (^EURUSD +0.46%) is up +0.38%. USD/JPY (^USDJPY -0.04%) is down -0.06%.

Dec 10-year T-note prices (ZNZ18 +0-015) are up +1.5 ticks.

The Organization for Economic Cooperation and Development (OECD) cut its global 2018 GDP forecast to 3.7% from a May estimate of 3.8% and said the global economy is shrouded in “high uncertainty” as the outlook for emerging markets deteriorates and trade tensions intensify.

UK Aug retail sales ex auto fuel rose +0.3% m/m and +3.5% y/y, stronger than expectations of -0.2% m/m and +2.4% y/y. Aug retail sales including auto fuel rose +0.3% m/m and +3.3% y/y, stronger than expectations of -0.2% m/m and +2.3% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +6,000 to 210,000, previous -1,000 to 204,000) and continuing claims (expected +9,000 to 1.705 million, previous -15,000 to 1.696 million), (2) Sep Philadelphia Fed business outlook survey index (expected +6.1 to 18.0, Aug -13.8 to 11.9), (3) Aug leading indicators (expected +0.5%, Jul +0.6%), (4) Aug existing home sales (expected +0.4% to 5.36 million, Jul -0.7% to 5.34 million), (5) Treasury auctions $11 billion of 10-year TIPS.