Asia Mid-Session Market Update: Risk off environment persists amid US political uncertainty; NZD rallies on better employment data
***US Session Highlights***
- (US) OCT FINAL MARKIT MANUFACTURING PMI: 53.4 V 53.2E (highest reading since Oct 2015); new orders rise
- (US) OCT ISM MANUFACTURING: 51.9 V 51.7E; PRICES PAID: 54.5 V 54.3E; employment rises
- (US) SEPT CONSTRUCTION SPENDING M/M: -0.4% V 0.5%E
- (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +11.4% v +1.4% prior (markets were anticipating a big jump)
***US markets on close: Dow -0.7%, S&P500 -0.6%, Nasdaq -0.7%***
- Best Sector in S&P500: Basic Materials
- Worst Sector in S&P500: Utilities
- Biggest gainers: ADM +7.3%, MLM +4.1%, FIS +4.0%, HRS +4.0%, WYNN +3.9%
- Biggest losers: YUM -29.7%, AA -19.9%, PBI -18.5%, HCP -11.0%, LB -7.9%
- At the close: VIX 18.6 (+1.5pts); Treasuries: 2-yr 0.83% (-2bps), 10-yr 1.82% (-2bps), 30-yr 2.57% (-2bps)
***US movers afterhours***
- EA: Reports Q2 $0.53 v $0.43e, R$898M v $1.09Be; +5.9% afterhours
- OCLR: Reports Q1 $0.14 v $0.10e, R$135.5M v $131Me; +5.6% afterhours
- SQ: Reports Q3 -$0.09 v -$0.11e, R$439M v $432Me; +3.9% afterhours
- CERN: Reports Q3 $0.59 v $0.60e, R$1.19B v $1.25Be; -6.0% afterhours
- X: Reports Q3 $0.40 v $0.88e, R$2.69B v $2.84Be; -8.7% afterhours
- DATA: Reports Q3 $0.16 v $0.07e, R$206M v $215Me; -9.0% afterhours
- MYGN: Reports Q1 $0.23 v $0.26e, R$177.5M v $170Me; -9.9% afterhours
- ZAGG: Reports Q3 $0.29 v $0.14e, R$124.7M v $121Me; cuts outlook; -19.9% afterhours
- ADPT: Reports Q3 $0.06 v $0.52e, R$85.4M v $92.5Me; Engaged Goldman Sachs to explore various financing alternatives; -49.9% afterhours
***Asia Session Notable Observations, Speakers and Press***
- Selloff in US equities has carried over into the overnight futures and Asian markets amid tightening of polls going into next Tuesday's US elections; Gold and Silver are up sharply, Vix was up for the 6th straight day to test 20 handle for the first time since early Sept, and Yen is stronger in the wake of overnight reluctance by BOJ to signal more intended easing.
- AUD is underperforming after yesterday's post-RBA rally on risk-off sentiment and selling in stocks, even though Basic Materials sector in US hours was the least hit by volatility. NZD is rallying however after much stronger than expected employment data, gradual rise in inflation expectations, and a big jump in dairy auction prices. BNZ and KiwiBank have all repriced their RBNZ rate cut expectations to just one more move this month. AUD/NZD cross is near a 1-month low, while AUD/JPY is around 1-week lows.
- BOJ Gov Kuroda reiterated his view that the economy is continuing to recover gradually, adding there are more downside than upside risks but still expressing confidence of hitting 2% inflation target in FY18. JCER GDP estimate for Sept also registered its first monthly increase in 3 months.
- In China, former NDRC official warned that GDP growth would hardly return about 7% after bottoming out in the near term, adding there are concerns about property bubbles in some cities translating into financial risks. Separately, Commerce Ministry expressed worries of uncertain environment for trade in 2017 despite some stabilization thus far in 2016.
***Asia Key economic data:***
- (NZ) NEW ZEALAND Q3 UNEMPLOYMENT RATE: 4.9% (8-year low) V 5.1%E; EMPLOYMENT CHANGE Q/Q: 1.4% V 0.5%E; Y/Y: 6.1% V 5.4%E; Participation rate 70.1% v 69.7%e; multi-year high
- (NZ) NEW ZEALAND Q4 2-YEAR INFLATION EXPECTATION SURVEY Q/Q: 1.68% V 1.65% PRIOR
- (AU) AUSTRALIA SEPT BUILDING APPROVALS M/M: -8.7% V -3.0%E; Y/Y: -6.4% V +2.1%E
- (JP) JAPAN OCT MONETARY BASE Y/Y: 22.1% v 22.7% PRIOR; MONETARY BASE END OF PERIOD: ¥417.6T v ¥412.8T PRIOR
***Asian Equity Markets (00:30ET)***
- Nikkei -1.9%, Hang Seng -1.3%, Shanghai Composite -0.5%, ASX200 -1.3%, Kospi -1.4%
***FX ranges/Commodities/Futures/Fixed Income (00:30ET):***
- EUR 1.1050-1.1070; JPY 103.65-104.15; AUD 0.7610-0.7660; NZD 0.7180-0.7225
- Dec Gold +0.4% at 1,293/oz; Dec Crude Oil -0.8% at $46.28/brl; Copper -0.9% at $2.21/lb
- SLV: iShares Silver Trust ETF daily holdings rise to 11,235 tonnes from 11,218 tonnes prior
- GLD: SPDR Gold Trust ETF daily holdings rise 2.7 tonnes to 945.3 tonnes
- Equity Futures: S&P e-mini -0.3%, Dax -0.5%, FTSE100 -0.3%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7562 V 6.7734 PRIOR (strongest CNY setting since Oct 21st)
- (CN) PBOC to inject CNY80B in 7-day reverse repos, CNY30B in 14-day reverse repos, and CNY10B in 28-day reverse repos
- (AU) Australia MoF (AOFM) sells A$1B in 2027 Bonds; avg yield: 2.4189%; bid-to-cover: 2.36x
- (CN) China MoF sells 10-yr bonds at 2.7014%, bid-to-cover 3.39x; Sells 1-yr bonds at 2.1%, bid-to-cover 3.12x
- (KR) BOK sells KRW2.0T in 2-yr bonds at 1.46%
***Asia movers***
- Consumer discretionary: Bega Cheese BGA.AU -2.5% (aware of market-sensitive Information); Harvey Norman HVN.AU -1.7% (Q1 result)
- Consumer staples: China Shengmu Organic Milk 1432.HK -3.3% (Yili to acquire stake)
- Financials: Eclipx Group ECX.AU +0.9% (FY16 result); Sumitomo Corp 8053.JP +0.7% (H1 result)
- Industrials: CSR CSR.AU +6.7% (H1 result); Virgin Australia VAH.AU -3.3% (Q1 result); Toyota Motor Corp 7203.JP -2.0% (Oct result); Mazda Motor Corp 7261.JP -3.3% (Oct result); Nissan Motor Co 7201.JP -2.6% (Oct result); CNHTC Jinan Truck Co 000951.CN +3.4% (outlook)
- Technology: Samsung Electronics 005930.KR -0.3% (officials to be probed for Choi scandal); Sony Corp 6758.JP -2.1% (Q2 result); Itochu Techno Solutions 4739.JP +7.6% (H1 result); Yahoo Japan Corp 4689.JP +4.2% (H1 result)
- Materials: Regis Resources RRL.AU +4.2%, Resolute Mining RSG.AU +4.4%, St Barbara SBM.AU +2.9% (gold climbs to one-month high); Showa Denko 4004.JP +5.9% (9-month result); Nippon Steel & Sumitomo Metal Corp 5401.JP +3.8% (H1 result)
- Energy: Sumitomo Electric Industries 5802.JP -12.1% (H1 result); Idemitsu Kosan Co 5019.JP -1.7% (H1 result)
- Telecom: KDDI Corp 9433.JP -4.7% (H1 result)