Morning Call For Thursday, Oct. 19

OVERNIGHT MARKETS AND NEWS

Dec E-mini S&Ps (ESZ17 -0.44%) this morning are down -0.51% at a 1-week low and European stocks are down -0.80% at a 2-week low as rising tensions between Spain and Catalonia spurs liquidation in equities and pushed the VIX volatility index up to a 5-week high. In a response to a Thursday deadline set by Spain for the state of Catalonia to renounce its claims to independence, Catalan President Puigdemont said his state may declare independence from Spain unless the government in Madrid agrees to talks. Spanish Prime Minster Rajoy said the Spanish government will start the process of taking direct control of the Catalan regional administration under Article 155 of Spain’s Constitution unless the Catalan government steps back from its push for independence. A slide in Apple suppliers is also weighing on technology stocks after the Taipei-based Economic Daily reported that Apple has cut orders linked to its iPhone 8 models by as much as 50% over the rest of the year due to lukewarm reception for its newest model. Asian stocks settled mixed: Japan +0.40%, Hong Kong -1.92%, China -0.34%, Taiwan +0.37%, Australia +0.10%, Singapore +0.18%, South Korea -0.59%, India closed for holiday. China’s Shanghai Composite fell to a 1-week low on disappointment that a 3-hour speech by Chinese President Xi Jinping at China’s 19th Communist Party Congress failed to provide details to support the market. The rally in Japanese stocks continues as the Nikkei Stock Index rose to a 21-year year ahead of Sunday’s elections in Japan where Prime Minister Abe’s party is expected to win in a landslide.

The dollar index (DXY00 -0.16%) is down -0.16%. EUR/USD (^EURUSD) is up +0.32%. USD/JPY (^USDJPY) is down -0.43%.

Dec 10-year T-note prices (ZNZ17 +0.16%) are up +7 ticks.

The Japan Sep trade balance widened to a surplus of +670.2 billion yen. larger than expectations of +556.8 billion yen. Sep exports rise +14.1% y/y, weaker than expectations of +15.0% y/y. Sep imports rose +12.0% y/y, weaker than expectations of +14.7% y/y.

China Q3 GDP rose +6.8% y/y, right on expectations.