Asia Mid-Session Market Update: China Retail Sales and Industrial Output top expectations; Soft Australia NAB confidence supports the case for more easing; ADB cuts 2016 GDP forecasts
***US Session Highlights***
- US 10-year Note yield moves above 2.50% for 1st time since Oct 2014; Fed expected to hike at its decision on Wed
- Italy Govt said to be ready to step in with emergency decree on banks if necessary
***US markets on close: Dow +0.2%, S&P500 -0.1%, Nasdaq -0.6%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Financials
- Biggest gainers: REGN +3.8%, CMG +3.4%, EQIX +3.2%, JNJ +2.8%, DLR +2.6%
- Biggest losers: ALXN -12.9%, VIAB -9.4%, SWN -8.8%, RRC -7.3%, FOXA -6.6%
- At the close: VIX 12.6 (+0.9pts); Treasuries: 2-yr 1.15% (flat), 10-yr 2.48% (+2bps), 30-yr 3.16% (+1bps)
***US movers afterhours***
- BA: Raises dividend 30% to $1.42 from $1.09 (indicated yield 3.61%); Renews $14B share repurchase authorization (14% of market cap); +1.5% afterhours
- WWE: Guides Q4 avg paid subscribers to at least 1.40M (prior 1.42M); affirms Q4 adj OIBDA and op income guidance; -3.0% afterhours
- AKAO: To offer 5.75M shares of stock (21% of outstanding); -7.9% afterhours
- INOV: Cuts FY16 $0.32-0.33 v $0.44e, Rev $426-428M v $473Me (prior $0.39-0.46, R$470-490M); -34.3% afterhours
***Politics***
- (US) President-elect Trump to name Exxon CEO Tillerson as Secretary of State - Fox News and NBC
- (US) Trump to delay the announcement about his plans for his businesses until January; Announcement expected this Thursday - press
- (US) Trump remains the winner in Wisconsin primary following the recount; Pennsylvania primary victory for Trump also certified - press
***Asia Key economic data:***
- (CN) CHINA NOV INDUSTRIAL PRODUCTION Y/Y: 6.2% (3-month high) V 6.1%E; YTD Y/Y: 6.0% V 6.0%E
- (CN) CHINA NOV RETAIL SALES Y/Y: 10.8% (11-month high) V 10.2%E; YTD Y/Y: 10.4% V 10.3%E
- (CN) CHINA NOV FIXED ASSETS EX RURAL YTD Y/Y: 8.3% V 8.3%E
- (AU) AUSTRALIA NOV NAB BUSINESS CONFIDENCE: 5 V 4 PRIOR; CONDITIONS: 5 (19-month low) V 7 PRIOR
- (AU) AUSTRALIA Q3 HOUSE PRICE INDEX Q/Q: 1.5% V 2.5%E; Y/Y: 3.5% V 4.6%E
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.4 v 118.6 prior
- (NZ) NEW ZEALAND Q3 MANUFACTURING ACTIVITY (SA) Q/Q: 0.4% V 2.2% PRIOR; VOLUME Q/Q: 2.1% V 2.8% PRIOR
***Asia Session Notable Observations, Speakers and Press***
- Asian indices mixed with Shanghai Composite remaining under most direct pressure despite the better than expected set of November economic data; USD majors largely in narrow ranges with little reaction to China figures for AUD, as traders more inclined to await the expected Fed decision to hike rates this Wednesday and assess the accompanying statement for tightening inclination next year.
- China industrial output at a 3-month high and retail sales at a 11-month high; Notable output components show power generation +7%, steel +5%, and coal -5%. Investment components show property investment +6.5%, construction +7.6%, and sales value +37.5%. NBS notes the data show economy staying in reasonable range with some improvement and stabilization of investment over the past 4 months.
- ADB cuts developing Asia 2016 GDP to 5.6% from 5.7% and Maintains 2017 GDP at 5.7%. SE Asia 2016 cut to 6.6% from 6.9% and East Asia maintained at 5.8%. China seen at 6.6% in 2016 and 6.4% in 2017. ADB calling for structural reforms to boost productivity, improve investment climate, and support domestic demand can help maintain growth momentum into the future.
- US press speculates BOJ is considering raising its economic assessment for the first time since May 2015, while former BOJ member Shirai says central bank will have to raise its 10-yr JGB yield target and also reduce JGB purchases next year to adjust to post-Trump rising of US Treasury rates and lower JPY.
- Australia NAB Conditions falls to a 19-month low, with resident economist concerned about the direction of the non-mining recovery in the near term. Separately, ANZ weekly confidence also retreats due to "shockingly weak Q3 GDP". Economists suggest the recent spate of underwhelming Aussie data points could bring RBA back to easing mode next year.
China:
- (CN) Moody's: China banks are facing increasing risks in asset quality; due to rising leverage in the system
- (CN) China Stats Bureau (NBS): Positive changes have increased in China; Economy stays in reasonable range - press
- (CN) China Foreign Ministry: President-elect Trump should act prudently on the Taiwan question to avoid "serious damage to the Sino-US relationship" - China Daily
Japan:
- (JP) BOJ said to consider raising its overall economic assessment for the first time since May 2015 in the upcoming Dec decision - press
- (JP) Former BOJ member Shirai: 10-year JGB yield already moving away from target of 0.0%; BOJ may have to raise 10-year target next year - CNBC
- (JP) According to a Nikkei survey, Japan winter bonuses are seen rising just 0.1% y/y - Nikkei
Australia
- (AU) JPMorgan: Latest NAB survey continues to suggest fading in consumer sentiment; Some further RBA policy easing likely to be required - Australian press
- CBA.AU: Raises variable investment home mortgage rate by 7bps to 5.56%
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.2%, Hang Seng -0.5%, Shanghai Composite -0.7%, ASX200 -0.2%, Kospi +0.1%
- Equity Futures: S&P e-mini flat, FTSE100 -0.1%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0625-1.0650; JPY 114.75-115.20; AUD 0.7490-0.7515; NZD 0.7185-0.7205
- Feb Gold -0.2% at 1,164/oz; Jan Crude Oil -0.3% at $52.69/brl; Mar Copper -0.1% at $2.60/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 856.3 tonnes; 18th straight decline; lowest since May 18th
- (HK) Hong Kong 1-month HK$ HIBOR 0.62429% (~8-yr high) v 0.58357% prior; 3-month 0.86571% v 0.82107% prior
- JGB: (JP) Japan MoF sells ¥2.17T in 0.1% 5-year JGB bonds; avg yield -0.063% v -0.160% prior; bid-to-cover 4.48x (highest since June) v 3.56x prior
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8934 V 6.9086 PRIOR
- (AU) Australia Finance Ministry (AOFM) sells A$200M in 3.0% 2025 bonds; avg yield 0.7462%; bid-to-cover 2.1x
***Asia equities / Notables / movers by sector***
- Consumer discretionary: Lovisa LOV.AU +11.5% (Morgans Financial raised to add); DeNA Co. 2432.JP -2.1% (SMBC cuts to equal weight)
- Financials: China Overseas Land 688.HK -1.1% (Nov result); China Resources Land 1109.HK -0.9% (Nov result); Credit China Holdings 8207.HK -5.3%
- Industrials: SMC Corp 6273.JP -7.1% (short-seller questions accounting issues)
- Technology: Japan Display 6740.JP +10.9% (speculation on JV); Aconex ACX.AU +3.2% (signs agreement with Fletcher Building)
- Materials: OceanaGold Corp OGC.AU +2.4% (guidance); Newcrest Mining NCM.AU -0.7% (affirms output guidance)