Asia Mid-Session Market Update: China Caixin Services PMI improves while Hong Kong Composite PMI slumps; Sentiment stressed by reports of expanded FBI investigation of Clinton server
***US Session Highlights***
- (US) Oct ISM New York: 49.2 v 49.6 prior (3rd straight month below 50, in contraction)
- (US) OCT ADP EMPLOYMENT CHANGE: +147K V +165KE; back month revised above 200K
- (US) DOE CRUDE: +14.4M V +1ME; GASOLINE: -2.2M V -1ME; DISTILLATE: -1.8M V -1.5ME (largest crude build on record)
- FOMC holds target rate range at 0.25-0.50%; Statement repeats: case for rate hike has strengthened; near-term risks to economy 'roughly balanced'; **Dec rate hike probability still just under 70%
***US markets on close: Dow -0.4%, S&P500 -0.7%, Nasdaq -0.9%***
- Best Sector in S&P500: Consumer Goods
- Worst Sector in S&P500: Basic Materials
- Biggest gainers: ABC +8.8%, HSIC +6.2%, ZTS +6.1%, MCK +5.1%, DVN +4.9%
- Biggest losers: FTR -13.7%, CERN -7.3%, TGNA -7.2%, NRG -7.0%, EL -5.5%
- At the close: VIX 19.3 (+08pts); Treasuries: 2-yr 0.83% (flat), 10-yr 1.80% (-2bps), 30-yr 2.56% (-1bps)
***US movers afterhours***
- IQNT: Agrees to be Acquired by GTCR for $23/shr cash (37% premium) in $800M deal; 30 day go shop period; +34.1% afterhours
- ZUMZ: Reports Oct SSS +10.2% y/y; Raises Q3 $0.35-0.36 v $0.30e (prior $0.29-0.30); +9.5% afterhours
- TTWO: Reports Q2 $0.45 v $0.29e, R$420.2M v $405Me; +4.8% afterhours
- WFM: Reports Q4 $0.28 v $0.24e, R$3.5B v $3.51Be; Increases dividend; eliminates Co-CEO structure; appoints John Mackey CEO, effective immediately; +3.5% afterhours
- MRO: Reports Q3 -$0.11 (adj) v -$0.19e, R$1.23B v $1.09Be; +1.7% afterhours
- CAR: Reports Q3 $2.47 v $2.34e, R$2.66B v $2.62Be; +1.2% afterhours
- FSLR: Reports Q3 $1.22 v $0.69e, R$688M v $967Me; -0.8% afterhours
- ZNGA: Reports Q3 -$0.05 v $0.01e, R$182.4M v $188Me; Adds $200M buyback (8.5% of market cap); -2.6% afterhours
- WYNN: Reports Q3 $0.75 v $0.79e, R$1.11B v $1.13Be; -6.2% afterhours
- FB: Reports Q3 $1.09 (adj) v $0.98e, R$7.01B v $6.92Be; -7.1% afterhours
- DPLO: Reports Q3 $0.21 v $0.24e, R$1.18B v $1.26Be; -27.4% afterhours
- FIT: Reports Q3 $0.19 v $0.19e, R$503.8M v $504Me; CUTS FY16 guidance; -29.7% afterhours
***Asia Session Notable Observations, Speakers and Press***
- S&P500 futures, Mexican Peso fall and safe-haven JPY / US Treasuries rise as both Fox News and CNN report citing sources that FBI is considering indictment of Hillary Clinton related to her use of private server; "99% confidence" that server has been hacked by 5 foreign intelligence agencies.
- China Caixin Services PMI hits a 4-month high and Composite a 3-year high; Rate of employment reduction the slowest in 17 months and input prices rise at fastest rate in over 5 years; Resident economist urges supportive monetary/fiscal policies to continue so as to sustain the recovery.
- Hong Kong PMI falls to 3 month low and remains in contraction for 20 straight months; rate of decline in new work from mainland China the sharpest in 4 months and staffing costs rise for 2nd month amid lower new business inflows.
- Australia trade balance in deficit for 29th straight month, but deficit the smallest in 20 months; Imports fall 1% m/m while exports rise 2%, as shipments of Coal and value of exports to China rise to 1-year highs.
- ANZ up slightly despite lower Profit and Rev in FY16. NIMs down 4bps, ROE down 160bps, and final dividend reduced by 16% y/y.
***Asia Key economic data:***
- (CN) CHINA OCT CAIXIN CHINA SERVICES PMI: 52.4 V 52.0 PRIOR; 4-month high
- (HK) HONG KONG OCT COMPOSITE PMI: 48.2 V 49.3 PRIOR; 20th consecutive month of contraction; 3-month low
- (SG) SINGAPORE OCT PMI COMPOSITE: 50.5 V 52.9 PRIOR; lowest since May 2016
- (AU) AUSTRALIA SEPT TRADE BALANCE (A$): -1.2B V -1.7BE; 29th consecutive month of deficit, smallest deficit in 20 months
- (AU) AUSTRALIA OCT AIG PERF OF SERVICES INDEX: 50.5 V 48.9 PRIOR; first expansion in 3 months
***Asian Equity Markets (00:30ET)***
- Nikkei -1.8%, Hang Seng -0.1%, Shanghai Composite +0.6%, ASX200 flat, Kospi +0.3%
***FX ranges/Commodities/Futures/Fixed Income (00:30ET):***
- EUR 1.1090-1.1125; JPY 102.55-103.45; AUD 0.7635-0.7685; NZD 0.7280-0.7310
- Dec Gold +0.2% at 1,306/oz; Dec Crude Oil +0.9% at $45.74/brl; Copper +0.1% at $2.22/lb
- SLV: iShares Silver Trust ETF daily holdings fall to 11,148 tonnes from 11,235 tonnes prior ; 2-month low
- Equity Futures: S&P e-mini -0.3%, Dax -0.3%, FTSE100 -0.2%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7491 V 6.7562 PRIOR; 2nd straight firmer setting; strongest Yuan setting since Oct 20th
- (CN) PBOC to inject CNY30B in 7-day reverse repos, CNY20B in 14-day reverse repos, and CNY20B in 28-day reverse repos
***Asia movers***
- Consumer discretionary: Wynn Macau 1128.HK -4.2% (Q3 result); Fairfax Media FXJ.AU -3.7% (guidance); Domino's Pizza DMP.AU +4.3% (Morgan Stanley raises PT); Reliance Worldwide Corp RWC.AU +0.7% (JPMorgan raised to overweight); Nine Entertainment Co Holdings NEC.AU +5.3% (Credit Suisse raised to outperform)
- Consumer staples: Warrnambool Cheese & Butter WCB.AU +5.2% (H1 result)
- Financials: Vanke 000002.CN +0.2% (Oct result); Hong Kong Exchanges & Clearing 388.HK -1.1% (Q3 result); BT Investment BTT.AU +4.5% (FY16 result); Guangzhou R&F 2777.HK +0.4% (Oct result); Scentre Group SCG.AU -0.6% (Q3 result); ANZ Bank ANZ.AU +0.5% (FY16 result)
- Industrials: Geely Automobile Holdings175.HK +0.7% (Oct result); Virgin Australia VAH.AU -1.3% (UBS cuts to sell); CSR CSR.AU +3.6% (Ord Minnett raised to hold); Boral BLD.AU -5.5% (guidance)
- Technology: Xero XRO.AU +2.7% (H1 result)
- Materials: Whitehaven Coal WHC.AU +1.5% (Credit Suisse raised to outperform)
- Energy: Sinopec Shanghai Petrochemical 338.HK -0.8% (JPMorgan cuts to neutral)
- Healthcare: Mayne Pharma MYX.AU +8.2% (starts selling sulfate extended-release tables in US);Unilife Corp UNS.AU -4.8% (Q4 result)