Asia Mid-Session Market Update: China GDP, Retail Sales, Fixed investment meet estimates while Industrial Output underwhelms
***US Session Highlights***
- (US) SEPT CPI M/M: 0.3% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA INDEX: 241.428 V 241.498E
- (US) Sept Real Avg Weekly Earnings Y/Y: 0.8% v 0.4% prior
- (US) OCT NAHB HOUSING MARKET INDEX: 63 V 63E (mild pullback from a jump in September)
- (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +1.4% v -3.0% prior
***US markets on close: Dow +0.4%, S&P500 +0.6%, Nasdaq +0.9%***
- Best Sector in S&P500: Healthcare
- Worst Sector in S&P500: Industrials
- Biggest gainers: NFLX +19.0%, HOG +9.0%, UNH +7.0%, NRG +6.7%, FTR +4.6%
- Biggest losers: URBN -4.3%, GWW -4.2%, DLPH -3.5%, EXPD -3.2%, JNJ -2.6%
- At the close: VIX 15.28 (-0.9pts); Treasuries: 2-yr 0.80% (-2bp), 10-yr 1.75% (-2bp), 30-yr 2.51% (-1bp)
***US movers afterhours***
- HPE +2.5%: Affirms FY16 $1.90-1.95 v $1.92e; Sees FY17 adj EPS (combined company) $2.00-2.10 v $2.05e, Rev -1% to 0%
- YHOO +1.4%: Reports Q3 $0.20 v $0.14e, R$857M (ex-TAC) v $861Me
- ISRG -2.5%: Reports Q3 $6.19 (includes $0.40 tax benefit) v $5.13e, R$683M v $648Me
- INTC -5.2%: Reports Q3 $0.80 (adj) v $0.73e, R$15.8B v $15.6Be; Guides Q4 Rev $15.7B, +/- $500M v $15.9Be
- PBYI -5.5%: Offering $150M in common stock (8.8% of market cap) through Citigroup and J.P. Morgan
- ACHC -7.1%: Signs definitive agreement for sale of UK facilities in fulfillment of previously announced undertakings to the CMA for $390M; Guides Q3 $0.58 v $0.62 y/y (adj), R$735M v $480M y/y
- MANH -8.0%: Reports Q3 $0.50 v $0.47e, R$152M v $156Me
- CREE -9.7%: Reports Q1 $0.15 v $0.11e, R$321M v $339Me
- VIVO -11.5%: Reports prelim Q4 R$47M v $48.4Me; Reports prelim FY16 $0.75-0.76 v $0.85 y/y, $196M v $198Me
***Asia Session Notable Observations, Speakers and Press***
- China indices little changed as Q3 GDP, Retail Sales, and Fixed Asset Investment meet expectations; AUD/USD slightly softer on a miss in industrial output; Retail Sales growth was the highest in 8 months as economy continues its rebalancing - NBS says 71% of GDP was consumption. Industrial production components were mixed - power generation grew by 6.8% but down from 7.8% prior, steel output rose 3.9%, and coal production declined over 12%. Fixed asset investment showing more appreciation and growth in the property sector - investment rose 5.8%, sales value up 41%, and construction up 6.8%. NBS saw data indicative of economic performance better than expected, maintaining 2016 growth target, but also warned there are still uncertainties. Stats bureau also cited supply-side reform behind rising prices of industrial products and profits.
- Australia treasurer Fraser confident can sustain AAA sovereign rating and also warns about the high cost of housing depressing demand and pricing out first time buyers.
- BHP Q1 iron ore output tops forecasts at 57.6Mt v 56.3e (flat y/y), but copper production falls 6%, energy coal falls 4% and oil output falls 15%; BHP affirms FY17 output and CAPEX forecasts, as CEO sees early signs of markets rebalancing with expectation of improvement in energy market fundamentals.
- Australia gambling sector saw a high-profile merger of Tatts and Tabcorp with enterprise value of A$11.3B; TTS rises 15% on acquisition by TAH.
- Intel beats on top and bottom line but shares fall on soft Q4 Rev guidance; Yahoo rises afterhours despite the miss on ex-Tac Rev after raising FY16 EBITDA and declaring company is busy ahead of integration with Verizon; Recall recent press reports suggesting VZ could seek a discount due to recent hacking incidents.
- US latest TIC flows data showing China holdings of US treasuries falling for the 3rd straight month below $1.20T - lowest level in nearly 4 years.
***Asia Key economic data:***
- (CN) CHINA Q3 GDP Q/Q: 1.8% V 1.8%E; Y/Y: 6.7% V 6.7%E
- (CN) CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 6.1% V 6.4%E; YTD Y/Y: 6.0% V 6.1%E
- (CN) CHINA SEPT FIXED URBAN ASSETS YTD Y/Y: 8.2% V 8.2%E; 3-month high
- (CN) CHINA SEPT RETAIL SALES Y/Y: 10.7% (8-month high) V 10.7%E; YTD Y/Y: 10.4% V 10.3%E
- (CN) CHINA SEPT M2 MONEY SUPPLY Y/Y: 11.5% (3-month high) V 11.6%E; M1 MONEY SUPPLY Y/Y: 24.7% V 24.5%E
- (CN) CHINA SEPT NEW YUAN LOANS (CNY): 1.22T (3-month high) V 1.00TE
- (CN) CHINA SEPT AGGREGATE FINANCING (CNY): 1.72 T V 1.390TE
- (CN) China Sept Fiscal Balance (CNY) -860B v -429.3B prior
- (AU) AUSTRALIA SEPT SKILLED VACANCIES M/M: -1.2% V -1.3% PRIOR
- (AU) AUSTRALIA SEPT WESTPAC LEADING INDEX M/M: 0.1% V 0.0% PRIOR
- (KR) South Korea Sept PPI Y/Y: -1.1% v -1.8% prior (26th consecutive decline)
- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED
***Asian Equity Markets (23:30ET)***
- Nikkei +0.1%, Hang Seng -0.1%, Shanghai Composite +0.1%, ASX200 +0.4%, Kospi +0.3%
***FX ranges/Commodities/Futures/Fixed Income (23:30ET):***
- EUR 1.0975-1.10; JPY 103.65-103.95; AUD 0.7660-0.7690; NZD 0.7190-0.7235
- Dec Gold +0.1% at 1,264/oz; Crude Oil +0.9% at $50.75/brl; Copper +0.1% at $2.10/lb
- (US) Weekly API Oil Inventories: Crude: -3.8M v +2.7M prior
- Equity Futures: S&P e-mini +0.1%, Dax +0.4%, FTSE100 +0.1%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7326 V 6.7303 PRIOR
- (CN) PBOC to inject CNY65B in 7-day reverse repos, CNY50B in 14-day reverse repos and CNY35B in 28-day reverse repos
- (CN) China MoF sells 5-yr bonds at 2.394%; bid-to-cover 3.33x
- (KR) South Korea sells KRW2.0T 2-yr monetary stabilization bonds; avg rate 1.36% v 1.33% prior
- (AU) Australia MoF (AOFM) sells A$900M in 2.25% 2028 Bonds; avg yield: 2.405%; bid-to-cover: 2.39x
***Asia movers***
- Consumer discretionary: 361 Degrees International 1361.HK +1.7% (Q3 result); Ansell ANN.AU +1.3% (Q1 result); Sydney Airport SYD.AU +3.0% (Credit Suisse raised to Neutral); Tatts Group TTS.AU +15.3%, Tabcorp TAH.AU +1.9% (Tabcorp and Tatts confirm merger)
- Financials: China Life Insurance 2628.HK -2.2% (profit warning)
- Industrials: CIMIC Group CIM.AU +2.1% (Q3 result)
- Technology: Sharp Corp 6753.JP +9.3% (Fy16 result speculation)
- Materials: Saracen Mineral SAR.AU +5.7% (gold prices rise); St Barbara SBM.AU +5.3% (reaffirms guidance); Galaxy Resources GXY.AU +4.6% (reaffirms Mt Cattlin restart ahead of schedule); LG Chem 051910.KR +1.4% (Q3 result); BHP Billiton BHP.AU -1.2% (Q1 result); Western Areas WSA.AU +4.7% (Q1 result)
- Energy: Origin Energy ORG.AU -0.8% (affirms guidance); Beach Energy BPT.AU +2.0% (affirms guidance)