Morning Call For Thursday, Dec. 20

Overnight Markets And News

Mar E-mini S&Ps (ESH19 +0.19%) this morning are up +0.40% as they recover from a contract low posted in the overnight session. U.S. stocks indexes slumped Wednesday afternoon, with the S&P 500 falling to a 1-1/4 year low, after the FOMC signaled additional rate hikes next year. The sell-off in U.S. equities spread around the world with European stocks down -1.16% at a 2-year low. The sell-off in European stocks boosted safe-haven demand for government debt as the 10-year German bund yield fell to a 6-1/2 month low of 0.204%. The slump in global equity markets has stoked demand concerns for crude with Feb WTI crude oil (CLG19 -2.89%) down -3.43%. Asian stocks settled lower: Japan -2.84%, Hong Kong -0.94%, China -0.52%, Taiwan -1.11%, Australia -1.34%, Singapore -0.26%, South Korea -0.94%, India -0.14%. Asian stock markets followed the plunge in U.S. equity markets as China's Shanghai Composite fell to a 2-month low and Japan's Nikkei Stock Index slid to a 14-1/2 month low. A sell-off in Japanese exporters led losses in Japanese stocks after USD/JPY tumbled to a 1-3/4 month low, which curbs the earnings prospects of exporters. Losses in Japanese stocks accelerated after the BOJ kept monetary policy unchanged.

The dollar index (DXY00 -0.69%) is down -0.72% at a 1-month low. EUR/USD (^EURUSD +0.76%) is up +0.76%% at a 1-1/2 month high. USD/JPY (^USDJPY -0.63%) is down -0.66% at a 1-3/4 month low.

Mar 10-year T-note prices (ZNH19 -0-015) are down -1.5 ticks.

The BOJ as expected kept its benchmark interest rate at -0.1% and its target for the 10-year Japanese government bond yield at around 0%. The BOJ also maintained its JGB purchase pace of about 80 trillion yen a year.

The BOE as expected voted 9-0 to keep its benchmark interest rate unchanged at 0.75% and to maintain its asset purchase target at 435 billion pounds.

UK Nov retail sales ex auto fuel rose +1.2% m/m, stronger than expectations of +0.2% m/m. Nov retail sales including auto fuel rose +1.4% m/m, stronger than expectations of +0.3% m/m and the biggest increase in 6 months.

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