Asian Mid-session Update: RBNZ on hold after 3 straight cuts; Japan industrial output recovers, denting BOJ easing expectations
***Economic Data***
- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT 2.75%; AS EXPECTED
- (JP) JAPAN SEPT PRELIMINARY INDUSTRIAL PRODUCTION M/M: +1.0% V -0.6%E; Y/Y: -0.9% V -2.6%E
- (AU) AUSTRALIA Q3 IMPORT PRICE INDEX Q/Q: 1.4% V 1.5%E; EXPORT PRICE INDEX Q/Q: 0.0% V 0.6%E
- (AU) AUSTRALIA SEPT HIA NEW HOME SALES M/M: -4.0% v +2.3% PRIOR; biggest decline in 14 months
- (NZ) RBNZ bought net NZ$138M in Sept v bought NZ$81M in Aug
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.1%, S&P/ASX -0.9%, Kospi -0.2%, Shanghai Composite +0.1%, Hang Seng -0.3%, Dec S&P500 -0.2% at 2,079
***Commodities/Fixed Income***
- Dec gold -1.3% at $1,160/oz, Dec crude oil -0.3% at $45.80/brl, Dec copper -0.5% at $2.35/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 694.3 tonnes
- (JP) Japan investors bought net ¥463B in foreign bonds v bought ¥496B in prior week; Foreign investors bought net ¥325B in Japan stocks v sold ¥29.3B in prior week
- (CN) PBoC to inject CNY10B in 7-day reverse repos (34th consecutive injection); Drains net CNY25B this week v drained CNY45B prior (3rd week of drain)
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, ¥400B in 5-10yr JGBs
***Market Focal Points/FX***
- Asian equity markets are holding up reasonably well despite the FOMC policy statement that re-established December as the odds-on favorite for the Fed rate liftoff. The decision seemed to counter the unexpected dovish hold last month with a much more upbeat assessment, most notably doing away with concern over international developments "restraining economic activity". FOMC statement went as far as to specify that it will determine with it was appropriate to "raise the target range at its next meeting," though analysts were quick to point out that every meeting has been a live meeting for the impending tightening. The market response however was unmistakable, as yield curve steepened, USD strengthened, and Gold fell some $20/oz below $1,160. EUR/USD fell nearly 200pips below $1.09 and USD/JPY spiked up 70pips to 121.20 following FOMC, largely consolidating gains for the greenback over the Asia session.
- Reserve Bank of New Zealand decision was less groundbreaking and did not produce any clear bias. Holding rates for the first time after 3 straight cuts, RBNZ downcast its assessment for global economic growth as "below average", but was also more vocal on the short term fluctuations in the exchange rate, noting that NZD rallied since September, and if sustained, would dampen tradables sector activity and medium-term inflation. NZD/USD initially fell some 40pips below 0.6630 on the release before regaining its footing, trading back up to $0.67 later in the day.
- The case for further BOJ policy easing in tomorrow's meeting has been dented by surprisingly strong Japan industrial production in September. Cabinet Office actually upgraded its view of production to "moving sideways", anticipating more strength in Oct before modest decline in November. USD/JPY fell over 40pips below 120.60 after the release of industrial output. Finance Ministry official said the rise in output was due to brisk production of parts for smart phones, cosmetics and autos.
- As investors await more details of the China 13th plenum and the next five-year plan, Premier Li Keqiang said China needs average GDP of 6.53% for the next 5-years to build a prosperous society by 2020. China state researcher speculated 2016 GDP target would be reduced to 6.8%, while PBoC official Yin remarked China FX reserves and liquidity were high, even as RRR levels were also at a relatively high level.
***Equities***
US equities / ADRs:
- LOCK: Reports Q3 $0.28 v $0.25e, R$152M v $123M y/y; +41.9% afterhours
- HBI: Reports Q3 $0.50 v $0.45e, R$1.59B v $1.56Be; +12.9% afterhours
- SPWR: Reports Q3 $0.13 v -$0.01e, R$441M v $418Me; +6.2% afterhours
- VRTX: Reports Q3 -$0.13 v -$0.37 y/y, R$310M v $231Me; +5.0% afterhours
- YELP: Reports Q3 -$0.11 v -$0.09e, R$144M v $142Me; +3.3% afterhours
- NE: Reports Q3 $0.72 v $0.53e, R$760M v $759Me; +2.4% afterhours
- ORLY: Reports Q3 $2.64 v $2.37e, R$2.08B v $2.02Be; +3.4% afterhours
- TSO: Reports Q3 $6.13 v $6.05e, R$7.74B v $5.58Be; Board approves $1B share buyback (7.7% of market cap); +2.3% afterhours
- NEM: Reports Q3 $0.23 v $0.17e, R$2.03B v $1.95Be; +2.1% afterhours
- ABX: Reports Q3 $0.11 adj v $0.06e, R$2.32B v $2.35Be; +1.4% afterhours
- AMGN: Reports Q3 $2.72 v $2.38e, R$5.52B v $5.31Be; +1.0% afterhours
- WDC: Reports Q1 $1.56 v $2.10 y/y, R$3.36B v $3.46Be; flat afterhours
- OII: Reports Q3 $0.70 v $0.69e, R$744M v $788Me; Cuts FY15 guidance; -2.3% afterhours
- PYPL: Reports Q3 $0.31 v $0.29e, R$2.26B v $2.26Be; -4.2% afterhours
- FFIV: Reports Q4 $1.84 v $1.72e, R$501M v $506Me; -7.5% afterhours
- ARRS: Reports Q3 $0.56 v $0.56e, R$1.22B v $1.24Be; -10.5% afterhours
- BWLD: Reports Q3 $1.00 (unclear if comparable) v $1.28e, R$455M v $464Me; -14.0% afterhours
- GPRO: Reports Q3 $0.25 v $0.29e, R$400M v $438Me; announces $300M capital stock repurchase (8% of market cap); -17.4% afterhours
Notable movers by sector:
- Consumer discretionary: Shanghai Lujiazui Finance & Trade Zone Development Co 600663.CN +0.5% (9-mo result); JB Hi-Fi JBH.AU +0.5% (Q1 result)
- Consumer staples: Woolworths WOW.AU -10.1% (Q1 result); Henan Shuanghui Investment & Development Co 000895.CN +1.2% (9-mo result); Zhejiang Beingmate Technology Industry & Trade Co 002570.CN +2.1% (acquisition);Luzhou Lao Jiao Co.000568.CN +1.5% (9-mo result)
- Financials: China Life Insurance 2628.HK -5.6% (9-mo result); Haitong Securities 600837.CN -0.1% (9-mo result); Bank of Nanjing Co 601009.CN +2.2% (9-mo result); ANZ Bank ANZ.AU -1.0% (FY15 result); BT Investment Management BTT.AU +5.5% (FY15 result)
- Industrials: Kawasaki Heavy Industries 7012.JP -1.2% (H1 result, cuts guidance); Beiqi Foton Motor Co 600166.CN +10.0% (new business plan); China National Chemical Engineering Co 601117.CN +0.7% (9-mo result); ANA Holdings Inc 9202.JP -3.1% (H1 result)
- Technology: ASM Pacific Technology 522.HK -3.0% (9-mo result); Samsung Electronics 005930.KR +1.9% (Q3 result)
- Materials: Baoshan Iron & Steel Co 600019.CN -1.0% (9-mo result, guidance); Sinopec Yizheng Chemical Fibre Co 600871.CN -2.9% (9-mo result); Samsung C&T Corp 028260.KR +1.3% (Q3 result); CIMIC Group CIM.AU +2.4% (9-mo result); Hitachi Ltd 6501.JP -2.2% (H1 result)
- Energy: CNOOC 883.HK +4.0% (9-mo result); Tohoku Electric 9506.JP -5.5% (H1 result)
- Healthcare: Kangmei Pharmaceutical Co 600518.CN -0.7% (9-mo result); Blackmores BKL.AU +12.6% (Q1 result, partnership)
- Telecom: China Telecom Corp 728.HK -1.2% (9-mo result); Telstra Corp.TLS.AU -1.3% (affirms guidance)
- Utilities: DUET Group DUE.AU -0.4% (traffics decision)