Asia Mid-Session Market Update: Japan manufacturing PMI expands for 3rd straight month; Singapore final GDP better than estimated, but 2016 forecast lowered
***US Session Highlights***
- (IQ) Iraq Prime Min Abadi: Iraq supports OPEC efforts to cut oil output; will shoulder responsibility for some of OPEC's planned production cuts
- (US) OCT PRELIMINARY DURABLE GOODS ORDERS: 4.8% V 1.7%E; DURABLES EX TRANSPORTATION: 1.0% V 0.2%E
- (US) INITIAL JOBLESS CLAIMS: 251K V 250KE; CONTINUING CLAIMS: 2.04M V 2.01ME (90 consecutive weeks of initial claims below 300K)
- (US) NOV PRELIMINARY MARKIT MANUFACTURING PMI: 53.9 V 53.5E (highest reading since Oct 2015)
- (US) NOV FINAL MICHIGAN CONFIDENCE: 93.8 V 91.6E (highest since May)
- (US) OCT NEW HOME SALES: 563K V 590KE (lowest since March); hurt by jump in median prices
- (US) DOE CRUDE: -1.3M V +1ME; GASOLINE: +2.3M V +1ME; DISTILLATE: +0.3M V -1ME
- Strong 7-year Treasury sale stops bleeding momentarily; first stop through in 5 auctions
- FOMC MINUTES FROM NOV 1-2 MEETING: MOST PARTICIPANTS SAID HIKE COULD HAPPEN RELATIVELY SOON
***US markets on close: Dow +0.3%, S&P500 +0.1%, Nasdaq -0.1%***
- Best Sector in S&P500: Industrials
- Worst Sector in S&P500: Utilities
- Biggest gainers: DE +11.0%, FCX +7.2%, SWN +4.0%, JEC +4.0%, URI +3.5%
- Biggest losers: URBN -12.1%, LLY -10.5%, HPQ -6.8%, NEM -5.1%, BIIB -3.8%
- At the close: VIX 12.4 (flat); Treasuries: 2-yr 1.13% (+3bp), 10-yr 2.36% (+4bp), 30-yr 3.02% (+1bp)
***US movers afterhours***
- NAVB: Cardinal Health to purchase Lymphoseek lymphatic mapping product; Navidea to receive $80M at closing, plus opportunity to earn $230M on milestones through 2026; +24.3% afterhours
- IIIN: Insteel to replace Littelfuse in SmallCap 600 after close Nov 28th; +6.6% afterhours
***Politics***
- (US) Donald Trump expected to pick Billionaire Wilbur Ross as Commerce Sec and Todd Ricketts as his deputy - press
- TRP: Trump transition team reportedly studying ways to revive Keystone Pipeline early on in presidential term - press
***Asia Session Notable Observations, Speakers and Press***
- USD extended its gains following strong Durable Goods and Consumer Confidence data in US hours, along with Fed meeting minutes that all but cemented expectations of a rate hike by the FOMC next month; Gold prices tracking firmer USD to the downside, falling to 8-month lows below $1,190.
- PBoC resumed weakening of Yuan fix, setting midpoint at lowest level since mid-2008. Goldman Sachs sees USD/CNY reaching 7.3 level in 2017.
- Japan Nov prelim manufacturing PMI expanded for the 3rd straight month, although at slower pace. Markit points to strong international demand boosting New Orders component. Employment component eased from Octobers 30-month high and was only marginal overall, but cost inflation (input prices) increased for the first time since Dec 2015.
- SGD falls following Q3 final GDP data from Singapore, with USD/SGD rising about 60pips to S$1.4360. Although the q/q decline of -2% was less than consensus -2.5%, MAS also lowered its 2016 GDP target range to 1.0-1.5% v 1-2% prior and set its 2017 target at 1-3%.
China:
- (CN) China CSRC may stop reviews of listing candidates with more than 50% decline of profits before being considered for IPO - Chinese press
- (CN) China Commerce Ministry Spokesperson: China will continue to deepen reform regardless of TPP and Regional Comprehensive Economic Partnership (RCEP) directions
- USD/CNY: (CN) Goldman Sachs 2017 global market forecast seen CNY falling further to CNY7.30; Yuan depreciation to continue amid capital outflow pressure - press
Japan
- (JP) Japan PM Abe: would like to have a summit with China and South Korea
- (JP) Japan Fin Min Aso: Japan banks have stable financial basis and no trouble getting USD - press
- (JP) Bank of Japan (BOJ) Dep Gov Nakaso: Bondholders may see unrealized JGB losses if rates rise - press
- (JP) Japan Vice Fin Min of International Affairs (currency chief) Asakawa: Plan to maintain FX policy; Election of Trump will not change Japan policy - Nikkei
Australia:
- (AU) Morgan Stanley: Australia Q3 GDP may have contracted -0.3% q/q - press
- (AU) S&P/ASX200 extending gains to 5,500; 3-month high
- AUD/USD: Westpac's Speizer: Rising coal and iron ore prices to support AUD - press
***Asia Key economic data:***
- (JP) JAPAN NOV PRELIMINARY PMI MANUFACTURING: 51.1 V 51.4 PRIOR; 3rd consecutive expansion
- (SG) SINGAPORE Q3 FINAL GDP Q/Q: -2.0% V -2.5%E; Y/Y: 1.1% V 1.0%E
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +1.0%, Hang Seng -0.4%, Shanghai Composite +0.1%, ASX200 flat, Kospi -0.7%
- Equity Futures: S&P e-mini -0.1%, Dax -0.1%, FTSE100 -0.1%
***FX ranges/Commodities/Fixed Income (00:00ET):***
- EUR 1.0525-1.0555; JPY 112.40-112.90; AUD 0.7365-0.7385; NZD 0.6970-0.7010
- Dec Gold -0.2% at 1,185/oz; Jan Crude Oil +0.1% at $47.98/brl; Dec Copper +2.6% at $2.68/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 13.3 tonnes to 891.6 tonnes; 10th straight decline; lowest since June 9th
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.9085 V 6.8904 PRIOR; weakest Yuan setting since June 2008
- USD/CNY: (CN) SWIFT: CNY use in international transactions: 1.67% of total in Oct v 2.03% prior
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥410B in 5-10yr JGBs
Notable movers by sector:
- Consumer discretionary: Gateway Lifestyle Operations GTY.AU +4.4% (Hometown America considers a bid); Huabao International 336.HK +7.6% (BNP to buy shares)
- Financials: Computershare CPU.AU -1.1% (Evans cuts to neutral); China Life Insurance 2628.HK +2.6% (CICC raises to buy); Mitsubishi UFJ Financial Group 8306.JP -0.2% (Goldman Sachs cuts to neutral)
- Technology: Alibaba Health Information Technology 241.HK -0.7% (H1 result); Samsung SDI Co 006400.KR -3.1%, LG Chem 051910.KR -6.6% (China to tightens battery regulation); NEXTDC NXT.AU +4.1% (guidance); Hansen Technologies HSN.AU +4.6% (guidance)
- Materials: Newcrest Mining NCM.AU -3.6%, Evolution Mining EVN.AU -5.0% (gold prices fall) Marubeni Corp 8002.JP +3.5% (Mizuho raises to buy)
- Healthcare: Sigma Pharmaceuticals SIP.AU +5.7% (guidance)