Asia Mid-Session Market Update: Yuan fix set at multi-year lows again as USD rally continues; Australia Q3 wage growth at record lows
***US Session Highlights***
- (SA) Saudi Energy Min al Falih expected to travel to Doha for production talks with other oil ministers on Friday - press
- (US) Fed's Rosengren (moderate, FOMC voter): We should now be raising rates
- (US) Fed's Tarullo (dovish, FOMC voter): rate hikes are now more on the table than they were before, but still grounds for caution in rate hike debate
- (US) Fed Vice Chair Fischer: 'flash crash' market events may become more frequent; higher capital ratios mitigate fire sale risks
- (US) Fed's Kaplan (moderate, non-voter): the sooner, the better on rate hikes - comments in Texas
- (US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 3.3% from 3.1% on Nov 9th
- (US) Speaker Ryan (R-WI) re-nominated unanimously by GOP to remain as Speaker of the House - press
***US markets on close: Dow +0.3%, S&P500 +0.8%, Nasdaq +1.1%***
- Best Sector in S&P500: Materials
- Worst Sector in S&P500: Healthcare
- Biggest gainers: AAP +15.0%, CHK +10.6%, MUR +9.1%, APA +7.6%, CNC +6.2%
- Biggest losers: SNI -4.2%, AIV -4.1%, AVB -3.6%, REGN -3.6%, UDR -3.5%
- At the close: VIX 13.4 (-1.1pts); Treasuries: 2-yr 0.99% (-1bp), 10-yr 2.24% (+2bps), 30-yr 2.97% (-1bps)
***US movers afterhours***
- ALR: Settles lawsuit with Abbott over bribe investigation documents - financial press; +2.3% afterhours
- MTSI: Reports Q4 $0.54 v $0.56e, R$152.7M v $150Me; -3.0% afterhours
- NVTA: To offer $40M shares of common stock through JPMorgan (15% of market cap); -6.2% afterhours
- FLXN: Announces secondary offering size is 3M shares through Wells Fargo, RBC and BMO, we're told; -6.4% afterhours
- LNTH: To offer 3M shares of common stock (8% of shares outstanding); -7.9% afterhours
***Asia Session Notable Observations, Speakers and Press***
- Sectors in the Trump victory rally took a back seat to those that have underperformed, with Tech, Utilities, and Materials outperforming Healthcare, Industrials, and Financials.
- Oil prices consolidating today's 5% increase in the US session that followed Saudi energy min expressing commitment to production curbs in upcoming talks; Subsequent comments from OPEC Sec Gen indicated OPEC countries are "all hands on deck" to meet Nov 30th target.
- Australia Q3 wage price data were the most notable in an otherwise quiet session, falling to record low on annualized basis. Despite the slowing wage inflation, Citi economists noted that for the first time in 2 years, OIS markets are pricing in an RBA hike over next 12 months, even though inflation expectations see "a rise only to the bottom of the 2-3% target."
- Chinese Yuan midpoint fix was once again set at multi-year lows, tracking ongoing strength in the greenback during the US session. Former PBoC advisor Yu remarked that economic fundamentals do not support long term yuan falls, and that the market may experience an "over-correction" in CNY decline.
- BOJ Gov Kuroda speaking in Parliament warned the central bank is closely monitoring profit margins of regional banks amid negative interest rate policy. Nikkei also reported PB Abe will push for FY17/18 wage hikes that at least match the 2.14% growth in FY16/17.
***Asia Key economic data:***
- (AU) AUSTRALIA Q3 WAGE PRICE INDEX Q/Q: 0.4% V 0.5%E; Y/Y: 1.9% (record low) V 2.0%E
- (AU) AUSTRALIA OCT NEW MOTOR VEHICLE SALES M/M: -2.4% v 2.5% PRIOR; Y/Y: 1.2% v 0.8% PRIOR
- (AU) AUSTRALIA OCT WESTPAC LEADING INDEX M/M: 0.1% V 0.1% PRIOR
- (JP) JAPAN Q3 HOUSING LOANS Y/Y: 2.7% V 2.4% PRIOR
***Asian Equity Markets (23:00ET)***
- Nikkei +1.1%, Hang Seng +0.6%, Shanghai Composite -0.1%, ASX200 +0.1%, Kospi +0.7%
***FX ranges/Commodities/Futures/Fixed Income (23:00ET):***
- EUR 1.0715-1.0760; JPY 108.80-109.20; AUD 0.7540-0.7570; NZD 0.7080-0.7115
- Dec Gold +0.6% at 1,231/oz; Dec Crude Oil -0.5% at $45.59/brl; Copper -0.7% at $2.49/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.4 tonnes to 927.5 tonnes; lowest since June
- (US) Weekly API Oil Inventories: Crude: +3.7M v +4.4M prior (4th straight build)
- Equity Futures: S&P e-mini +0.1%, Dax +0.1%, FTSE100 -0.1%
- (CN) PBOC SETS YUAN MID POINT AT 6.8592 V 6.8495 PRIOR; weakest Yuan setting since 2008; 9th straight day of weaker Fix
- (CN) China MoF sells 7-yr bonds at 2.79% v 2.80%e; bid-to-cover 2.59x
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥410B in 5-10yr JGBs
- (AU) Australia MoF (AOFM) sells A$900M in 3.25% 2025 Bonds; avg yield: 2.5613%; bid-to-cover: 2.61x
Notable movers by sector:
- Consumer discretionary: China Southern Airlines 1055.HK +0.9% (Oct result); Car 699.HK -1.1% (9-month result); Navitas NVT.AU +1.6% (guidance); LG Corp 003550.KR +1.9% (Credit Suisse raised to outperform)
- Financials: OzForex Group OFX.AU +6.7% (Macquarie raised to outperform); National Storage REIT NSR.AU +1.8% (JPMorgan raised to overweight)
- Industrials: Virgin Australia VAH.AU +3.2% (guidance); GrainCorp GNC.AU -0.1% (FY16 result); Hyundai Heavy 009540.KR +7.5%, Hyundai Mipo Dockyard 010620.KR +6.8% (business spin-off)
- Technology: LG Display Co 034220.KR +4.7% (takeover chatter); Brambles BXB.AU -0.5% (affirms guidance)
- Materials: Newcrest Mining NCM.AU +2.9%, Resolute Mining RSG.AU +2.0% (Gold climbs); Paladin Energy PDN.AU -2.9% (Q1 result)
- Energy: Woodside WPL.AU +2.8%, Oil Search OSH.AU +3.8%, Beach Energy BPT.AU +6.8% (Crude prices surge)