Asia Mid-Session Market Update: South Korea GDP tops consensus; Yuan fix set at new multi-year lows
***US Session Highlights***
- (US) OCT PRELIMINARY MARKIT MANUFACTURING PMI: 53.2 V 51.5E (along with new orders highest since Oct 2015)
- (UK) PM May: there will be a series of parliamentary debates on Brexit, including on high level negotiating principles
- (CA) Bank of Canada and Canada govt renew 2% inflation target regime for 5 more years through 2021
- (US) Fed's Bullard (FOMC voter, Dovish): sees single rate increase as all that is necessary for the time being; jobless rate is close to the Fed's long-term target level
- (US) Fed's Evans (dove, non-voter): sees less headroom to raise rates; overshooting inflation target might be appropriate - comments in Chicago
***US markets on close: Dow +0.4%, S&P500 +0.5%, Nasdaq +1.0%***
- Best Sector in S&P500: Technology
- Worst Sector in S&P500: Healthcare
- Biggest gainers: QRVO +4.7%, NVDA +4.7%, SYMC +3.4%, ADS +3.3%, GM +3.0%
- Biggest losers: COL -6.2%, CHK -4.8%, KMB -4.8%, DVA -4.6%, RIG -3.8%
- At the close: VIX 13.20 (-0.2pts); Treasuries: 2-yr 0.84% (+2bp), 10-yr 1.77% (+2bp), 30-yr 2.53% (+3bp)
***US movers afterhours***
- GBT: Announces pivotal study for GBT440 in Sickle Cell Disease with Primary Hemoglobin endpoint; top-line data anticipated in 1H19; +12.7% afterhours
- CWEI: To sell Giddings Area assets for $400M; Names Patrick Cooke new COO; +8.0% afterhours
- RMBS: Reports Q3 $0.16 v $0.15e, R$89.9M v $86.5Me; +6.7% afterhours
- BLKB: Raises FY16 operating cash flow guidance $147-157M (prior $135-145M); +3.5% afterhours
- CLGX: Reports Q3 $0.73 v $0.65e, R$524M v $504Me; Updates 2017 share repurchase program; increases cost reduction program; +2.8% afterhours
- SWFT: Reports Q3 $0.34 v $0.32e, R$1.01B v $1.04Be; +2.2% afterhours
- V: Reports Q4 $0.78 v $0.73e, R$4.26B v $4.24Be; -1.1% afterhour
- EFII: Reports Q3 $0.58 (ex-items) v $0.58e, R$245.6M v $248Me; Guides Q4 $0.71-0.76 v $0.76e, gross margin approx 50-51% - earnings slides; -3.7% afterhours
- PRA: Reports prelim Q3 op earnings $0.43-0.47 v $0.60e, gross premiums written $230M; -5.0% afterhours
- SONC: Reports Q4 $0.45 adj v $0.44e, R$162.1M v $168Me; -5.0% afterhours
***Asia Session Notable Observations, Speakers and Press***
- China NDRC spokesperson sees economy ahead of schedule in meeting 2016-end overcapacity cuts in the steel sector, achieving the milestones in November. Separately, Dalian spot iron ore prices spike by over 4%, helping AUD outperform other major currencies.
- China Yuan fix set at record low for 3rd straight session as continued strength in US economic data solidifies the case for a FOMC rate hike in Dec. PBoC Dep Gov Yi responds that there is no basis for a persistent depreciation in CNY.
- Japan press speculates the BOJ will hold off on further easing at its upcoming policy meeting on Nov 1st despite expected downward revision in CPI projections; Report sees BOJ once again pushing back its forecast for reaching 2% inflation to FY18 from FY17 while still maintaining assessment that the trend in inflation is improving.
- South Korea Q3 prelim GDP tops q/q and y/y consensus by a decimal, with Construction investment rising by +3.9% q/q and private consumption up just 0.5%. BOK notes Q3 would have been much better if Samsung Electronics did not experience Galaxy Note 7 manufacturing scandal and Hyundai Motors workers did not wage a strike. BOK still sees FY16 GDP target achievable if Q4 growth comes in positive.
***Asia Key economic data:***
- (CN) China urban registered jobless rate declines to 4.0% by end of Sept v 4.5% annual target
- (KR) SOUTH KOREA Q3 PRELIMINARY GDP Q/Q: 0.7% V 0.6%E; Y/Y: 2.7% V 2.6%E
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.6 v 117.8 prior
***Asian Equity Markets (23:30ET)***
- Nikkei +0.6%, Hang Seng -0.2%, Shanghai Composite -0.1%, ASX200 +0.6%, Kospi -0.7%
***FX ranges/Commodities/Futures/Fixed Income (23:30ET):***
- EUR 1.0868-1.0882; JPY 104.15-104.50; AUD 0.7590-0.7625; NZD 0.7110-0.7150
- Dec Gold +0.1% at 1,265/oz; Dec Crude Oil -0.1% at $50.49/brl; Copper +0.9% at $2.11/lb
- Equity Futures: S&P e-mini +0.1%, Dax +0.2%, FTSE100 +0.1%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7744 V 6.7690 PRIOR; lowest CNY setting since 2010
- (CN) PBOC to inject CNY115B in 7-day reverse repos, CNY85B in 14-day reverse repos, and CNY35B in 28-day reverse repos
- JGB: (JP) Japan's MoF sells ¥1.0T in 0.5% (0.5% prior) 20-year JGBs; Avg yield: 0.364% v 0.437% prior; bid-to-cover: 3.49x v 3.33x prior
***Asia movers***
- Consumer discretionary: Gome Electrical Appliances Holdings 493.HK -1.0% (profit warning); SA SA International Holdings 178.HK +7.5% (profit warning); Bega Chees BGA.AU -13.9% (guidance); Shimano Inc 7309.JP +3.7% (Credit Suisse raised to outperform)
- Financials: Dexus Property Group DXS.AU +1.6% (affirms guidance); ClearView Wealth CVW.AU +8.3% (Sony Life to acquire stake); Mirvac Group MGR.AU +1.0% (affirms guidance)
- Industrials: Automotive Holdings AHG.AU +4.2% (confirms to restructuring certain business); GUD Holdings GUD.AU +1.5% (guidance); Nidec Corp 6594.JP +4.9% (H1 result); Mazda Motor Corp 7261.JP +3.1% (may miss profit targets)
- Technology: Hynix Semiconductor 000660.KR +2.4% (Q3 result); NavInfo Co 002405.CN +4.3% (to acquire MediaTek unit); Aconex ACX.AU +9.8% (guidance)
- Materials: Fortescue +5.0% (AGM comments, iron ore prices); Saracen Mineral Holdings SAR.AU -2.1% (Q1 result)
- Healthcare: Greencross GXL.AU +5.1% (on track to hit FY17 network targets); Sirtex Medical SRX.AU +2.2% (guidance)