Asia Mid-Session Market Update: Oil rises on renewed OPEC optimism; Japan trade data mixed, Oct exports disappoint after strong showing in Q3 GDP
***Friday US markets on close: Dow -0.2%, S&P500 -0.2%, Nasdaq -0.2%***
- At the close: VIX 12.9 (-0.5pts); Treasuries: 2-yr 1.08% (+2bps), 10-yr 2.34% (+6bps), 30-yr 3.02% (+3bp)
- Best Sector in S&P500: Conglomerates
- Worst Sector in S&P500: Healthcare
***Weekend US Corporate Headlines***
- HW: To be acquired by Australia's Boral for $2.6B or $24.25/shr cash; Boral intends to raise approximately A$2.06B in new equity to partially fund the acquisition
- LOCK: Confirms to be acquired by Symantec for $2.3B or $24/shr; Symantec raises share repurchase program by $500M (3.3% of market cap) to $1.3B
***Politics***
- (US) President-elect Trump's choice of Treasury Sec narrowed down to economic advisor Steven Mnuchin and Rep Hensarling (R-TX) - press
- (DE) German Chancellor Merkel: Plans to run for 4th term as Chancellor; 2017 election will be "very difficult"; I am not irreplaceable within the CDU party
- (FR) France President center-right primary results: Francois Fillon with 44%; Alain Juppe 28% and Nikolas Sarkozy (concedes defeat) with 22%; Fillon and Juppe move to run-off next weekend.
- (KR) South Korea prosecutors determine Pres Park had a role in influence-peddling case; Top opposition Democratic Party calls for impeachment - press
***Asia Session Notable Observations, Speakers and Press***
Energy:
- Oil prices rise over 1% in electronic trade; Iraq's al-Luaibi said he plans to offer new proposals at Vienna meeting for output cut, Iran's oil min expressed confidence that members will reach a consensus, and Russia's Putin stated it would not be hard for Russia to freeze oil output.
China:
- China Pres Xi: US-China relations are at a "hinge-moment" following US presidential elections; Hopeful for a smooth transition in relations with pres-elect Trump.
- Goldman Sachs: China property developers may begin to cut prices in Q1 of 2017; Implementation of curbs in Shanghai, Nanjing and Suzhou has been stricter than in previous cycles.
Japan:
- Trade balance misses consensus on headline but beats on adjusted basis for its best print in nearly 5 years; Exports fall for 13th straight month, imports fall for 22nd straight month; Exports to Europe, Asia and China down just over 9%, exports to US down over 11% y/y.
- FSA to monitor banks' securities management amid sharp rise in JGB yields following US elections, citing concerns over widening of unrealized losses on investment into bonds
Australia:
- Goldman raises AUD/USD 3-month target to $0.78 from $0.75 and 12-month to $0.75 from $0.72. Sees Australia moving through transition point, and RBA will contemplate rate hikes thanks to sharply improving trade balance and stronger private sector demand.
- Conversely, NAB sees AUD/USD fall to $0.70 next year given risks that US interest rates will rise above RBA's OCR. NAB states under these conditions AUD typically falls below $0.60.
***Asian Equity Markets (23:30ET)***
- Nikkei225 +0.7%, S&P/ASX flat, Kospi -0.2%, Shanghai Composite +0.9%, Hang Seng +0.3%
***FX ranges/Commodities/Futures/Fixed Income (23:30ET):***
- EUR 1.0580-1.0615; JPY 110.65-111.20; AUD 0.7310-0.7545; NZD 0.6985-0.7025
- Dec gold +0.1% at $1,210/oz, Jan crude oil +1.4% at $47.10/brl, Dec copper +1.9% at $2.52/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 5.3 tonnes to 920.6 tonnes; 7th straight decline; lowest since June 22nd
- SLV: iShares Silver Trust ETF daily holdings fall to 10,891 tonnes from 11,080 tonnes prior; 4th straight decline; lowest since July 31st
- Equity Futures: S&P500 +0.2%, Dax +0.1%, FTSE100 +0.2%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8985 V 6.8796 PRIOR; weakest Yuan setting since 2008; 12th straight day of weaker Fix
- (CN) PBOC to inject CNY110B in 7-day reverse repos, CNY60B in 14-day reverse repos, and CNY15B in 28-day reverse repos
- (AU) Australia sells A$600M of 1.75% in 2020 bonds; avg yield 1.9852%; bid-to-cover 3.38x
- (KR) South Korea sells 20-yr bonds; avg yeild 2.235%
***Key economic data:***
- (JP) JAPAN OCT TRADE BALANCE: ¥496B V ¥610BE; ADJ TRADE BALANCE: ¥474B (highest since Nov 2011) V ¥404BE
- (NZ) NEW ZEALAND OCT CREDIT CARD SPENDING M/M: 2.8% V 2.6% PRIOR; Y/Y: 10.2% V 8.2% PRIOR
- (TH) THAILAND Q3 GDP Q/Q: 0.6% V 0.7%E; Y/Y: 3.2% V 3.3%E
***Asia movers***
- Oriental Press Group 18.HK: Reports H1 Net HK$60.0M v loss HK$6.0M y/y; Rev HK$507M v HK$604M y/y; +12.7%
- Melco International 200.HK: Credit Suisse Raised 200.HK to Outperform from Neutral; +7.9%
- Australia gold stocks upgraded at Deutsche; Northern Star Resources (NST) +5.3%; Regis Resources (RRL) +2.2%; Evolution Mining (EVN) +3.1%
- Doray Minerats; Macquarie Raised DRM.AU to Neutral from Underperform; +4.9%
- FamilyMart 8028.JP: Itochu said to spend around ¥40B to increase stake in the company - Nikkei; +4.8%
- Kingsoft 3888.HK: Reports Q3 Net CNY141.7M v CNY47.6M y/y; Rev CNY2.23B v CNY1.51B y/y; +4.0%
- Westfield WFD.AU: Macquarie Raised WFD.AU to Outperform from Underperform; +1.8%
- Fosun Intl; 656.HK: Entered into MOU setting out the terms of Fosuns investment in the share capital of BCP; +1.1%
- PYI Corp 498.HK: Reports H1 Net loss $3.8Mv loss $297.7M y/y, Rev $2.31B v $3.38B y/y; -3.0%
- Yuan Heng Gas Holdings Ltd 332.HK: Issues H1 profit warning; -4.3%