Asia Mid-Session Market Update: China PMIs hit multi-month highs; BOJ on hold with a cut to CPI forecasts; RBA stands pat with more hawkish outlook
***US Session Highlights***
- OPEC Sec Gen Barkindo: OPEC committee made 'significant progress'; remains on track for deal on Nov 30th
- (US) SEPT PERSONAL INCOME: 0.3% V 0.4%E; PERSONAL SPENDING: 0.5% V 0.4%E
- (US) SEPT PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.7% V 1.7%E
- (US) SEPT PCE DEFLATOR M/M: 0.2% V 0.2%E; Y/Y: 1.4% V 1.2%E
- (US) OCT CHICAGO PURCHASING MANAGER: 50.6 V 54.0E; prices paid highest since Nov 2014
- (US) OCT DALLAS FED MANUFACTURING ACTIVITY: -1.5 V +2.0E (though company outlook remains positive)
- Merger Monday: Baker Hughes/GE, Level3/CenturyLink, Team Health
***US markets on close: Dow -0.1%, S&P500 flat, Nasdaq flat***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Basic Materials
- Biggest gainers: DVA +6.3%, L +4.9%, NEM +4.7%, LVLT +3.9%, ESRX +3.6%
- Biggest losers: ZBH -14.0%, CTL -12.5%, JCI -7.9%, BHI -6.3%, RIG -5.9%
- At the close: VIX 17.1 (+0.9pts); Treasuries: 2-yr 0.85% (flat), 10-yr 1.84% (flat), 30-yr 2.59% (-3bps)
***US movers afterhours***
- RYAM: Reports Q3 $0.44 v $0.27e, R$207M v $211Me; +10.6% afterhours
- CGNX: Reports Q3 $0.61 v $0.48e, R$148M v $146Me; +8.0% afterhours
- LMNX: Reports Q3 $0.21 v $0.12e, R$71.2M v $69.2Me; +3.3% afterhours
- LION: To be added to S&P600 index after the close of trading on Nov 2; +2.4% afterhours
- LB: Narrows Q3 $0.40 v $0.45e (prior $0.40-0.45), guides Oct SS +1%; -5.9% afterhours
- TEX: Reports Q3 $0.19 v $0.22e, R$1.06B v $1.05Be; -7.9% afterhours
- THC: Reports Q3 $0.16 v $0.19e, R$4.8B v $4.75Be; -8.1% afterhours
***Asia Session Notable Observations, Speakers and Press***
- As widely expected BOJ leaves policy settings and framework after shifting to yield curve control last time around; As part of its semiannual outlook for growth and prices, BOJ also maintains its views for GDP in FY16-19 years while cutting all 3 years' CPI by 0.2% pts. BOJ affirmed its assessment for the overall economy, exports, housing, and business investment, but noted its inflation expectations remained in weakening phase as it shifted its forecast for achieving 2% inflation target by another half a year to H2 of FY18.
- China twin PMIs hit multi-month highs - manufacturing for Official and Caixin prints at 2-year highs and non-manufacturing at 10-month high; Official manufacturing PMI components see 2016 highs for New Orders, Output, Employment, and Input prices; Caixin PMI at highest level in over 2 years, as employment culling slowed to lowest pace in 17 months and input price inflation rises by the biggest rate in over 5 years.
- AUD/USD rises over 40pips above 0.7650 and Australia 3-year bond yield up 3bps after a decidedly neutral RBA policy statement. While the RBA largely reiterated prior month's policy statement in the 2nd decision for Gov Lowe, it did add more bullish passages in terms of China growth as well as on inflation outlook. RBA upgraded its China view to "steadied recently" from "moderating", and also added that "inflation is expected to pick up gradually over next 2 years".
***Asia Key economic data:***
- (CN) CHINA OCT CAIXIN PMI MANUFACTURING: 51.2 V 50.1E; 4th consecutive expansion; highest since July 2014
- (CN) CHINA OCT MANUFACTURING PMI (GOVT OFFICIAL): 51.2 V 50.3E; 3rd straight expansion (2-year high); Non-manufacturing PMI (Services): 54.0 v 53.7 prior; 10-month high
- (JP) JAPAN OCT FINAL PMI MANUFACTURING: 51.4 V 51.7 PRELIM
- (KR) SOUTH KOREA OCT PMI MANUFACTURING: 48.0 V 47.6 PRIOR; 3rd straight contraction
- (KR) SOUTH KOREA OCT TRADE BALANCE: $7.2B V $7.2BE; Exports Y/Y: -3.2% v -3.1%e; Imports Y/Y: -5.4% v -4.4%e
- (KR) SOUTH KOREA OCT CPI M/M: +0.1% V -0.1%E; Y/Y: 1.3% V 1.1%E; CPI CORE Y/Y:1.5 % V 1.2%E
- (AU) AUSTRALIA OCT CORELOGIC RPDATA HOUSE PRICES M/M: 0.5% V 1.0% PRIOR
- (AU) AUSTRALIA OCT AIG MANUFACTURING INDEX: 50.9 V 49.8 PRIOR; 1st expansion in 3 months
- (NZ) NEW ZEALAND OCT QV HOUSE PRICES Y/Y: 12.7% V 14.3% PRIOR (7th straight increase; smallest rise in 5 months)
***Asian Equity Markets (00:00ET)***
- Nikkei flat, Hang Seng +1.1%, Shanghai Composite +0.3%, ASX200 -0.8%, Kospi -0.2%
***FX ranges/Commodities/Futures/Fixed Income (00:00ET):***
- EUR 1.0960-1.0980; JPY 104.65-104.95; AUD 0.7600-0.7680; NZD 0.7145-0.7175
- Dec Gold +0.4% at 1,278/oz; Dec Crude Oil +0.1% at $46.90/brl; Copper +0.1% at $2.21/lb
- Equity Futures: S&P e-mini +0.4%, Dax +0.3%, FTSE100 +0.2%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7734 V 6.7641 PRIOR
- (CN) PBOC to inject CNY100B in 7-day reverse repos, CNY60B in 14-day reverse repos, and CNY30B in 28-day reverse repos
- (KR) South Korea sells 30-yr bonds at 1.805%
***Asia movers***
- Consumer discretionary: SK Networks 001740.KR +2.3% (Q3 result); Vita Group VTG.AU -8.8% (in talks with Telstra); Nine Entertainment NEC.AU +2.9% (Allan Gray Australia boosts stake); Kirin Holdings Co 2503.JP +2.5% (9-month result); Japan Tobacco Inc 2914.JP +0.9% (9-month result); Panasonic Corporation 6752.JP -6.8% (H1 result)
- Consumer staples: COFCO Meat Holdings 1610.HK -15.5% (IPO debut)
- Financials: Macquarie Group MQG.AU -1.1% (Credit Suisse cuts to neutral); Huishang Bank 3698.HK +2.4% (approval to issue shares)
- Industrials: Nippon Express 9062.JP +1.9% (H1 result); Mitsubishi Heavy Industries 7011.JP -0.9% (H1 result); Fanuc 6954.JP -4.7% (Q2 result)
- Technology: NEC Corp 6701.JP +1.8% (H1 result)
- Materials: Newmont Mining NEM.AU +4.7%(Mackie Research Capital raised to buy); Fortescue Metals Group FMG.AU -0.5% (Credit Suisse cuts to underperform); Honda Motor Co.7267.JP -1.5% (H1 result)
- Energy: AWE AWE.AU +2.8% (Macquarie raised to Neutral); China Shenhua Energy Co 1088.HK +7.1% (completes capacity cut target)
- Utilities: Mitsubishi Electric Corp 6503.JP +2.4% (H1 result)