Asian Mid-session Update: US Treasury currency report softens view on CNY; RBA minutes show no hints of easing bias
***Economic Data***
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.3 v 115.6 prior
- (KR) South Korea Sept PPI M/M: -0.3% v -0.5% prior; Y/Y: -4.5% (14th straight decline) v -4.4% prior
- NPD: Sept US total video game sales $1.0B, -9% y/y
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.3%, S&P/ASX -0.5%, Kospi +0.1%, Shanghai Composite -0.1%, Hang Seng -0.5%, Dec S&P500 -0.1% at 2,025
***Commodities/Fixed Income***
- Dec gold -0.4% at $1,168/oz, Dec crude oil +0.2% at $46.39/brl, Dec copper -0.5% at $2.35/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 3.5 tonnes to 697.3 tonnes
- JGB: (JP) Japan's MoF sells ¥1.10T in 1.2% (1.2% prior) 20-year JGBs; Avg yield: 1.078% v 1.164% prior; bid-to-cover: 3.04x v 2.56x prior
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3614 v 6.3527 prior setting; Weakest Yuan setting since Sept 29th
- (CN) PBoC to inject CNY25B in 7-day reverse repos (31st consecutive injection, smallest injection since mid-July )
***Market Focal Points/FX***
- Asian equity markets are mixed, with Australia's S&P/ASX as a regional underperformer. The aftermath of the soft China economic data overnight continues to weigh heavily on basic materials names, as shares of BHP and Rio Tinto are both down over 2%. Decline is somewhat exacerbated by a fairly neutral to positive set of RBA policy meeting minutes from this month, denting a minority view of economists (including Goldman) anticipating more near term RBA easing. RBA said that there is more evidence of economic rebalancing toward the non-mining sector, that labor market strengthened and unemployment rate would not rise further. Australia's 3-year rates ticked up about 2bps to 1.85% on the minutes release and AUD/USD strengthened some 20pips to 0.7275.
- Other USD majors were little changed in Asian trading, though there was some volatility in the far east FX after the release of the Semi-annual Currency Report from the US Treasury. The report once again did not declare any major trading partner as "currency manipulator", and actually softened its stance on China in spite of the August devaluation. The Treasury said CNY remains below appropriate "medium term valuation", compared to prior view of being "significantly undervalued", in a nod to slowing Chinese economic growth justifying the response by Chinese authorities. The Treasury also called for more policy transparency, stating the devaluation underscores its importance. Likewise, KRW weakened by about 1% after the US report called South Korea interventions as roughly balanced. For Japan, the Treasury is calling for more efforts on fiscal policy and reduced reliance on JPY depreciation to steer its economy.
- In notable Chinese press reports, influential former PBoC adviser Li said China GDP wold be about 6.8% in 2015 and 6.9% in 2016 as the economy bottoms out in H1 of next year. A separate report anticipated a moderate rebound in Q4, even though analysts continued to question the accuracy of Q3 GDP print in light of a more pronounced slowdown of other datapoints.
***Equities***
US equities / ADRs:
- ERII: Signs $125M 15-year license with Schlumberger to provide exclusive rights to its VorTeq Hydraulic Fracturing Technology; +124% afterhours
- SNDK: Said to be in late stage deal talks with WDC, a merger announcement possible by this week; +7.6% afterhours
- FLEX: Reports Q2 $0.27 v $0.25e, R$6.32B v $6.15Be; +6.7% afterhours
- ETH: Guides Q1 $0.45-$0.46 v $0.45e; +1.7% afterhours
- IBM: Reports Q3 $3.34 v $3.33e, R$19.3B v $19.6Be; -4.8% afterhours
- ZGNX: Continues to expect Phase 3 ZX008 Clinical Program to begin in Q415; -7.4% afterhours
- HXL: Reports Q3 $0.55 v $0.59e, R$448.8M v $466Me; To repurchase additional $250M in common stock (5.6% of market cap); -8.3% afterhours
- RMBS: Reports Q3 $0.14 v $0.14e, R$73.8M v $76.0Me; -15.4% afterhours
- NEOS: Provides Cotempla XR-ODT FDA Update; -13.7% afterhours
Notable movers by sector:
- Consumer discretionary: Nine Entertainment Co Holdings NEC.AU -1.2% (Apollo to sell stakes)
- Financials: PAX Global Technology 327.HK +4.0% (9-month result); China State Construction Holdings 3311.HK +3.5% (9-month result); Australia and New Zealand Banking Group ANZ.AU -1.4%, Westpac Banking Corp WBC.AU -1.1% (Australia banking regulator's liquidity inquiry)
- Industrials: Anhui Ankai Automobile Co 000868.CN +4.6% (9-month result); Sinosteel Engineering & Technology Co 000928.CN -3.3% (parent extends bond redemption date); Aurizon Holdings AZJ.AU -0.8% (Q1 result)
- Technology: AVIC International Holdings 161.HK -2.9% (terminates acquisition proposal); Fujian Newland Computer Co 000997.CN +7.1% (9-month result); Sichuan Changhong Electric Co 600839.CN +1.7% (9-month result)
- Materials: Newcrest Mining NCM.AU -5.1% (Q1 result); OZ Minerals OZL.AU -4.5% (gold price declines); Nitto Denko Corp 6988.JP +0.5% (H1 result speculation)
- Energy: China Shenhua Energy Co 1088.HK -2.3% (Sept result); Oil Search OSH.AU -2.0% (Q3 result); Yanzhou Coal Mining Co. 1171.HK -1.7% (Q3 coal business result)
- Telecom: KDDI Corp 9433.JP +6.0% (to start power retail sales service)
- Utilities: China Datang Renewable Power Co 1798.HK -1.9% (Q3 power generation); Huaneng Power International 600011.CN +2.3%(Q3 power generation)