Morning Call For Aug. 14, 2014


September E-mini S&Ps (ESU14 +0.10%) this morning are up +0.12% and European stocks are up +0.37% after ThyssenKrupp AG, Germany's largest steelmaker, reported better-than-expected quarterly earnings. European stocks shook off weaker-than-expected Q2 GDP reports from Germany and France which left Eurozone economic growth stagnating in Q2. The yield on the 10-year German bund fell to a record low 0.998% on speculation that the weaker-than-expected Eurozone Q2 GDP will prod the ECB into expanding stimulus. Asian stocks closed mixed: Japan +0.66%, Hong Kong-0.36%, China -0.97%, Taiwan -0.01%, Australia +0.61%, Singapore -0.20%, South Korea -0.01%, India +0.71%. Commodity prices are mostly lower. Sep crude oil (CLU14 -0.11%) is down -0.09%. Sep gasoline (RBU14 -0.51%) is down -0.38%. Dec gold (GCZ14 -0.25%) is down -0.17%. Sep copper (HGU14 -0.08%) is down -0.10% at a 1-3/4 month low as stagnation in the Eurozone economy fuels copper demand concerns. Agriculture and livestock prices are mostly lower with Oct hogs down -1.85% at a 4-3/4 month low. The dollar index (DXY00 -0.06%) is down -0.06%. EUR/USD (^EURUSD) is up +0.08%. USD/JPY (^USDJPY) is up +0.03%. Sep T-note prices (ZNU14 +0.02%) are unchanged.

Eurozone Q2 GDP was unchanged q/q and up +0.7% y/y, slightly less than expectations of +0.1% q/q and +0.7% y/y.

Eurozone Jul CPI fell -0.7% m/m, a bigger decline than expectations of -0.6% m/m, while the annual Jul CPI was left unrevised at +0.4% y/y. The Jul core CPI was also left unrevised at +0.8% y/y.

German Q2 GDP fell -0.2% q/q and rose +0.8% y/y (nsa), weaker than expectations of -0.1% q/q and +1.3% y/y (nsa).

Japan Jun machine orders rose +8.8% m/m and fell -3.0% y/y, weaker than expectations of +15.3% m/m and +3.0% y/y.

The Bank of Korea (BOK) unexpectedly cut its seven-day repurchase rate by 25 bp to 2.25% and BOK Governor Lee said the cut was aimed at preventing weak sentiment from harming growth and was possible because pressure from inflation isn't high. The BOK last month had lowered its South Korea 2014 GDP estimate to 3.8% from 4.0% due to weaker-than-expected domestic demand.

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