Asia Mid-Session Market Update: Australia CPI tops consensus, boosting AUD and weighing on ASX200
***US Session Highlights***
- (US) OCT RICHMOND FED MANUFACTURING INDEX: -4 V -4E; new orders fell again but hiring and shipments moved into positive territory
- (US) OCT CONSUMER CONFIDENCE: 98.6 V 101.5E (retreats after back-to-back monthly gains)
- (UK) BOE Gov Carney: BOE does not target the exchange rate, but we are not indifferent to it
- Whirlpool, 3M, Polaris and Under Armour earnings paint a cautious US consumer picture
***US markets on close: Dow -0.3%, S&P500 -0.4%, Nasdaq -0.5%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Healthcare
- Biggest gainers: LMT +7.4%, KEY +5.9%, VLO +4.9%, BHI +4.3%, FCX +3.6%
- Biggest losers: NLSN -16.9%, UA -13.2%, WAT -12.1%, SHW -10.9%, WHR -10.8%
- At the close: VIX 13.5 (+0.4pts); Treasuries: 2-yr 0.86% (+2bp), 10-yr 1.76% (-1bp), 30-yr 2.50% (-2bp)
***US movers afterhours***
- AKAM: Reports Q3 $0.68 v $0.61e, R$584M v $574Me; +8.4% afterhours
- UIS: Reports Q3 +$0.41 adj v -$0.06e, R$683.3M v $706Me; +8.4% afterhours
- JNPR: Reports Q3 $0.58 v $0.52e, R$1.29B v $1.25Be; +7.3% afterhours
- VRTX: Reports Q3 $0.16 v $0.19e, R$410M v $420Me; +6.2% afterhours
- PNRA: Reports Q3 $1.37 v $1.34e, R$684M v $682Me; +5.5% afterhours
- IRBT: Reports Q3 $0.70 v $0.42e, R$168.6M v $157Me; +5.0% afterhours
- OI: Reports Q3 $0.68 v $0.66e, R$1.71B v $1.73Be; +3.5% afterhours
- TWTR: Disney said to have rekindled interest - Betaville; +3.3% afterhours
- CB: Reports Q3 $2.88 v $2.64e, net premiums written $7.57B v $4.71B y/y; +2.4% afterhours
- MDR: Reports Q3 +$0.09 v -$0.06e (unclear if comp), R$558.5M v $603Me; +1.5% afterhours
- COF: Reports Q3 $2.03 adj v $1.94e, R$6.46B v $6.36B; -1.9% afterhours
- CMG: Reports Q3 $0.79 adj v $1.63e (unclear if comp), R$1.04B v $1.09Be; -2.0% afterhours
- AAPL: Reports Q4 $1.67 v $1.66e, R$46.9B v $46.8Be; -2.8% afterhours
- CHRW: Reports Q3 $0.90 v $0.97e, R$3.36B v $3.33Be; -6.5% afterhours
- P: Reports Q3 -$0.07 v -$0.06e, R$351.9M v $366Me; -7.2% afterhours
- WFT: Reports Q3 -$0.39 v -$0.24e, R$1.36B v $1.43Be; -10.7% afterhours
- EW: Reports Q3 $0.68 v $0.68e, R$739.4M v $748Me; -13.1% afterhours
***Asia Session Notable Observations, Speakers and Press***
- Apple beats estimates marginally on top and bottom line, but shares fall nearly 3% afterhours; Analysts note the first annual sales decline in 15 years as well as compression in margins (38.0% v 39.9% y/y) due to higher cost structure of newer iPhone products. On the earnings call, CFO Maestri noted currency headwinds remaining a headwind, while CEO Cook skirts around the impact of Samsung's Galaxy Note 7 scandal.
- AUD was the most volatile currency among the majors after Australia Q3 CPI beat consensus on the headline. Fruit/vegetables and electricity were among the highest gaining components of the basket, while the biggest declines were seen in automotive fuel (-2.9%) and telecommunication equipment (-2.5%). OIS swaps repriced the probability of a Nov rate cut to 6% after CPI release vs 15% going into the data, 3-year bond yield rose 3bps, and AUD/USD rose over 60pips above 0.77 handle.
- Twitter shares spiked higher following a Betaville report that Disney interest in acquisition has returned; Betaville reported the two companies agreed on takeover price "in high $20s/shr" last week. Recall last week Disney confirmed reports that it heard a presentation from Twitter execs, but decided not to pursue acquisition due to valuation and investor pressure.
- Dec WTI crude oil contract fell to a 3-week low of $49.30/brl, down about 1%, following API inventories report showing the largest build since April; Sinopec and CNOOC shares fell about 2.5% in Hong Kong on lower oil; DOE inventories expected in early US session.
***Asia Key economic data:***
- (AU) AUSTRALIA Q3 CONSUMER PRICES (CPI) Q/Q: 0.7% (matches 5-quarter high) V 0.5%E; Y/Y: 1.3% V 1.1%E; TRIMMED MEAN Q/Q: 0.4% V 0.4%E ; Y/Y: 1.7% V 1.7%E
- (CN) China Oct Westpac Consumer Confidence Index: 117.1 v 115.2 prior
- (JP) JAPAN SEPT PPI SERVICES Y/Y: 0.3% V 0.2%E
- (KR) South Korea Oct Consumer Confidence: 101.9 v 101.7 prior; 10-month high
***Asian Equity Markets (23:00ET)***
- Nikkei -0.2%, Hang Seng -0.6%, Shanghai Composite -0.4%, ASX200 -1.7%, Kospi -1.3%
***FX ranges/Commodities/Futures/Fixed Income (23:00ET):***
- EUR 1.0875-1.0893; JPY 104.00-104.38; AUD 0.7625-0.7710; NZD 0.7145-0.7175
- Dec Gold +0.2% at 1,276/oz; Dec Crude Oil -1.3% at $49.32/brl; Copper -0.2% at $2.13/lb
- (US) Weekly API Oil Inventories: Crude: +4.8M v -3.8M prior; Largest build since April
- GLD: SPDR Gold Trust ETF daily holdings rise 3.2 tonnes to 956.8 tonnes
- Equity Futures: S&P e-mini -0.2%, Dax -0.2%, FTSE100 -0.2%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7705 V 6.7744 PRIOR; first weaker Yuan setting in 4 days
- (CN) China MOF sells 7-yr bond, avg yield 2.62%; Sells 3-yr bonds at 2.29%
- (CN) PBOC to inject CNY105B in 7-day reverse repos, CNY75B in 14-day reverse repos, and CNY30B in 28-day reverse repos
***Asia movers***
- Consumer discretionary: Belle International 1880.HK -4.1% (JPMorgan cuts rate); Kirin Holdings Co 2503.JP +1.6% (confirms in tie-up talks with Coca Cola); Komeri 8218.JP +0.8% (H1 result); Koito Manufacturing Co 7276.JP -2.0% (H1 result)
- Financials: WesFarmers WES.AU -5.1% (Q1 result); Ardent Leisure Group AAD.AU -12.3% (To close Thunder River Rapids Dreamworld ride after reports of 4 people killed at the theme park; Cut at Citi and Morgans)
- Industrials: China Communications Construction 1800.HK -1.9% (YTD contracts report) ; Great Wall Motor 2333.HK -11.8% (9-month result); GUD Holdings GUD.AU -3.5% (Citi cuts to neutral)
- Technology: Canon Electronics 7739.JP -2.3% (cuts guidance)
- Materials: Independence Group IGO.AU +2.5% (Q1 result); Jiangxi Copper Company 358.HK +0.6% (Q3 result); Zijin Mining 2899.HK +2.1% (Q3 result); Shandong Chenming Paper Holding 1812.HK -4.4% (Q3 result); Beadell Resources BDR.AU +5.4% (Q3 result); LG Hausys 108670.KR +1.0% (Shinhan forecasts its earnings to rebound); Saracen Mineral SAR.AU +4.2%, Evolution Mining EVN.AU +1.2% (gold Rises)
- Energy: Toho Gas Co 9533.JP +0.4% (raises guidance); CNOOC 883.HK -2.6%, PetroChina 857.HK -1.6%, Sinopec 386.HK -2.4% (oil declines)
- Healthcare: Guangzhou Baiyunshan Pharmaceutical Holdings Co 874.HK -1.0% (Q3 result); Ramsay Health Care RHC.AU +1.2% (reaffirms forecast)
- Telecom: NTT DoCoMo 9437.JP +2.3% (H1 result speculation)
- Utilities: Huaneng Power International 902.HK +0.6% (Q3 result); Huadian Power International Corp 1071.HK -0.6% (9-month result)