Asia Mid-Session Market Update: USD craters to 2-week lows against EUR and JPY while Gold adds to gains; China's NDRC said to loosen investment curbs on banking
***US Session Highlights***
- (US) NOV ADVANCE GOODS TRADE BALANCE: -$65.3B V -$61.6BE
- (US) NOV PRELIMINARY WHOLESALE INVENTORIES M/M: 0.9% V 0.2%E
- (US) Nevada reports Nov casino gaming Rev $930.4M, -1.5% y/y; Las Vegas strip rev $517M, -3.5% y/y
- (US) 7-Year Treasury $28 billion auction average yield 2.284%, prior 2.215%, Bid-To-Cover ratio: 2.54 V 2.68 prior and 2.50 average over last 12 auctions.
***US markets on close: Dow -0.1%, S&P500 flat, Nasdaq -0.1%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Financials
- Biggest gainers: NEM +7.6%; DLR +2.5%; ETR +2.1%
- Biggest losers: CMG -2.3%; MU -2.2%; CFG -2.0
- At the close: VIX 13.4 (+0.4pts); Treasuries: 2-yr 1.22% (-3bps), 10-yr 2.48% (-3bps), 30-yr 3.08% (flat)
***US movers afterhours***
- MYL: Launches generic Concerta (methylphenidate) tablets; +2.2% afterhours
- NVDA: TheStreet.com defends NVDA with analysis of Citron claims; +1.7% afterhours
- GEVO: Announces 1-for-20 reverse stock split, effective Jan 5th; -8.5% afterhours
- INNL: Receives refusal to file letter from FDA for Xaracoll (bupivacaine HCl collagen-matrix implants) New Drug Application; -49.7% afterhours
***Key economic data***
- (KR) SOUTH KOREA DEC CPI M/M: 0.1% V 0.2%E; Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 1.2% V 1.4%E
- (AU) AUSTRALIA NOV PRIVATE SECTOR CREDIT M/M: 0.5% V 0.5%E; Y/Y: 5.4% V 5.4%E
- (TH) Thailand Dec PMI Manufacturing: 50.6 v 48.2 prior; first expansion since April
***Asia Session Notable Observations, Speakers and Press***
- Nikkei225 underperforms yet again as profit-taking in USD/JPY continues; USD falls to 2-week lows against JPY and EUR - the move against the latter particularly abrupt with about a 150pip spike to 1.0650 during the most illiquid early part of the Asia session. No specific catalysts for the move cited by dealers outside of algo-driven buying.
- New Zealand and Australia main indices end the day early, finishing 2016 up 9% and 7% respectively.
- Economic data were primarily 2nd tier, not yielding any meaningful market impact. South Korea CPI y/y was in line w/ consensus at 1.3%, but below BOK's 2% target for 38th consecutive month.
- China regulators called for tighter criteria on investment in insurers, while state planner NDRC said govt would loosen foreign investment curbs in banking. Ahead of the open, local press also speculated the govt could further raise coal and steel capacity reduction goals by 10% in 2017 after completing initial 2016 targets ahead of schedule.
- Toshiba bounced after about a 40% plunge this week; Nomura says the US nuclear ops writedown is priced in.
China:
- (CN) China Insurance Regulatory Commission (CIRC) proposes to tighten rules on investment stakes in insurers - financial press
- (CN) China State Planner (NDRC) official: China to loosen foreign investment curbs in banking sector
- (CN) PBoC requests banks to report yuan trading over CNY50K vs CNY200K previously; effective July 1st 2017
- (CN) SocGen chief China economist: China State Council may abandon 6.5% GDP growth target by 2018 to curb asset bubbles and financial leverage - press
- (CN) China reportedly could raise coal and steel capacity reduction goals by 10% in 2017 - Chinese press
Japan:
- (JP) Japan 2016 vehicle sales seen at 4.97M units, -2% y/y and a 5-year low - Nikkei
- (JP) Japan PM Abe's cabinet approval rating rose 6pts to 64% (38-month high) following his joint visit with US Pres Obama to Pearl Harbor - Nikkei
Australia:
- (AU) NAB co-head of FX strategy: There is a chance that US interest rates will exceed those of Australia in 2017, but the effects on AUD exchange rate may be less severe; today's stronger terms of trade implies "a significantly higher level" - AFR
***Asian Equity Indices/Futures (23:30ET)***
- Nikkei225 +0.1%, Hang Seng +1.0%, Shanghai Composite +0.1%, ASX200 -0.6%, Kospi closed
- Equity Futures: S&P500 +0.2%, Nasdaq +0.3%, Dax +0.1%, FTSE100 +0.2%
***FX ranges/Commodities/Fixed Income (23:30ET)***
- EUR 1.0485-1.0650; JPY 116.05-116.90; AUD 0.7215-0.7245; NZD 0.6950-0.6980
- Feb Gold +0.2% at 1,161/oz; Feb Crude Oil +0.3% at $53.94/brl; Mar Copper +0.5% at $2.50/lb
- (CN) China MOF sells 91-day bonds, avg yield 2.674%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.9370 V 6.9497 PRIOR; strongest Yuan fix since Dec 19th
- (CN) PBOC to inject CNY160B in 7-day reverse repos, CNY90B in 14-day reverse repos; For the week, drains CNY245B v CNY375B injection in prior week
***Asia equities / Notables / movers by sector***
- Consumer discretionary: Adastria Holdings Co 2685.JP -8.3% (9-month result); Aeon Mall Co.8905.JP -1.9% (9-month result speculation)
- Financials: Wynn Macau 1128.HK +3.3%, Melco International Development 200.HK +5.2% (ahead of Macau Dec revenue data)
- Industrials: China Green Holdings 904.HK +1.1% (H1 result); Takata Corp.7312.JP +21.2% (settlement speculation momentum)
- Technology: Toshiba Corporation 6502.JP +9.9% (Nomura positive note); Inventec Corp 2356.TW +3.0% (benefits from popularity of AirPods)
- Materials: Sandfire Resources SFR.AU -1.2% (management changes); Newcrest NCM.AU +5.1%, Northern Star NST.AU +4.0%, Evolution EVN.AU +9.8%, St Barbara SBM.AU +10.6% (Gold price rises); China Minmetals Resources 1208.HK +2.1% (asset sale)
- Healthcare: Yunnan Baiyao Group Co 000538.CN +10.0% (new investment plan)