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Global Markets Build Off Themes Established Last Friday

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Today's financial recap and tomorrow's financial outlook.

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Today's trading largely saw a follow through from some of the trends that were established last Friday. China's equities rose slightly more than what US markets had priced in with the Hong Kong Hang Seng Index (HSI) the top performing equity index overnight, up 1.95%. The domestic A-share Shanghai Composite (SHCOMP) also posted a strong performance of +1.85%. The rate cut last week by the People's Bank of China (PBoC) has prompted speculation that further easing will come from the country's government.

US equities rallied today, led by tech and small caps. The larger cap Dow Industrials (INDU) and S&P 500 (SPX) underperformed by a substantial margin relative to the small cap Russell 2000 (RUT). Apple (AAPL) continued to lead the overall market higher, rising 1.81% in today's session. The consumer discretionary and tech sectors were the top two performers in the SPX today

Natural gas futures fell by as much as 5%, their largest decline since February of this year, but recovered a sizable chunk of those losses by day's end. Forecasts for average temperatures next week prompted the losses, although the winter weather this year is expected to be as cold as it was last year.

Oil was very volatile in both directions during today's session. News reports over the weekend indicated that some members of OPEC were pushing for a production cut by the cartel of 1 million barrels per day. The group of oil producers will meet on Thursday in Vienna to discuss a course of action and if one is needed.

US Treasuries posted small gains today after early weakness. The auction of $28 billion 2-year notes had a high yield that was 1.3bps through the expected price, which was the largest since December 2010 according to Stone & McCarthy. The 10-year yield finished down 1bp to 2.30%. European sovereign bonds were strong following comments from ECB Vice President Constancio over the weekend that the central bank was waiting to see if there would be enough covered bonds and asset-backed securities programs to fulfill its goals of increasing its balance sheet by 1 trillion Euros over the next two years.

Tomorrow's Financial Outlook

The major event tomorrow is the second release of third quarter US GDP. Because most economic data for the third quarter has been released, economists expect growth to be revised down to a 3.3% quarterly annualized rate from 3.5% in the prior release. The only piece of data yet to be released is the Quarterly Services Survey, which will be released next week. Also scheduled for release is the November Conference Board consumer confidence index. Recently, we've seen this index show a substantial jump in optimism for those earning less than $35,000 per year, presumably from the ~$80 boost each month from gasoline prices that are almost a dollar lower.

Bank of Japan Governor Kuroda will speak overnight in a speech in Nagoya, Japan. Although Japanese markets are scheduled to be closed tomorrow, the odds of his comments moving foreign exchange markets remain low after the moves the BoJ made at the end of last month. In Europe, the OECD will release its 2015 economic outlook for the eurozone.

On the earnings front, Eaton Vance (EV), Hewlett-Packard (HPQ), and Tiffany (TIF) are scheduled to report.

Twitter: @Minyanville

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No positions in stocks mentioned.

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