Asia Mid-Session Market Update: Japan financial lobby urges BOJ to consider the side effects of NIRP; US consumer agency calls for recall of Galaxy Note 7
Fri, 16 Sep 2016 0:39 AM EST
***Economic Data***
- (NZ) NEW ZEALAND SEPT ANZ CONSUMER CONFIDENCE INDEX: 121.0 (8-month high) V 117.7 PRIOR; M/M: +2.8% V -0.4% PRIOR
- (NZ) NEW ZEALAND AUG ANZ JOB ADVERTISEMENTS M/M: 3.1% V 1.4% PRIOR; 7th straight increase
- (NZ) New Zealand Aug Non-resident bond holdings: 66.1% v 67.2% prior
- (SG) SINGAPORE AUG BALANCE OF TRADE: $5.6B V $6.5B PRIOR
- (SG) SINGAPORE AUG ELECTRONIC EXPORTS Y/Y: -6.0% V -12.9% PRIOR; NON-OIL DOMESTIC EXPORTS M/M: -1.9% V -3.1%E; Y/Y: 0.0% V -3.3%E
- (US) NORTH AMERICA AUG SEMI BOOK/BILL RATIO: 1.03 V 1.05 prior
- (US) NPD: Aug Video Games Sales +1% y/y at $573.4M
***Index Snapshot (as of 03:00 GMT)***
- Nikkei225 +0.4%, S&P/ASX +1.1%, Kospi closed, Shanghai Composite closed, Hang Seng closed, Dec S&P500 -% at 2,1
***Commodities/Fixed Income***
- Dec gold flat at $1,318/oz, Oct crude oil -0.6% at $43.66/brl, Dec copper +0.2% at $2.16/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 3.3 tonnes to 932.2 tonnes; 5th consecutive decline; lowest since June 25th
- (JP) BOJ offers to buy ¥70B in JGBs with maturity under 1 year, ¥400B in 1-3 yr JGBs, ¥420B in 3-5 yr JGBs and ¥1.25T in T-bills
- (AU) Australia MoF (AOFM) sells A$700M in 2.25% 2028 bonds; avg yield 2.261%; bid-to-cover 3.68x
***Market Focal Points/FX***
- Australia and Japan were the only key indices open in today's session, as Hong Kong joined China, Korea, and Taiwan for Mid-Autumn Festival holiday break. Both traded to the upside, tracking a snap-back rally on Wall St, where disappointing retail sales and downward revision in Atlanta Fed GDPNow tool have knocked down expectations for a Fed hike next week to just 12% and a tightening this year below 50%. Australia was led higher by miners - particularly Whitehaven (+6.5%) and Sandfire (+5.0%) - while Japan saw the best gains among the electronics hardware names involved with the iPhone. Note that Apple was once again at the forefront of S&P500 rally on Thursday on strong demand for the iPhone 7 device and a recall at key competitor Samsung. Economic data were limited to 2nd tier New Zealand and Singapore prints, and FX majors traded very thin - NZD/USD in about a 30pip range above 0.73, AUD/USD in a 30pip range above 0.75, and USD/JPY in a 40pip range above 101.75.
- Ahead of next week's BOJ meeting taking place just hours prior to FOMC decision, Financial Services Agency (FSA) and Japanese Bankers' Association waded into consideration for monetary policy. The FSA issued a warning for banks related to risk of rapid interest rate fluctuations, noting the rapidly dwindling supply of JGBs due to BOJ's massive buying program. The JBA was even more blunt, stating that the negative interest rate policy is not effective, and the BOJ should consider the negative consequences on financial sector. Late in the day, Fin Min Aso said monetary policy is up to the BOJ, but expressed readiness for close contact between the central bank and MoF. Also of note, local press speculated that among the 7 current supporters of monetary easing on the BOJ board, there is now as split with only 3 favoring the current policy of bond purchases with negative rates and the others being more skeptical, opening up the likelihood of a close call for changes to the current stance and potentially a new framework in policy response.
- Australia Treasurer Morrison warned that spending cuts and revenue increases alone will not be enough to repay Australia's debt, as policymakers should tackle the problem of slow earnings growth. Note that the Treasury will also put out its Mid-Year Economic and Fiscal Outlook (MYEFO) report next week along with the latest RBA policy meeting minutes from this month.
- Although Korea markets were closed, Samsung Electronics got more bad news as US consumer safety agency CPSC formally issued a recall on about 1M Galaxy Note 7 devices due recent cases of battery overheating and explosions. The company is in hot water with regulators who also claim that Samsung exacerbated the situation with the way it handled communication with consumers. Following the CSPC announcement, Samsung replied it aims for US availability of replacement Note 7 devices as part of voluntary recall no later than Sept 21st.
***Equities***
US equities / ADRs:
- DEPO: Said to be exploring sale following calls from Starboard; Said to reject approach from Arbor Pharma - financial press; +12.7% afterhours
- CAR: To replace Questar in S&P MidCap 400 index after the close of trading on Sept 16; +4.7% afterhours
- P: Announces direct licensing agreement with Warner Music Group; +2.2% afterhours
- ORCL: Reports Q1 $0.55 v $0.58e, R$8.60B v $8.72Be; Guides Q2 $0.59-0.62 v $0.65e (constant currency), Rev 0-3% y/y v +3%e; -3.2% afterhours
- DB: US DOJ said to have asked the bank to pay $14B to settle probe into mortgage securities, much higher than $2-3B estimated by DB counsel; Final settlement may be lower - financial press; -6.8% afterhours
- NVAX: Announces topline RSV F vaccine data from two clinical trials in older adults; topline data did not meet pre-specified efficacy objectives; -83.2% afterhours
Asia:
- JB Hi-Fi JBH.AU +6.9% (resumes after Good Guys acquisition)
- Estia Health EHE.AU +2.6% (new CEO)
- Myer MYR.AU -1.4% (broker commentary)
- Japan iPhone suppliers rise on strong demand of iPhone 7 as Apple leads S&P500 for 2nd straight day; Alps Electric +5.7%, TDK +4.4%