Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -0.20%) this morning are down -0.29% and European stocks are down -0.83% at a 3-week low as Italian bank stocks slumped and government bond yields soared after the European Commission rejected the Italian government’s plan for a wider budget deficit. The yield on Italy’s 10-year bond rose to a 4-1/2 year high of 3.63% after EU officials said that the Italian government’s plan for a 2.4% budget deficit of GDP in 2019 will put them in breach of EU austerity rules. Weakness in energy stocks added to losses in the overall market as Nov WTI crude oil (CLX18 -1.49%) dropped -1.35% to a 1-week low. European stocks were also weighed down after German Aug industrial production unexpectedly declined for a third month. Asian stocks settled mostly lower: Japan -0.80%, Hong Kong -1.39%, China -3.72%, Taiwan -0.58%, Australia -1.38%, Singapore -0.88%, South Korea -0.47%, India +0.28%. Asian stock markets sold-off as China reopened after a week long holiday with the Shanghai Composite and the Nikkei Stock Index both falling to 2-week lows. The Chinese yuan sank to a 1-3/4 month low against the dollar after the PBOC lowered the reserve requirement ratio for banks the fourth time this year and a decline in Japanese exporter stocks led the Nikkei lower after the yen climbed to a 1-week high.

The dollar index (DXY00 +0.30%) is up +0.39%. EUR/USD (^EURUSD -0.32%) is down -0.46% as the Italian political crisis and unexpected drop in German Aug industrial production weighed in the currency. USD/JPY (^USDJPY-0.32%) is down -0.31% at a 1-week low as the sell-off in stocks boosted the safe-haven demand for the yen.

Dec 10-year T-note prices (ZNZ18 +0-030) are up +3 ticks.

German Aug industrial production unexpectedly fell -0.3% m/m, weaker than expectations of +0.3% m/m.

The Eurozone Oct Sentix investor confidence fell -0.6 to 11.4, weaker than expectations of -0.4 to 11.6.

The PBOC lowered the reserve requirement ratio for banks by 100 bp to 14.50% from 15.50% effective October 15.