Asia Mid-Session Market Update: China FX reserves fall at faster rate; Samsung Electronics prelim Q3 mixed; GBP/USD craters 10 handles in a flash crash
Fri, 07 Oct 2016 1:24 AM EST
***Notes/Observations***
- GBP/USD "flash-crashed" unexpected in low-liquidity early Asian trade, falling by over 8 handles from just above 1.26 to below 1.18. There was no associated news with the event, though some analysts have noted the mention of a hard Brexit my French President Hollande in late US hours. FX traders await more details on what was likely a large order setting off brisk algo selling in what has already been a one-way trade over the past week.
- China FX reserves outflows have accelerated, falling over $20B to $3.166B - the biggest decline in 4 months and also 3rd straight month of outflows. Analysts suggest the data signifies the extent of PBoC intervention in China currency.
- Samsung Electronics reported prelim Q3 results; Op profit topped consensus at KRW7.8T v KRW7.6Te while Rev missed KRW49.0T v KRW51.0Te; There is no accompanying commentary or performance/financial metrics with this initial release, they will be posted with final Q3 report at the end of the month. Shares of Samsung were up by just over 0.5%.
- Japan PM Abe's economic adviser Honda made a more vocal plea for increase in fiscal stimulus and expanded monetary easy by the BOJ as soon as next month, attributing limited progress on inflation to fiscal restaint of the govt.
- Hurricane Matthew within 50 miles of the Florida coast; Latest (23:00ET) NHC projections suggest the eye of the storm may stay off shore, hugging the coastline through Saturday afternoon.
***Top US session headlines***
- (EU) ECB ACCOUNT OF THE MONETARY POLICY MEETING (SEPT MINUTES): Downside risks remain; underlying inflation still not showing signs of a sustained pickup
- (US) SEPT CHALLENGER JOB CUTS -44.3K V 32.2K PRIOR; Y/Y: -24.7% V -21.8% PRIOR
- (US) INITIAL JOBLESS CLAIMS: 249K V 256KE; CONTINUING CLAIMS: 2.06M V 2.08ME (4-week average hits 43-year low)
- OPEC Chief reportedly to discuss a non-OPEC production cut with Russia in talks next week - press
- NXPI: Qualcomm said to make progress on NXP bid; considering offer structure of 75% cash, 25% stock; NXP reportedly would prefer all-cash offer - press
***US markets on close: Dow -0.1%, S&P500 +0.1%, Nasdaq -0.2%***
- Best Sector in S&P500: Basic Materials
- Worst Sector in S&P500: Healthcare
- Biggest gainers: WFM +4.9%, CRM +4.2%, LRCX +4.2%, DLTR +4.0%, LYB +3.4%
- Biggest losers: ENDP -3.7%, AXP -3.7%, FCX -3.5%, SYF -3.4%, WMT -3.2%
***VIX 12.84 (-0.2pts); Treasuries: 2-yr 0.85% (+1bp), 10-yr 1.74% (+2bp), 30-yr 2.46% (+2bp)***
***US movers afterhours***
- CIT +7.6%: To sell CIT Commercial Air to Avolon Holdings for $10B; received non-objection to amended capital plan
- GPS +6.5%: Reports Sept SSS -3.0% (including 3% negative impact from Fishkill fire) v -2.9%e
- DVAX +3.5%: Point72 Asset Management (Steve Cohen) discloses passive 5.9% stake (raised from 1.17% in June) - 13G filing
- YHOO -0.9%: Verizon said to request a $1B discount (~20%) in Yahoo bid after the latest hacking reports - NY Post
- HELE -2.3%: Reports Q2 $1.31 v $1.10e, R$368.2M v $365Me
- RT -2.8%: Reports Q1 -$0.11 v -$0.03 y/y, R$256.7M v $279.5 y/y
- HON -4.8%: Narrows lower Q3 $1.67 v $1.69e (prior $1.67-1.72), guides initial Q4 $1.74-1.78 v $1.79e, narrows FY16 $6.60-6.64 v $6.67e (prior $6.60-6.70)
- MG -7.2%: Reports Q1 $0.22 v $0.23e, R$168M v $174Me; Cuts FY17 $0.88-0.97 v $1.04e, R$690-705M v $725Me
***After extended session***
- TRNC: Gannett's current offer for Tronc seen at $18.75/shr - NY Post
***Equity Futures (00:00ET): S&P e-mini -0.2%, Dax -0.1%, FTSE100 +0.5%***
***FX / Commodities ranges (00:00ET):***
- GBP 1.1740-1.2620; EUR 1.1110-1.1150; JPY 103.50-104.00; AUD 0.7560-0.7590, NZD 0.7125-0.7165
- Gold +0.3% at 1,256/oz; Oil flat at $50.42/brl; Copper -0.3% at $2.15/lb
***Asian Equity Markets (00:00ET)***
- Nikkei -0.4%, Hang Seng -0.5%, ASX -0.2%, Shanghai closed, Kospi -0.5%
***Key economic data:***
- (CN) CHINA SEPT FOREIGN RESERVES: $3.166T V $3.183TE; 3rd consecutive decline, biggest monthly drop in 4 months multi-year lows
- (JP) JAPAN AUG LABOR CASH EARNINGS Y/Y: -0.1% V +0.4%E ; REAL EARNINGS (EX-INFLATION) Y/Y: 0.5% V 2.0% PRIOR
- (AU) AUSTRALIA SEPT AIG PERFORMANCE OF CONSTRUCTION INDEX: 51.4 V 46.6 PRIOR
***Speakers / Press / Fixed Income***
China:
- (CN) Morgan Stanley raises China 2016 GDP forecast to 6.7% from 6.4% prior guided
- (CN) PBOC's Yi: Chinese economy is more stable; has more confidence in China's economy overall - press
Japan:
- (JP) Japan Vice Fin Min of International Affairs (currency chief) Asakawa: No talks on FX at G20 finance leaders' gathering today
- (JP) BOJ Gov Kuroda: To convey to G20 that Japan made commitment to ultra-loose monetary policy
- (JP) BOJ offers to buy ¥410B in 5-10yr JGBs, ¥190B in 10-25yr JGBs, ¥110B in JGBs with maturity over 25-yr, and ¥3T in T-bills
Australia
- (AU) Australia MoF (AOFM) sells A$900M in 1.75% 2020 Bonds; avg yield: 1.6936%; bid-to-cover: 3.45x
***Asia movers***
- Consumer discretionary: H2O Retailing Corp.8242.JP +3.0% (sets up capital tie-up with Seven & I); Kose Corp 4922.JP -3.1% (H1 result speculation)
- Financials: Seven & I Holdings 3382.JP -3.5% (Goldman cut to Neutral, H1 result); Cathay Financial Holding 2882.TW -0.6% (Sept result)
- Industrials: Mitsubishi Heavy Industries 7011.JP +0.8% (unit sale speculation); Sinotrans Shipping 368.HK +6.2% (oil gains)
- Technology: Samsung Electronics 005930.KR +0.6% (Q3 prelim result)
- Materials: Galaxy Resources GXY.AU -0.9% (Bell Potter initiates with Buy); Whitehaven Coal WHC.AU +8.2% (Newcastle Sept result); St Barbara SBM.AU -2.0%; Saracen Mineral SAR.AU -2.3% (gold declines to 4-month low); ALS ALQ.AU +0.7% (Macquarie raised to outperform)
- Energy: Japex 1662.JP +2.1%, Inpex 1605.JP +1.6% (oil rises above $50/bbl); Karoon Gas Australia KAR.AU +10.4% (acquisition)
- Healthcare: Estia Health EHE.AU -5.6% (may face writedowns)