Asian Mid-session Update: PBoC SLF rate cut fails to jolt equities; Japan cabinet on the fence about consumption tax, extra budget
***Economic Data***
- (CN) China Oct Conference Board Leading Economic Index: 0.6% v 1.6% prior
- (NZ) NEW ZEALAND OCT RETAIL CREDIT CARD SPENDING M/M: +1.5% v -1.9% PRIOR; Y/Y: 7.8% v 7.3% PRIOR
- (MY) Malaysia Oct CPI Y/Y: 2.5% v 2.5%e
- (US) NORTH AMERICA OCT SEMI BOOK/BILL RATIO: 0.98 V 1.07 PRIOR; Below parity for the first time in 4 months
- (DE) German Finance Ministry November report: German moderate upswing likely to continue
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.5%, S&P/ASX +0.4%, Kospi +0.1%, Shanghai Composite +0.1%, Hang Seng -0.1%, Dec S&P500 -0.1% at 2,077
***Commodities/Fixed Income***
- Dec gold +0.5% at $1,083/oz, Jan crude oil +0.6% at $41.95/brl, Dec copper -0.3% at $2.07/lb
- (AU) Australia MoF (AOFM) sells A$600M in 4.5% 2020 Bonds; avg yield: 2.2367%; bid-to-cover: 4.42x
- (CN) China MOF sells 50-yr bonds, avg yield 3.89% v 3.87%e
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3780 v 6.3791 prior; 2nd straight firmer setting
- USD/KRW: Onshore opens at KRW1,156 v KRW1,162 prior close
***Market Focal Points/FX***
- Asian markets trading in tight ranges, with low volatility across the region. There was very limited economic data out today to give the market momentum heading into the weekend. Japan's Nikkei underperformed in part due to stronger Yen overnight. USD/JPY is now down over 100pips from this week's high in spite of the buildup of expectations for December rate liftoff, falling to 122.60 level in US session and trading in a 20 pip range during Asian hours. In local press, there was speculation that Japan government would consider to raise wages to help boost consumption so as to achieve the govt's growth targets. Japan cabinet officials also spoke - Amari urged caution on proceeding with the 2nd stage of consumption tax increase, while Fin Min Aso said there were no decisions yet on the direction of extra budget (fiscal stimulus).
- China markets were unimpressed by the PBoC decision late Thursday to cut the 7-day Standing Lending Facility Rate (SLFR). PBoC cut 1-day (overnight) Standing Lending Facility Rate from 4.50% to 2.75% and 7-day Standing Lending Facility Rate from 5.50% to 3.25%. The move to lower borrowing costs is in line with central bank's agenda to cushion economic slowdown, stimulating lending activity that was particularly disappointing in October. PBoC said the SLF rate cut would help to form the ceiling of an interest rate corridor.
- Australia's S&P/ ASX spent most of the session flat, with a slight upside bias. Weakness in the resource sector was offset by a stronger demand for financial names. The ASX had its best week in over a month ending up over 3.5%. RBA's Heath comments had little impact on the market. She noted that the Australia economy is not as strong as she would like it to be, but saw labor market having made some progress over the past year.
- After the US close, Fed vice Chair Fischer added to anticipation of next month's likely hike, stating that interest rates will rise gradually in relatively near future, even though no final decision was made yet. Fischer added the FOMC has done everything possible to avoid surprising markets, though he also warned that slower growth in emerging Asia will have profound implications for global economy.
***Equities***
US equities / ADRs:
- ROST: Reports Q3 $0.53 v $0.50e, R$2.78B v $2.76Be; +8.3% afterhours
- INTU: Reports Q1 +$0.09 (adj) v -$0.03e, R$713M v $670Me; +8.2% afterhours
- CAB: Said to be evaluating possible bids and options for the company though no formal process is underway - financial press; +5.4% afterhours
- NKE: APPROVES $12B BUYBACK PROGRAM (14% OF MARKET CAP); INCREASES DIVIDEND 14%, APPROVES 2-1 STOCK SPLIT; +3.6% afterhours
- SPLK: Reports Q3 $0.05 v $0.02e, R$174.4M v $160Me +1.5% afterhours
- ADSK: Reports Q3 $0.14 v $0.08e, R$599.8M v $592Me; -0.6% afterhours
- GPS: Reports Q3 $0.63 (adj) v $0.63e, R$3.86B v $3.88Be; -1.6% afterhours
- WSM: Reports Q3 $0.77 v $0.71e, R$1.23B v $1.21Be; -3.7% afterhours
- ZOES: Reports Q3 $0.05 v $0.03e, R$56.4M v $55.5Me; -4.3% afterhours
- MENT: Reports Q3 $0.28 v $0.27e, R$291M v $290Me; Cuts FY16 guidance; -26.6% afterhours
- NMBL: Reports Q3 -$0.14 v -$0.06e, R$80.7M v $86.8Me; -37.7% afterhours
Notable movers by sector:
- Consumer discretionary: Slater & Gordon SGH.AU -10.2% (affirms guidance); Myer Holdings MYR.AU +4.8% (Q1 result); Sydney Airport SYD.AU +2.2% (Oct result); Dali Foods Group Company 3799.HK -4.4% (IPO debut); Slater & Gordon SGH.AU -9.5% (affirms guidance); Lawson 2651.JP +1.0% (entry into banking business speculation)
- Industrials: CIMIC Group CIM.AU +0.7% (new contract); Nissan Motor Co 7201.JP -1.6% , Toyota Motor Corp 7203.JP -1.0% (target sales in China)
- Energy: AWE AWE.AU +0.3% (guidance)
- Technology: Renesas Electronics 6723.JP +12.1% (fund's interest)
- Healthcare: Primary Healthcare PRY.AU -10.1% (guidance)
- Telecom: China Unicom 762.HK +0.8% (Oct result)