Asian Mid-session Update: RBA Quarterly Statement cuts GDP and inflation outlook but maintains neutral stance; BOJ's Kuroda still willing to boost QE if needed
***Economic Data***
- (JP) JAPAN SEPT PRELIMINARY LEADING INDEX CI: 101.4 V 101.8E; COINCIDENT INDEX:111.9 V 112.1E
- (AU) AUSTRALIA OCT AIG PERFORMANCE OF CONSTRUCTION INDEX: 52.1 V 51.9 PRIOR; 3rd month of expansion
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.4%, S&P/ASX +0.3%, Kospi -0.2%, Shanghai Composite +0.5%, Hang Seng -0.8%, Dec S&P500 -0.1% at 2,092
***Commodities/Fixed Income***
- Dec gold +0.3% at $1,107/oz, Dec crude oil +0.5% at $45.43/brl, Dec copper +0.3% at $2.26/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 8.3 tonnes to 671.8 tonnes; lowest since Aug 8th
- (CN) China MOF sells 1-yr bonds, avg yield 2.41%
- (JP) BOJ offers to buy ¥70B in JGBs with maturity less than 1-yr and ¥400B in 5-10yr JGBs
- (JP) Japan investors bought net ¥883B in foreign bonds v bought ¥465B in prior week; Foreign investors bought net ¥1878B in Japan stocks v bought ¥325B in prior week
***Market Focal Points/FX***
- Asian equities are mixed, tracking the pause on Wall St going into Friday's non-farm payrolls. A strong number - anywhere above 200K - will likely solidify expectations for December FOMC liftoff even further. Fed funds futures are already pricing in over 50% chance of a hike next month, as short-term rates have continued to move higher. USD is also benefiting from those tailwinds in today's session, particularly vs JPY and AUD, after comments from BOJ Gov Kuroda and RBA Quarterly Policy statement. USD/JPY was up over 20pips above 121.85, while AUD/USD fell 20pips below 0.7140. EUR/USD traded in a 25pip range below 1.09.
- BoJ Gov Kuroda said the central bank is prepared to adjust policy to achieve 2% target if necessary, but still believes the current setting are enough to achieve price objective. Kuroda expressed the most concern over risks in emerging economy slowdown as it pertains to demand for Japan output and exports, and also called for wage growth to be reflected in the price trends. Overall, Kuroda said fundamentals in Japan are sound, as overall the comments continue to explain the BOJ maintaining its stance late last month despite some pressure to boost QE. On China, Kuroda said the chance of a hard landing on the mainland is low, and even the rising NPLs are not a challenge since Beijing has the reserve capacity to solve it. Separately, Japan PM Abe also cheered the economy, noting Japan is closer to escaping from deflation and reiterating the 2% inflation target can be met with current easing policy.
- Among notable comments from China, premier Li acknowledged that the transformation from investment-driven to consumer-led model is a painful process. A Chinese press report also called attention to bank NPLs in some provinces topping 2% - recall overnight CBRC announced Q3 NPLs nationwide hit a new record high of 1.59%
- Reserve Bank of Australia released its quarterly policy statement with projections for growth and inflation. RBA cut 2015 GDP at 2.25% v 2.50% prior, affirmed 2016 at 2.5-3.5%, and narrowed lower 2017 GDP 3.0-4.0% v 3.0-4.5% prior. On inflation, RBA lowered 2015 CPI by 0.5pts to 2.0%, but affirmed 2016 and 2017 at 2-3% range. Despite the lower expectations, RBA reiterated that economic improvement has been firmer and exports recovered in Q3, keeping the damage on AUD to a minimum. Economists with CBA said the central bank reiterated its conditional easing bias and will likely remain on hold unless domestic growth conditions slow dramatically.
***Equities***
US equities / ADRs:
- DATA: Reports Q3 $0.14 v $0.07e, R$170.8M v $156Me; +19.4% afterhours
- QRVO: Reports Q2 $1.22 v $1.11e, R$707.4M v $700Me; Announces $1B share repurchase (15% of market cap); +13.8% afterhours
- NVDA: Reports Q3 $0.46 v $0.25e, R$1.31B v $1.18Be; +9.9% afterhours
- PODD: Reports Q3 -$0.33 v -$0.26e, R$87.3M v $83.8Me; +8.8% afterhours
- MNST: Reports Q3 $0.84 v $0.81e, R$756.6M v $740Me; +8.1% afterhours
- SHAK: Reports Q3 $0.10 v $0.07e, R$53.3M v $47.1Me; +5.4% afterhours
- DIS: Reports Q4 $1.20 v $1.17e, R$13.5B v $13.6Be; -0.4% afterhours
- KHC: Reports Q3 $0.44 v $0.59e, R$6.12B v $6.10Be; -2.2% afterhours
- MHK: Reports Q3 $2.98 v $3.00e, R$2.15B v $2.17Be; -3.2% afterhours
- GLUU: Reports Q3 $0.06 v $0.00e, R$64.4M v $59.3Me; Cuts guidance; -20.5% afterhours
- MW: Reports preliminary Q3 $0.46-0.51 v $0.98e; cuts FY15 outlook now sees $1.75-2.00 v $2.79e; -30.5% afterhours
Notable movers by sector:
- Consumer discretionary: SAIC Motor Corp 600104.CN +10.0% (Oct result, private placement); Yamada Denki 9831.JP +5.8% (H1 result)
- Financials: CITIC Securities 6030.HK +3.3% (Oct result); Haitong Securities 6837.HK +3.2% (Oct result); China Merchants Securities Co 600999.CN +2.7% (Oct result); Everbright Securities Co 601788.CN +6.8% (Oct result); GF Securities Co 000776.CN +3.4% (Oct result)
- Industrials: Geely Automobile Holdings 175.HK -2.7% (Oct result); Tongfang Guoxin Electronics Co 002049.CN +10.0% (private placement); Hanjin Shipping Co 117930.KR -1.2% (Q3 result); Daikin Industries 6367.JP 2.2% (H1 result); Mitsubishi Chemical Holdings Corp 4188.JP +1.8% (H1 result); Sumitomo Rubber Industries 5110.JP -7.9% (9-month result)
- Technology: MediaTek 2454.TW -2.7% (Oct result); Funai Electric Co. 6839.JP -1.2 % (H1 result speculation)
- Materials: Marubeni Corp 8002.JP +1.6% (H1 result); BHP -2.5% (Discloses incident at Samarco iron operations; 15 people reported killed)
- Telecom: KDDI Corp 9433.JP +0.3% (H1 result)
- Utilities: Korea Electric Power Corp 015760.KR +1.0% (Q3 result)