Asia Mid-Session Market Update: China inflation retains upward trend as wholesale prices jump to 5-year high; Unionpay denies daily withdrawal limit cut
***US Session Highlights***
- ECB leaves rates unchanged (as expected), extends QE from April thru Dec 2017 and cuts purchases by 25%
- (US) INITIAL JOBLESS CLAIMS: 258K V 257KE; CONTINUING CLAIMS: 2.01M V 2.05ME
- (MX) MEXICO NOV CPI M/M: 0.8% V 0.8%E; Y/Y: 3.3% V 3.3%E; CPI CORE M/M: 0.2% V 0.3%E
- (US) ISM Dec Semiannual Economic Forecast: US economic growth to continue in 2017
***US markets on close: Dow +0.3%, S&P500 +0.2%, Nasdaq +0.4%***
- Best Sector in S&P500: Financials
- Worst Sector in S&P500: Industrials
- Biggest gainers: EW +6.7%, UA +6.6%, QRVO +4.8%, TSN +4.7%, MYL +4.5%
- Biggest losers: WYNN -11.1%, ESRX -6.7%, NOC -3.8%, MNST -3.2%, NLSN -3.2%
- At the close: VIX 12.2 (+0.4pts); Treasuries: 2-yr 1.10% (-2bps), 10-yr 2.35% (-5bps), 30-yr 3.03% (-5bps)
***US movers afterhours***
- FNSR: Reports Q2 $0.58 v $0.46e, R$369.9M v $365Me- Guides Q3 $0.58-0.64 v $0.47e, R$378-398M v $377Me; +6.2% afterhours
- AVGO: Reports Q4 $3.47 v $3.37e, R$4.14B v $4.12Be; doubles dividend to $1.02 from $0.51 (indicated yield 2.39%); +3.9% afterhours
- NCS: Reports Q4 $0.28 v $0.33e, R$480.3M v $486Me (1 est); -10.6% afterhours
- DLTH: Reports Q3 $0.01 v -$0.00e, R$67.0M v $69.0Me; cuts FY16 GAAP EPS $0.52-0.60, net sales $360-370M, Adj EBITDA $34-38M; -13.6% afterhours
- RH: Reports Q3 $0.20 v $0.16e, R$549.3M v $533Me- Guides Q4 $0.60-0.70 v $1.08e, R$562-592M v $639Me- CUTS FY16 EPS $1.19-1.29 v $1.6; -18.7% afterhours
***Politics***
- (KR) South Korea public support for presidential impeachment rate at 81%; Impeachment vote taking place today - Korean press
- (US) House passes govt stopgap funding bill, as expected; to fund govt through April 28, 2017 - press
- (US) President-elect Trump reportedly to remain exec producer on NBC's 'Celebrity Apprentice' - Variety
***Asia Session Notable Observations, Speakers and Press***
- Nikkei225 leads Asian equities higher as USD/JPY tops 104.50, rising about 50pips on higher US Treasury yields; Other USD majors in narrow ranges.
- Oil rises above $51/brl despite reports of Saudi Aramco and Iraq plans to supply full contractual value to clients in Asia next month.
- China CPI hits a 7-month high of 2.3% while PPI jumps a full point to a 5-year high of 3.3%. CPI still driven mostly by rising food prices - up 4% v 3.7% prior - while non-food inflation edged up to 1.8% v 1.7% prior. Chief ANZ China economist believes the new inflationary cycle in China has arrived as a result of rising commodity markets, and the next PBoC move should be a tightening.
- Casino stocks pare their losses as China's UnionPay denies HK press reports that it will reduce daily withdrawal limits to CNY5K from CNY10K. Speculation, which weighed heavily on US gaming stocks on Thursday, comes in the wake of accelerated FX outflows from China in the data out this week due to expectations of continued CNY weakness.
- Japan BSI survey for Q4 improves from Q3, but CAPEX outlook for FY16/17 was reduced to +2.5% from +4.9% prior forecast; Japan Fin Min Aso announces 3rd supplemental budget for FY16/17 to feature family tax relief.
Energy:
- (US) Pres-elect Trump's transition team said to develop plans to reshape Energy Dept programs; Looking at ways to keep nuclear power alive - press
- (SA) Saudi Aramco said to supply a full term contract value to at least one refiner in Asia despite the OPEC deal on production cuts; Iraq also reportedly to supply full contractual volume of Basra crude to at least 3 buyers in Asia in Jan - press
China:
- (CN) China Unionpay International: no change to overseas withdrawal limits; Daily limit remains at CNY10K
- (CN) ANZ chief China economist: China has entered a new inflationary cycle; Next PBoC move should be a hike rather than a cut
- (CN) China regulators said to have "quietly encouraged" increase in IPO activity; Total equity raised this year is up 29% y/y to CNY1.54T - financial press
- (CN) China banking regulator CBRC said to improve checks on property loans - Chinese press
Japan:
- (JP) Japan FY17 main budget may be around ¥97T - financial press
- (JP) Japan PM Abe: Govt debt is steadily falling as propotion of GDP - press
- (JP) Japan Fin Min Aso: Japan Cabinet to approve 3rd supplemental budget for FY16/17 on Dec 22nd - financial press
Australia
- (AU) Fitch downgrades Australia banking sector to Negative
- WBC.AU: Asset quality to remain sound in year ahead; Outlook for Australia and New Zealand remains positive
***Asia Key economic data:***
- (CN) CHINA NOV CPI M/M: 0.1% V 0.7% PRIOR; Y/Y: 2.3% (7-month high) V 2.2%E
- (CN) CHINA NOV PPI Y/Y: 3.3% V 2.3%E (3rd straight y/y positive print; 5-year high)
- (JP) JAPAN Q4 BUSINESS SURVEY INDEX (BSI) LARGE ALL INDUSTRY Q/Q: 3.0 V 1.9 PRIOR; BSI LARGE MANUFACTURING Q/Q: 7.5 V 2.9 PRIOR
- (JP) JAPAN NOV M2 MONEY STOCK Y/Y: 4.0% V 3.7%E; M3 MONEY STOCK Y/Y: 3.4% V 3.2%E
- (AU) AUSTRALIA OCT HOME LOANS M/M: -0.8% V -1.0%E
- (NZ) NEW ZEALAND NOV CARD SPENDING M/M: -0.1% V 0.4%E; TOTAL M/M: -0.3% V 0.6% PRIOR
***Asian Equity Indices/Futures (23:30ET)***
- Nikkei +1.2%, Hang Seng -0.3%, Shanghai Composite +0.7%, ASX200 +0.4%, Kospi -0.4%
- Equity Futures: S&P e-mini flat, Dax flat, FTSE100 -0.1%
***FX ranges/Commodities/Fixed Income (23:30ET):***
- EUR 1.0590-1.0620; JPY 114.00-114.55; AUD 0.7440-0.7460; NZD 0.7160-0.7180
- Feb Gold -0.3% at 1,169/oz; Jan Crude Oil +0.1% at $50.91/brl; Mar Copper +1.0% at $2.65/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 3.0 tonnes to 860.7 tonnes; 16th straight decline; lowest since May 19th
- SLV: iShares Silver Trust ETF daily holdings fall to 10,664 tonnes from 10,761 tonnes prior; 8th straight decline; lowest since July 11th
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8972 V 6.8731 PRIOR; weakest Yuan setting since Nov 28th; biggest margin of weakness since Oct 23rd
- (CN) China MoF sells 3-month bills at 2.4%
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥190B in 10-25yr JGBs and ¥110B in JGBs with maturity over 25-yr and ¥1.25T in T-bills
- (AU) Australia Finance Ministry (AOFM) sells A$900M in 2.75% 2027 bonds; avg yield 2.867%; bid-to-cover 3.04x
***Asia equities / Notables / movers by sector***
- Consumer discretionary: Sands China 1928.HK -4.9%, Galaxy Entertainment 27.HK -4.3%, SJM 880.HK -5.3%; Crown Resorts CWN.AU -5.2% (China govt may restrict ATM withdrawals); Recruit Holdings Co 6098.JP -1.0% (takes some curated content offline); Insurance Australia IAG.AU +0.6% (JPMorgan raises to overweight)
- Financials: QBE Insurance Group QBE.AU +1.0% (Shaw & Partners raises to buy); Westpac Banking Corp WBC.AU +0.5% (outlook); Ping An Insurance 2318.HK +1.6% (guidance)
- Industrials: Sinosteel Engineering & Technology Co 000928.CN +0.4% (group debt restructuring)
- Materials: Resolute Mining RSG.AU +4.2%, Saracen Mineral Holdings SAR.AU +0.8% (gold rises)
- Healthcare: Sirtex Medical SRX.AU -37.0% (guidance); Eisai Co 4523.JP +8.7%