Markets Overnight: Japan Higher, China and Italy Lower, Oct 17th Looms

by Enis September 26, 2013 4:43 am • Commentary

Stocks in Asia were mixed, with Japan staging an impressive turnaround, but China selling off 2%.  European stocks opened green, but quickly turned red.  SPX futures rallied to up 7 points just prior to the European open, but sold off with European stocks, now up only 3 points.

  1. Asian Equities Mixed, Japan Higher, China lower – Light economic calendar and no major news overnight led to a mixed session.  Though most indices started out in the red, the Nikkei reversed higher along with the yen reversing lower, and finished up more than 1%.  However, the Shanghai Composite closed down almost 2%, its third straight down day, breaking back below the 200 day moving average.
  2. European Stocks Lower, Led by Italy – The Euro Stoxx 50 Index is down 0.3% early in the session.  The Italian index is down 1.5%, the latest country index to register a false breakout from new highs after last week’s rise.  The pound lost value after U.K. economic data at 4:30 am EDT slightly missed.
  3. Commodities Mixed, Dollar Mixed, Bonds a Touch Lower – No big movers among other asset classes.  Tight ranges for oil and gold overnight, while copper bounced off its 50 day ma.  Bonds were lower across the board, though not by much.  The dollar is stronger vs. the yen and the pound, weaker vs. Australia / New Zealand.
  4. Debt Ceiling Deadline of Oct 17th Set by Treasury Secretary Jack Lew – That date gains added significance after Lew’s letter yesterday.  Market participants expect an eventual resolution, as implied volatility remains quite low (in fact, VIX spot is down 4 of the past 5 days, even with the market lower 5 straight days).  We remain long a good chunk of October premium.
  5. Jobless Claims and Revised 2Q GDP Released at 8:30 am  – The past two jobless claims reports have not been impactful because California has had data submission problems.  The final 2Q GDP revision has consensus expectations of 2.6%.