Asian Mid-session Update: Equities rally as soft US data further diminished 2015 liftoff outlook; BOK on hold, cuts CPI and GDP forecasts
***Economic Data***
- (KR) SOUTH KOREA CENTRAL BANK (BOK) LEAVES 7-DAY REPO RATE AT 1.50% (AS EXPECTED)
- (AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: -5.1K (first decline in 5 months) V +9.6KE; UNEMPLOYMENT RATE: 6.2% V 6.2%E
- (AU) AUSTRALIA SEPT NEW MOTOR VEHICLE SALES M/M: +5.5% (4-year high) V -1.7% PRIOR; Y/Y: 7.7% (2-year high) V 2.9% PRIOR
- (AU) AUSTRALIA OCT CONSUMER INFLATION EXPECTATION: 3.5% V 3.2% PRIOR
- (NZ) NEW ZEALAND SEPT BUSINESS MANUFACTURING PMI: 55.4 V 55.1 PRIOR; 7-month high
- (NZ) NEW ZEALAND OCT ANZ CONSUMER CONFIDENCE INDEX: 114.9 V 110.8 PRIOR; M/M: +3.7% V +0.9% PRIOR
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.8%, S&P/ASX +0.5%, Kospi +1.0%, Shanghai Composite +1.1%, Hang Seng +1.4%, Dec S&P500 +0.5% at 1,993
***Commodities/Fixed Income***
- Dec gold +0.4% at $1,184/oz, Nov crude oil -0.3% at $46.50/brl, Dec copper +0.3% at $2.42/lb
- (US) API Petroleum Inventories: Crude: +9.3M v +2.5Me (largest build since April)
- GLD: SPDR Gold Trust ETF daily holdings rise 7.7 tonnes to 694.9 tonnes
- (CN) PBoC to inject CNY50B in 7-day reverse repos (30th consecutive injection); Drains net CNY70B this week v injected CNY40B prior
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, ¥240B in 10-25yr JGBs, and ¥140B in JGBs with maturity over 25-yr
***Market Focal Points/FX***
- Asian indices are higher across the board despite the losses on Wall St. Softer US retail sales and PPI further dented the case for an FOMC liftoff in 2015, as the yield on the 10-year Treasury note closed at its lowest level since April, while the 2-year is near its 2-month lows. Focus stateside will turn to Thursday's release of CPI data, where expectations for sequential figure points to 2nd straight negative print. Regionally, Shanghai Composite, Hang Seng, and the Kospi were up about 1%. In FX, USD remained under modest pressure in Asian hours - NZD outperforming again with a rally of about 50pips above 0.6840, helped by stronger New Zealand PMI and Consumer Confidence index. AUD/USD was also up about 50pips to $0.7350 before a late-session drop on more chatter of inevitable RBA easing next month in the wake of local banks tightening mortgage rates.
- Australia employment was the key datapoint for the session, with employment change showing its first decline in 5 months, jobless rate holding at 6.2% and participation rate slowing. On the bright side, total hours worked were at an 8-month high of 12.2M. Australia inflation expectations also bounced after a 3-month low last month. On the corporate front, Fortescue rallied over 5% on quarterly output results, while Oil Search rose over 3% on chatter of revised higher bid by Woodside Petroleum.
- South Korea Central Bank held rates in check at 1.5% for the 4th straight month as expected but also lowered its projections for growth and inflation (Cuts 2015 GDP to 2.7% v 2.8% prior forecast; Cuts 2016 GDP to 3.2% v 3.3% prior forecast; Cuts 2015 CPI 0.7% v 0.9% prior forecast; Cuts 2016 CPI 1.7% v 1.8% prior forecast). BOK said economy and domestic demand are showing recovery, but uncertainty related to China slowdown, Fed liftoff, low energy prices, and currency volatility all pose risks. KRW uptrend was hardly altered on the revisions, with USD/KRW making 3-month lows near 1,130.
- China lending and money supply data are on tap potentially later in the European session. After yesterday's release of CPI, NDRC remarked that China will not see large increases in consumer prices over the coming months. ANZ economists also added "banks are still reluctant to raise the offer of credit to the real activity sector." Separately, PBoC chief economist Ma Jun said the decision to accept high-quality assets as collateral from borrowing banks announced over the weekend should not be construed as QE and will not have a significant impact on overall liquidity.
***Equities***
US equities / ADRs:
- DXCM: Guides Q3 R$105M v $98.1Me; +13.9% afterhours
- MBI: US and Puerto Rico said to be in talks about restructuring Puerto Rico's debt; +5.5% afterhours
- XLNX: Reports Q2 $0.48 v $0.46e, R$528M v $528Me; +5.1% afterhours
- JAH: Guides Q3 R$2.2B v $2.26Be; sees EPS in line with consensus ($0.81e); Offering 10M shares (4.7% of shares outstanding); -0.8% afterhours
- NFLX Reports Q3 $0.07 v $0.07e, R$1.74B (streaming and DVD business) v $1.74Be; -3.0% afterhours
- HCA: Reports prelim Q3 $1.17 v $1.24e, R$9.86B v $9.87Be; Narrows FY15 guidance to $5.20-5.25 v $5.30e, EBITDA $7.8B (prior $4.90-5.30, EBITDA $7.55-7.85B); -10.1% afterhours
- IMPR: Reports preliminary Q3 -$0.22 to -$0.23 v -$.20e, $28.9-29M v $31.5Me; -25.8% afterhours
Notable movers by sector:
- Consumer discretionary: Luk Fook Holdings 590.HK -2.1% (Q2 result); China Southern Airlines Co 1055.HK +1.9%% (YTD guidance); Domino's Pizza Enterprises DMP.AU +10.2% (acquisition); Li & Fung 494.HK -4.8% (Wal-Mart's guidance)
- Financials: Dalian Wanda Commercial Properties Co.3699.HK +1.6% (9-month result); Haitong Securities 6837.HK+2.5% (Sept result); CITIC Securities 600030.CN +1.3% (Sept result); China Pacific Insurance Group Co 2601.HK +2.2% (YTD result); Insurance Australia IAG.AU +5.3% (no plan to expand to China)
- Industrials: Coffey International Ltd COF.AU +116% (acquisition); Asciano Limited AIO.AU -7.8% (ACCC' statement on Brookfield deal)
- Technology: Leshi Internet Info & Tech Co Beijing 300104.CN +4.0% (9-month guidance); Inspur Electronic Information Industry Co 000977.CN +4.7% (9-month guidance); Canon Inc 7751.JP +0.4% (long-term guidance); East Money Information Co 300059.CN +6.2% (9-month guidance); Brambles Limited BXB.AU +0.2% (Q1 result)
- Materials: Zhaojin Mining Industry 1818.HK +7.3% (Q3 result); China Minmetals Rare Earth Co 000831.CN -1.4% (9-month guidance); Iluka Resources ILU.AU +1.1% (Q3 result); Whitehaven Coal WHC.AU -1.3% (Q1 result); Fortescue Metals Group FMG.AU +5.6% (Q1 result)
- Energy: China Petroleum & and Chemical Corp 600028.CN +0.8% (approval for new pipeline project); Woodside Petroleum WPL.AU +0.8% (Q3 result); Oil Search OSH.AU +3.6% (speculation for Woodside to boost bid)
- Telecom: China Mobile 941.HK +2.7%, China Unicom 600050.CN +6.8% (transfer assets to China Tower)