Asia Mid-Session Market Update: China first tier city prices stabilize; BOJ Gov Kuroda defends use of fixed rate operations in JGBs
***US Session Highlights***
- (US) OCT CPI M/M: 0.4% V 0.4%E; CPI EX FOOD AND ENERGY M/M: 0.1% V 0.2%E; CPI NSA INDEX: 241.729 V 241.785E; Y/Y CPI Ex Food and Energy Y/Y: 2.1% v 2.2%e
- (US) OCT HOUSING STARTS: 1.323M V 1.156ME; BUILDING PERMITS: 1.229M V 1.193ME (another jump in single family)
- (US) INITIAL JOBLESS CLAIMS: 235K (lowest since 1973) V 257KE; CONTINUING CLAIMS: 1.98M V 2.03ME (lowest since 2000)
- (US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: 7.6 V 7.8E; new orders 18.6 v 16.3 prior
- (US) Fed Chair Yellen: Rate hike could be appropriate 'relatively soon'; no mention of US elections in remarks - prepared text
- (US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 3.6% from 3.3% on Nov 15th
***US markets on close: Dow +0.2%, S&P500 +0.5%, Nasdaq +0.7%***
- Best Sector in S&P500: Technology/Services
- Worst Sector in S&P500: Basic Materials/Utilities
- Biggest gainers: BBY +13.7%, NTAP +6.3%, MU +5.2%, WYNN +4.5%, IPG +4.1%
- Biggest losers: MNK -7.3%, FSLR -5.1%, CSCO -4.8%, SWN -4.1%, SJM -3.9%
- At the close: VIX 13.4 (-0.3pts); Treasuries: 2-yr 1.06% (+4bp), 10-yr 2.28% (+6bps), 30-yr 2.99% (+6bps)
***US movers afterhours***
- MRVL: Reports Q3 $0.20 v $0.12e, R$654M v $612Me; +8.5% afterhours
- CRM: Reports Q3 $0.24 v $0.21e, R$2.14B v $2.12Be; +5.5% afterhours
- ROST: Reports Q3 $0.62 v $0.56e, R$3.09B v $2.96Be; +3.4% afterhours
- SCTY: SolarCity and Tesla shareholders approve planned merger; deal expected to close within days; SCTY +1.9% afterhours; TSLA +0.6% afterhours
- NUAN: Reports Q4 $0.41 v $0.39e, R$512M v $505Me; +1.9% afterhours
- AMAT: Reports Q4 $0.66 v $0.66e, R$3.30B v $3.31Be; -2.1% afterhours
- WSM: Reports Q3 $0.79 v $0.77e, R$1.25B v $1.26Be; guides Q4 $1.45-1.55 v $1.59e, R$1.57-1.65B v $1.63Be; -2.9% afterhours
- GPS: Reports Q3 $0.60 v $0.59e, R$3.80B v $3.77Be; -4.1% afterhours
- KTOS: Offers indeterminate amount of common stock through Canaccord and B. Riley -9.6% afterhours
***Asia Session Notable Observations, Speakers and Press***
- Strong US economic data and hawkish comments from Fed chair Yellen preserve the 2-week-long USD bull trend; USD/JPY hit a 5-month high above ¥110 and EUR/USD falls to 11-month low below $1.06; Treasury yields also continue to rise, particularly on the long-end, steepening the curve to multi-months highs. Gold prices fall to multi-month lows below $1,210.
- China property prices are stabilizing, with first tier appreciation slowing notably. In Beijing, New Home Prices were at a 10-month low m/m at 0.5% v 4.5% prior; Shanghai m/m also slowed to 0.5% from 2.7%, while Shenzhen m/m saw its first decline in years at -0.5% v +1.9% prior; All-70 city China prices hit 3-month low m/m at 1.1% v 2.1% prior, though y/y was still at multi-year highs of 12.3% v 11.2% prior. NBS said "property prices have stabilized in the second half of October." Separately in China, Financial Stability Bureau official remarked China is prepared for economic uncertainties.
- Japan PM Abe enthused after "long frank discussion with US President-elect Trump" at their NYC meeting; Renewed conviction toward a relationship of trust with Trump.
- BOJ Gov Kuroda says the recent rise in 2-yr and 5-yr JGB yields has been quite fast, pledging to continue to use fixed rate operations as needed with unlimited capacity for purchases; Prepared to conduct operations even at below market yields. Comments follow overnight BOJ's first use of fixed-rate facility to buy 2-yr and 5-yr JGBs to curb the recent yield rise.
- Despite OIS futures tipping a small chance of higher rates by RBA next year, one survey of economists forecast one more rate cut in Q3; Several houses expect as many as 2 more cuts by RBA, though there is also a camp expecting OCR to bottom at current level.
***Asia Key economic data:***
- (CN) CHINA OCT PROPERTY PRICES M/M: RISE IN 62 OUT OF 70 CITIES VS 63 PRIOR; Y/Y: RISE IN 65 OUT OF 70 CITIES V 64 PRIOR
- (NZ) NEW ZEALAND Q3 RETAIL SALES (EX-INFLATION): 0.9% V 0.9%E
- (NZ) NEW ZEALAND Q3 PPI INPUT Q/Q: 1.5% V 0.9% PRIOR; PPI OUTPUT Q/Q: 1.0% V 0.2% PRIOR
- (NZ) NEW ZEALAND NOV ANZ CONSUMER CONFIDENCE INDEX: 127.2 (19-month high) V 122.9 PRIOR; M/M: 3.5% V 1.6% PRIOR
- (KR) South Korea Oct PPI Y/Y: -0.2% v -1.1% prior
- (US) NPD: Oct Video Games Sales +6% y/y at $875.7M
***Asian Equity Markets (23:30ET)***
- Nikkei +0.7%, Hang Seng +0.3%, Shanghai Composite -0.3%, ASX200 +0.3%, Kospi -0.3%
***FX ranges/Commodities/Futures/Fixed Income (23:30ET):***
- EUR 1.0580-1.0630; JPY 109.95-110.75; AUD 0.7380-0.7420; NZD 0.7000-0.7035
- Dec Gold -0.8% at 1,207/oz; Dec Crude Oil -0.6% at $45.16/brl; Copper -1.1% at $2.46/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 5.7 tonnes to 920.6 tonnes; 6th straight decline; lowest since June 23rd
- Equity Futures: S&P e-mini -0.1%, Dax -0.2%, FTSE100 -0.2%
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.8796 V 6.8692 PRIOR; weakest Yuan setting since 2008; 11th straight day of weaker Fix
- (CN) China MoF sells 50-yr bonds at 3.48%; Bid to cover 3.77x
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥190B in 10-25yr JGBs, ¥110B in 25-yrs or higher JGBs, and ¥1.5T in T-bills
- (AU) Australia MoF (AOFM) sells A$900M in 2.75% 2019 Bonds; avg yield: 1.841%; bid-to-cover: 4.03x (1-year high)
Notables / movers:
- Coal names falls as China NDRC issues directive to increase production ahead of winter; WHC.AU -8.9%, 1088.HK -3.5%, 1898.HK -3.4%
- TPV Technology Ltd 903.HK: Reports Q3 Net profit $18.6M v loss $26.3M y/y, Rev $2.47B v $2.80B y/y; -1.3%
- Eagle Nice International 2368.HK: Reports H1 Net HK$121M; Rev HK$1.08B v HK$947M y/y; -1.3%
- ZTE 763.HK: update related to restrictions by US Commerce Dept; -1.7%
- Swire Pacific 19.HK: Confirms realignment of Coca-Cola Bottling in China; consideration payable by SBHL in relation to realignment CNY4.65B; -0.3%
- Singamas Container Holdings 716.HK: Guides FY16 net loss at least $53M v loss $2.7M y/y; -4.3%
- iCar ICQ.AU: Carsales said to be considering offer for iCar - press; +31.6%
- Myer MYR.AU: Reports Q1 Rev A$719.2M v A$728Me (1 est); SSS +1.6% (5th straight quarter of SSS increase); +14.4%
- Paladin PDN.AU: Guides FY17 uranium production 3.8-4.0M lb; uranium is unsustainable at <$20/lb; sees 10-15% of global supply cut as early as 2017; -4.0%
- AusNet AST.AU: Reports H1 Net A$178.6M v A$374.5M y/y; EBITDA A$595.3M v A$650.4M y/y; Rev A$1.02B v A$1.01Be; +1.0%
- Kathmandu Holdings KMD.NZ: Reports Q1 Rev +2.8% y/y; SSS +1.4%; -3.4%
- Brambles BXB.AU: Macquarie Resumed BXB.AU with Outperform, price target: A$13; +1.6%
- Sydney Airport SYD.AU: Credit Suisse Cuts SYD.AU to Underperform from Neutral; Oct traffic metrics; -1.5%
- FCG.NZ Fonterra: Raises FY16/17 forecast for Farmgate milk price by NZ$0.75 to NZ$6.00/kg; -0.2%