Asia Mid-Session Market Update: RBA with another neutral hold despite growing expectations of negative Q3 GDP print tomorrow
***US Session Highlights***
- (US) Fed's Dudley (dove, FOMC voter): Favor gradually higher rates if growth keeps up; financial market conditions are broadly appropriate
- (US) Fed's Evans (dove, non-voter): expects US growth in H2 to be much stronger than H1 2016 - comments in Chicago
- (US) NOV FINAL MARKIT SERVICES PMI: 54.6 V 54.9E (lowest since Sep 2016); new orders highest since Aug 2015
- (US) NOV ISM NON-MANUFACTURING COMPOSITE: 57.2 V 55.5E (suggests service sector gaining momentum into year's final months)
***US markets on close: Dow +0.2%, S&P500 +0.6%, Nasdaq +1.0%***
- Best Sector in S&P500: Financials
- Worst Sector in S&P500: Industrials
- Biggest gainers: AA +7.5%, FSLR +7.3%, RRC +5.7%, SWN +5.3%, VLO +5.0%
- Biggest losers: AET -3.0%, BIIB -2.4%, HUM -2.3%, ALK -2.0%, WDC -2.0%
- At the close: VIX 12.1 (-2.0pts); Treasuries: 2-yr 1.12% (flat), 10-yr 2.39% (flat), 30-yr 3.06% (-1bps)
***US movers afterhours***
- TXMD: Announces positive top-line results from pivotal phase 3 replenish trial in postmenopausal women with moderate to severe vasomotor symptoms (vms) treated with tx-001hr; +20.8% afterhours
- BOBE: Reports Q2 $0.56 ex-items v $0.44e, R$316M v $319Me (2 est); working with JPM to review and evaluate potential opportunities for value creation; +4.8% afterhours
- KMI: Guides FY17 distributable cash flow $4.46B v $4.7B FY16e; Adj EBITDA $7.2B unch y/y; +2.2% afterhours
- Z: To offer $400M of convertible senior notes due 2021; -1.5% afterhours
- TEVA: Appoints Dipankar Bhattacharjee as President and CEO Global Generic Medicines Group in Q1 2017; Affirms FY16 outlook; -3.5% afterhours
***Politics***
- (US) Vice President-elect Pence: Some cabinet decisions have been made today; Announcements coming in days ahead - press
- (FR) France PM Valls confirms will run for France presidency as Socialist candidate; will step down as PM tomorrow to begin his campaign - press
***Asia Session Notable Observations, Speakers and Press***
- Asia indices rally, taking cue from US markets shrugging off Italian political uncertainty following Sunday referendum. USD majors in narrow ranges, while commodity/EM currencies (CNH, MXN, SGD) retreat against the dollar after several days of strength.
- Number of analysts revise their forecasts for Aussie Q3 GDP data (due tomorrow) to contract to -0.2% after latest Current Account data.
- RBA holds rates unchanged as widely expected (analysts were unanimous); Policy statement relatively unchanged - global economy growing at slower pace, labor markets are mixed with strong growth in part-time sector, inflation to remain low for some time on subdued labor costs; RBA acknowledges likely slowing in growth at 2016-end before a pick-up in 2017. AUD/USD in a narrow 15-pip range post decision around $0.7450
- Japan press speculates govt is looking at issuing mid-year deficit bonds for the first time since the GFC / Lehman shock in 2009.
- Yuan fix set at strongest level since mid-Nov, with the biggest margin of increase since June.
- NZD falls below $0.71 in a technical move ahead of tomorrow's dairy trade auction.
China
- (CN) JPMorgan chief China economist: Economic growth benefited from substantial progress made in cutting steel and coal industry capacity - Chinese press
- (CN) China should boost quotas for QFII, RQFII, and QDII - Chinese press
Japan
- (JP) Japan govt said to consider additional ¥1.9T in deficit bonds - Japan press
- (JP) Japan Lower House of Diet passes bill to legalize casinos - press
- (JP) Japan Fin Min Aso: Fx is a big reason for the fall in tax Rev; do not know about any increased issuance of JGBs
Australia
- (AU) Westpac lowers Australia Q3 GDP forecast to -0.2% from +0.2% following weak net exports data - press
- (AU) NAB now sees Australia Q3 GDP at -0.2% q/q
- (AU) Nomura forecasts Q3 GDP at -0.2% q/q v +0.2% consensus
***Asia Key economic data:***
- (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET AT 1.50%; AS EXPECTED
- (AU) AUSTRALIA Q3 CURRENT ACCOUNT BALANCE (A$): -11.4B V -13.5BE; NET EXPORTS OF GDP: -0.2% V 0.0%E
- (JP) JAPAN OCT LABOR CASH EARNINGS Y/Y: 0.1% (3-month high) V 0.2%E ; REAL EARNINGS (EX-INFLATION) Y/Y: 0.0% V 0.2%E
- (NZ) New Zealand Nov ANZ Truckometer Heavy (heavy traffic) M/M: +4.0% v -0.4% prior
- (UK) NOV BRC LFL SALES VALUE Y/Y: 0.6% V 1.7%E (3rd straight increase)
***Asian Equity Indices/Futures (23:30ET)***
- Nikkei +0.5%, Hang Seng +0.8%, Shanghai Composite +0.1%, ASX200 +0.7%, Kospi +1.3%
- Equity Futures: S&P e-mini -0.1%, Dax -0.1%, FTSE100 -0.3%
***FX ranges/Commodities/Fixed Income (23:30ET):***
- EUR 1.0750-1.0770; JPY 113.50-113.95; AUD 0.7440-0.7480; NZD 0.7090-0.7160
- Feb Gold +0.2% at 1,175/oz; Jan Crude Oil +0.5% at $51.27/brl; Mar Copper -0.8% at $2.68/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 0.3 tonnes to 869.9 tonnes; 14th straight decline; lowest since May 31st
- (CN) PBOC SETS YUAN MID POINT AT 6.8575 V 6.8870 PRIOR; Strongest Yuan fix since Nov 15th; biggest margin of increase since June
***Asia equities / Notables / movers by sector***
- Consumer discretionary: ABC-MART 2670.JP -3.9% (Nov result); Hyundai Department Store Co 069960.KR +0.9% (Deutsche Bank cuts to hold); Nine Entertainment Co Holdings NEC.AU +2.9% (in talks with Fairfax); G8 Education GEM.AU +3.9% (Moelis raised to buy); Nippon Television Holdings 9404.JP +3.5% (Mitsubishi raised to overweight)
- Financials: Evergrande Real Estate Group 3333.HK +0.8% (Nov result); Mitsui & Co 8031.JP +2.4% (Goldman Sachs raised to buy)
- Industrials: Geely Automobile Holdings 175.HK +1.8% (Nov result); Downer EDI DOW.AU -0.3% (Credit Suisse cuts to underperform)
- Technology: Taiwan Semiconductor Manufacturing Co 2330.TW +2.2% (to increase chip production); NCsoft Corp 036570.KR +2.3% (Ebest Investment says too early to judge new game); Samsung Electronics 005930.KR +2.2% (CEO comment on involvement with Choi scandal and Note 7)
- Materials: Whitehaven Coal WHC.AU +0.7% (Ord Minnett Raised WHC.AU to Accumulate); OJI Holdings Corp 3861.JP -1.2% (Daiwa cuts to neutral)
- Energy: Origin Energy ORG.AU +2.7% (divestment)
- Healthcare: Japara Healthcare JHC.AU +9.9% (Macquarie raised to outperform)