OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH15 +0.49%) this morning are up +0.53% and European stocks are up +1.20% as a plunge in crude oil to a new 5-1/2 year low reduces expectations of an early interest rate increase by the Fed and boosts speculation the ECB will expand stimulus to ward off deflation. Stocks also received support from a larger-than-expected increase in China Dec exports, a sign of economic strength. Asian stocks closed mixed: Japan -0.64%, Hong Kong +0.79%, China +0.01%, Taiwan +0.58%, Australia -0.33%, Singapore -0.11%, South Korea +0.24%, India -0.58%. Commodity prices are mixed. Feb crude oil (CLG15 -2.82%) is down -2.76% at a fresh 5-1/2 year low. Feb gasoline (RBG15 -2.56%) is down -2.55% at a 5-3/4 year low. Feb gold (GCG15 +0.56%) is up +0.53% at a 2-1/2 month high on speculation the plunge in energy costs will raise deflation concerns and reduce the chance of a Fed interest rate increase. Mar copper (HGH15 -2.90%) is down -2.97% at a 4-1/2 year low on signs of increased supplies after LME copper inventories rose +3,925 MT to a 7-3/4 month high of 191.325 MT. Copper continues to slide despite strong demand from China after data from China’s customs office showed China 2014 copper imports rose +7.4% to a record 4.83 MMT. Agriculture prices are higher. The dollar index (DXY00 +0.28%) is up +0.31%. EUR/USD (^EURUSD) is down -0.36%. USD/JPY (^USDJPY) is up +0.26%. Mar T-note prices (ZNH15 +0.16%) are up +6.5 ticks at a 2-3/4 month high.
The China Dec trade balance was in surplus by +$49.61 billion, more than expectations of +$49.00 billion. Dec exports rose +9.7% y/y, stronger than expectations of +6.0% y/y. Dec imports fell -2.4% y/y, less than expectations of -6.2% y/y.
Comments from ECB Governing Council member Nowotny signal he favors implementing QE when the ECB meets on Jan 22 when he said policy makers must treat the threat of deflation seriously and “we shouldn’t wait too long with a reaction.”
