Asian Mid-session Update: Asia indices mixed heading into holiday week; Spain general election results to require more compromise by ruling PP; Star Wars sets weekend record
***Economic Data***
- (NZ) NEW ZEALAND Q4 WESTPAC CONSUMER CONFIDENCE: 110.7 V 106.0 PRIOR
- (NZ) NEW ZEALAND NOV RETAIL CREDIT CARD SPENDING M/M: 0.7% v 1.8% PRIOR; Y/Y: 8.5% v 7.8% PRIOR
- (NZ) New Zealand Nov Net Migration: 6.3K v 6.2K prior (fresh record high)
- (JP) Japan Oct All Industry Activity Index M/M: 1.0% v 0.9%e
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -1.1%, S&P/ASX flat, Kospi +0.1%, Shanghai Composite +1.4%, Hang Seng +0.3%, Mar S&P500 +0.4% at 2,000
***Commodities/Fixed Income***
- Feb gold +0.3% at $1,067/oz, Feb crude oil -0.7% at $35.79/brl, Mar copper -0.4% at $2.10/lb
- (IQ) Iraq Oil Min: Oil prices set to rise from very low levels - financial press
- GLD: SPDR Gold Trust ETF daily holdings rise 18.7 tonnes to 648.9 tonnes; first rise since Oct 19
- SLV: iShares Silver Trust ETF daily holdings fall to 10,017 tonnes from 10,062 tonnes
- USD/CNY: (CN) PBoC sets yuan mid point at 6.4753 v 6.4814 prior; 1st stronger Yuan setting after 10 straight weaker fixes
- USD/CNY: ANZ strategist: Today's stronger Yuan fix does not mean depreciation trend is over; Currency likely to continue to decline next year - financial press
- (KR) South Korea sells 20-yr govt bond, avg yield 2.210%
***Market Focal Points/FX***
- Asian indices are mixed entering the new holiday-thinned trading week despite the 2nd consecutive significant down day on Wall st on Friday. Shanghai Composite is leading the rally, helped by hints of more assistance from policymakers. China power companies were especially strong on reports that the govt will start power company mixed-ownership reform next year. Chatter of more free trade zone trials were also constructive, as several provinces have interests to host their own version of FTZs. Finally, PBoC has set Yuan midpoint stronger for the first time in 2 weeks, even as analysts suggest this is unlikely to reverse a more structural trend of steady CNY decline.
- Spain's general elections offered a consolation prize to the anti-austerity camp. Even though the more conservative ruling Popular Party (PP) was victorious with 123 seats in Parliament, it was well below the number required for majority govt and also 63 seats shy of the 2011 result. Subsequently PP, which has ceded a number of seats to the upstart Podemos, will either have to look for a partner or attempt to form a minority govt that will likely produce political turmoil. Note that socialists obtained 90 seats, Podemos 69 seats, and centrist Ciudadanos got 40 seats.
- After last week's BOJ policy statement, the central bank's monthly report expanded on the decision. BOJ reiterated the economy has continued to recover moderately, adding that exports will likely increase, housing investment will pick up, and producer prices will likely decline further for the time being. Note the BOJ's "hawkish easing" confounded economists as they expanded the ETF buying to assets/ETF qualifications that technically do not yet exist. The program will not begin until Apr of 2016. Separately, Toshiba was down sharply on reports that it will see a FY15/16 net loss of about ¥500B amid unfolding accounting scandal, cutting jobs in its TV and home appliances division with estimated cost of about ¥200B.
- Korean press cited think tank LG Economic Research Institute (LGERI) cutting 2016 GDP target to 2.5% vs 2.7% prior forecast due to continued export slump and weakening domestic consumption. A separate report estimated household debt in South Korea rising 2.2% in 2015 to KRW61.8M.
- Trading in USD majors was subdued and rangebound going into the holiday week. AUD/USD was in a 20pip range above 0.7150, USD/JPY was contained to a 50pip range above 121, and EUR/USD rose some 30pips from the open above 1.0880 despite the potential political turbulence in Spain.
***Equities***
US equities / ADRs:
- DIS: Star Wars sets N America opening weekend box office record, taking in $238M (exceeding prior record of $208M for 'Jurrassic World')
Notable movers by sector:
- Consumer discretionary: China Modern Dairy 1117.HK -0.5% (profit warning)
- Financials: Fosun International 656.HK +2.2% (withdraws takeover proposal)
- Technology: Epistar Corp 2448.TW +5.6% (clarification); Samsung Electronics 005930.KR -0.3% (to expand OLED production); Renesas Electronics Corp 6723.JP +2.9% (INCJ unlikely to sell major stake); Toshiba Corporation 6502.JP -10.0% (FY15/16 speculation); Japan Display Inc 6740.JP -0.9% (speculation that Japan Display to acquire LCD unit)
- Materials: LG Chem 051910.KR -0.5% (suspends investment plan)
- Energy: China Resources Power 836.HK +2.6% (China to start power company reform)
- Telecom: China Unicom 762.HK -1.0% (Nov result)