Asian Market Update: Yen hits new 7-year lows on fresh speculation of postponed sales tax hike and snap polls
***Economic Data*** - (JP) JAPAN OCT M2 MONEY SUPPLY M2 Y/Y: 3.2% V 3.0%E; M3 Y/Y: 2.6% V 2.5%E - (JP) JAPAN SEPT TERTIARY INDUSTRY INDEX M/M: 1.0% V 0.8%E - (AU) AUSTRALIA NOV WESTPAC CONSUMER CONFIDENCE INDEX: 96.6 V 94.8 PRIOR; M/M: 1.9% (2nd consecutive rise) V 0.9% PRIOR - (AU) AUSTRALIA Q3 WAGE COST INDEX Q/Q: 0.6% (matches 5-year low) V 0.6%E; Y/Y: 2.6% V 2.6%E - (KR) SOUTH KOREA OCT BANK LENDING TO HOUSEHOLD (KRW): 508T V 501T PRIOR; 6-year high
***Index Snapshot (as of 02:30 GMT)*** - Nikkei225 +0.9%, S&P/ASX -0.9%, Kospi +0.6%, Shanghai Composite +0.1%, Hang Seng +0.3%, Dec S&P500 -0.1% at 2,035
***Commodities/Fixed Income*** - Dec gold +0.1% at $1,164, Dec crude oil -0.6% at $77.50/brl - (JP) BOJ offers to buy ¥400B in 5-10yr JGB, ¥240B in 10-25yr JGB and ¥120B in JGB with maturity over 25-yr - (AU) Australia MoF (AOFM) sells A$700M in 3.25% bonds due 2025; Avg yield: 3.4139%; Bid-to-cover: 2.9x
***Market Focal Points/Key Themes/FX*** - Rumors resurfaced that a snap election in the lower house of Japan's Diet serving as a referendum on the impending PM Abe sales tax decision would be called, weighing on the Yen. USD/JPY tested fresh 6-year highs around 116 in early trading after a Sankei report citing unnamed cabinet advisors said that Abe would push back the sales tax increase to Apr 2017, dissolve parliament later this month, and hold elections in December. A number of officials have since weighed in on the renewed speculation. BOJ adviser Kawai said the delay could make BOJ's decision harder by hurting fiscal trust by diminishing attractiveness of govt bonds. Abe's economic adviser Honda is in favor of a delay as it would help facilitate achieving 2% inflation target. Typically fiscally conservative Fin Min Aso said it would be hard to fund social welfare without tax rise to 10%. Finally, chief cabinet sec Suga once again refuted the rumors, stating there has been no change in the official stance the govt would study Q3 GDP results before making a decision. USD/JPY had retraced its gains below 115.50 on those Suga comments in the afternoon session.
- US and China leaders reportedly secured a new agreement on CO2 emission reduction at the APEC summit. China is promising that 20% of its energy would be sourced from non-fossil fuel by 2030, while US pledged to cut CO2 emissions by 26-28% by 2025 v 2005 level.
- Australia Westpac Consumer confidence saw a 2nd straight month of marginal improvement, however "pessimists have outnumbered optimists" for 9 consecutive months. Westpac said this marks the longest run of pessimists outnumbering optimists since the Global Financial Crisis and before that the recession of the 1990s.
- RBNZ semiannual Financial Stability Report announced the central bank would not relax the mortgage lending (LVR) limits for now, and also reiterated NZD is above sustainable and justified levels. Among the key risks facing New Zealand economy, RBNZ listed imbalances in the housing market, high levels of indebtedness in the dairy sector, potential effects of a slowdown in the Chinese economy, and the banking system's reliance on offshore funding. NZD was a bit softer on the release of the report.
***Equities*** US markets: - EVDY: Reports Q3 $0.08 v $0.07e, R$42.3M v $41.9Me; +9.7% afterhours - FOSL: Reports Q3 $1.96 v $1.82e, R$894M v $879Me; Announces $1B buyback (18.2% of market cap); Renews Global Licensing Agreement with Michael Kors for Watches and Jewelry through 2024; +9.6% afterhours - SUPN: Reports Q3 $0.39 v $0.45e, R$52.5M v $48.3Me; +6.8% afterhours - YY: Reports Q3 ADS $0.87 v $0.77e; Rev CNY1.0B v CNY487M y/y; +3.8% afterhours - YHOO: Agrees to acquire programmatic video advertising platform BrightRoll for $640M in cash; flat afterhours
Notable movers by sector: - Consumer Discretionary: Myer Holdings MYR.AU -6.7% (Q1 results); Gome Electrical Appliances 493.HK -4.9% (e-commerce including Alibaba, JD, Jumei traded lower during earlier US session) - Energy: Tap Oil TAP.AU +9.1% (production update) - Industrials: WDS Ltd WDS.AU -32.8% (cuts outlook); Hyundai Heavy 009540.KR +10.8% (awarded order); Aurizon Holdings AZJ.AU +2.6% (shares repurchase) - Utilities: AusNet Services AST.AU +2.0% (H1 results)