Asian Mid-session Update: RBA stands pat but notes low inflation to open the door to more easing
***Economic Data***
- (AU) RBA LEAVES CASH RATE TARGET UNCHANGED AT 2.00%, AS EXPECTED
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 115.2 v 113.4 prior; highest level since February 2014
- (NZ) NEW ZEALAND OCT ANZ COMMODITY PRICE M/M: 6.9% V 5.5% PRIOR; 2nd straight increase
- (NZ) NEW ZEALAND OCT QV HOUSE PRICES Y/Y: 14.0% V 12.6% PRIOR
- (KR) SOUTH KOREA OCT CPI M/M: 0.0% V -0.2%E; Y/Y: 0.9% V 0.7%E; CPI CORE Y/Y: 2.3% V 2.1%E
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 closed, S&P/ASX +1.3%, Kospi +0.5%, Shanghai Composite flat, Hang Seng +1.4%, Dec S&P500 -0.1% at 2,094
***Commodities/Fixed Income***
- Dec gold flat at $1,135/oz, Dec crude oil +0.2% at $46.23/brl, Dec copper +0.2% at $2.32/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 3.0 tonnes to 689.3 tonnes; lowest since Oct 13th
- TRP.CA: Request suspension of US permit for Keystone XL pipeline
- (KR) South Korea sells 30-yr govt bonds, avg yield 2.30%
- (CN) PBoC to inject CNY10B in 7-day reverse repos (35th consecutive injection); Offer yield 2.25%, unchanged from prior
***Market Focal Points/FX***
- Tokyo markets were closed for holiday and China held steady, but the focus for the session was on Australia and the close call for today's RBA rate decision. Despite the even-keeled commentary from the RBA in recent statements, the soft Q3 CPI and the decision by lenders to raise mortgage rates so as to offset higher capital requirements has boosted speculation for an easing going into today's meeting. Instead, the RBA merely acknowledged the lower inflation in deciding to hold rates steady at 2.00%, adding that property lending conditions are still accommodative despite the higher borrowing rates. AUD/USD was volatile around the decision as RBA left itself some room for an easing down the road, but traded firmer by about 40pips above $0.7210. S&P/ASX held its gains of over 1%, and 3-year rates fell 2bps to 1.84%.
- Among notable press reports related to China, economists with ANZ forecast another RRR cut before the end of the year as a possibility. An investigation of corruption charges against the 2nd highest ranking exec at Dongfeng Motor also sent its shares sharply lower.
- Tokyo markets were closed, but there was a notable Nikkei feature suggesting analysts are increasingly skeptical that BOJ Gov Kuroda will be able to achieve 2% CPI by the time his term ends in 2018. This is well beyond the H2 of 2016 timeframe expressed by the central bank last week. Japan Center for Economic Research (JCER) also put out its estimated for Sept GDP falling into a contraction for the first time in 4 months, driven by a 0.5% drop in consumer spending.
- Korea CPI was slightly higher than expected, but remained below the BOK target range of 2.5-3.5%. Separately, a BOK report pledged to keep monetary policy accommodative as the ongoing recovery is steady and as inflation is expected to remain low.
- In FX, outside of the volatility around the RBA decision in AUD/USD, dollar majors were little changed. USD/JPY traded in a 20pip range below 120.85, EUR/USD was supported in a 20pip range above 1.10, and NZD/USD traded within 20pip on either side of 0.6750 ahead of the upcoming dairy auction results later today.
***Equities***
US equities / ADRs:
- KING: To be acquired by Activision for $5.9B, $18/shr cash (20% premium over Oct 30th close); Announced after close of extended session
- LMNX: Reports Q3 $0.22 v $0.10e, R$60.6M v $57.3Me; +11.2% afterhours
- ALL: Reports Q3 $1.52 v $1.32e, R$9.0B v $7.96Be; +2.8% afterhours
- LB: Raises Q3 $0.51-0.53 v $0.48e (prior $0.40-0.45); reports Oct SSS +5%; +2.6% afterhours
- CYH: Reports Q3 $0.51 v $0.56e, R$4.85B v $4.91Be; -0.4% afterhours
- THC: Reports Q3 $0.29 v $0.30e, R$4.69B v $4.64Be; Authorizes $500M share buyback (15.3% of market cap); -2.9% afterhours
- AIG: Reports Q3 $0.52 v $1.03e; -3.0% afterhours
- FIT: Reports Q3 $0.24 v $0.10e, R$409M v $347Me; Morgan Stanley agrees to release lock up restrictions for 2.3M shares; -8.1% afterhours
- CAR: Reports Q3 $1.98 v $1.99e, R$2.58B v $2.62Be; -8.6% afterhours
- QLYS: Reports Q3 $0.19 v $0.13e, R$42.5M v $42.3Me; -10.8%; -10.3% afterhours
Notable movers by sector:
- Consumer discretionary: Bega Cheese BGA.AU -1.5% (takeover target speculation)
- Financials: Industrial Securities Co 601377.CN +1.3% (to spin off unit); Evergrande Real Estate Group 3333.HK +2.4% (Oct YTD result); Agricultural Bank of China (ABC) 1288.HK +1.0% (President under probe)
- Industrials: Dongfeng Motor 600006.CN -4.2% (exec under probe); Daewoo Shipbuilding & Marine 042660.KR +8.7% (SK Group denies in talks for acquisition); Alexium International Group AJX.AU +1.6% (files for US listing); Kia Motors Corporation 000270.KR +4.0%, Hyundai Motor Co 005380.KR +2.8%(Oct vehicle sales); GrainCorp GNC.AU -1.2% (guidance)
- Technology: Mesoblast Ltd.:Technology
P:MSB.AU % (application to list on Nasdaq)
- Materials: Alumina AWC.AU +2.4% (curtailment)
- Energy: Hidili Industry International Development 1393.HK-1.3% (not in position to pay notes); Santos STO.AU +3.5% (speculation for equity raise)
- Healthcare: Livzon Pharmaceutical Group 1513.HK -13.6% (non-public share issuance)