Asian Mid-session Update: Japan avoids technical recession; China trade surplus undershoots estimates
***Economic Data***
- (CN) CHINA NOV TRADE BALANCE: $54.1B v $64.0BE
- (JP) JAPAN Q3 FINAL GDP Q/Q: 0.3% V 0.0%E; ANNUALIZED GDP: 1.0% V 0.2%E; Nominal GDP: 0.4% v 0.2%e
- (JP) JAPAN NOV BANK LENDING (INCL TRUSTS) Y/Y: 2.3% V 2.5% PRIOR; BANK LENDING (EX- TRUSTS) Y/Y: 2.3% V 2.3%E
- (JP) JAPAN OCT CURRENT ACCOUNT BALANCE: ¥1.46T (4-month low) V ¥1.59TE; ADJUSTED CURRENT ACCOUNT: ¥1.49T V ¥1.54TE; TRADE BALANCE: ¥200B (7-month high) V ¥202BE
- (AU) AUSTRALIA NOV NAB BUSINESS CONFIDENCE: 5 V 3 PRIOR; CONDITIONS: 10 (3-month high) V 10 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 116.3 v 112.8 prior
- (NZ) NEW ZEALAND Q3 MANUFACTURING ACTIVITY Q/Q: +4.2% V +1.0% PRIOR; MANUFACTURING ACTIVITY VOLUME Q/Q: +3.5% (7-quarter high) V -0.2% PRIOR
- (NZ) New Zealand Nov ANZ Truckometer Heavy M/M: 0.7% v 1.0% prior; 3rd straight rise
- (TW) Taiwan Nov CPI Y/Y: 0.5% v 0.4%e; WPI Y/Y: -7.8% v -8.0%e
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -1.0%, S&P/ASX -0.8%, Kospi -0.6%, Shanghai Composite -1.3%, Hang Seng -1.7%, Dec S&P500 -0.4% at 2,072
***Commodities/Fixed Income***
- Feb gold -0.3% at $1,071/oz, Jan crude oil +0.3% at $37.77/brl, Mar copper flat at $2.05/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.2 tonnes to 638.8 tonnes; Lowest since Sept 2008
- (CN) PBoC to inject CNY10B in 7-day reverse repos (45th consecutive injection)
- USD/CNY: (CN) PBoC sets yuan mid point at 6.4078 v 6.3985 prior; weakest Yuan setting since Aug 27th
- USD/CNY: Offshore Yuan falls through 6.4780; 3-month low
- JGB: (JP) Japan's MOF sells ¥729B in 1.40% 30-year bonds; Avg yield: 1.397% v 1.385% prior; Bid to cover: 3.93x (highest since Aug 2014) v 3.17x prior
***Market Focal Points/FX***
- Steep declines in energy that helped send US markets lower on Monday is also feeding into weakness in Asia. Sector names in Australia and China are hit particularly hard - Oil Search decline is exacerbated by Woodside Petroleum walking away from any partnership, while shares of CNOOC are down by over 4%. Tokyo indices are once again weighed down by firmer JPY after stronger than anticipated Q3 final GDP from Japan, with USD/JPY falling over 30pips below 123.10. In other FX majors, AUD/USD and NZD/USD are down by over 40pips and 20pips below 0.7230 and 0.6630 respectively.
- As forecasted by Econ Min Amari over the weekend, Japan dodged a technical recession with Q3 final GDP revised to a positive print. Private consumption was revised down to 0.4% from 0.5% prelim, but corporate Capex recovered to +0.6% v -1.3% prelim. Exports were also revised slightly higher from the initial print to 2.7% v 2.6% prior. Amari remarked the data were a positive surprise, but cautioned that the govt's overall FY15 GDP target remains ambitious even with this revision. Markets repriced expectations of further BOJ easing, matching the sentiment expressed by an earlier Nikkei feature suggesting support for further BOJ policy easing is waning and could result in even stronger JPY if markets lose confidence in QQE.
- China trade balance came in at a 4-month low, with exports decline bigger than expected at -6.8% v -5.0%e and imports drop slightly smaller at -8.7% v -11.9%e. Exports to EU were especially disappointing at -9.0% v -2.9% prior, even though iron ore imports rose 22% and copper up 9.5%. Comments from local analysts did not inspire much confidence, with some noting the stronger imports do not necessarily reflect a pickup in demand. China will put out is inflation data tomorrow, with the balance including industrial output expected over the weekend.
- Ahead of the RBNZ rate decision on Wednesday, a New Zealand press report citing a survey saw 21 out of 24 economists expect a rate cut. Fixed income markets have also leaned more heavily in favor of a cut since last week, weighing on NZD currency. Comments from the cabinet officials was also downbeat - the Treasury warned that domestic growth is weaker than expected while Fin Min English forecast growth in 2.0-2.5% for the next few years. Recall the latest Q2 GDP of 2.4% y/y was already a 2-year low.
***Equities***
US equities / ADRs:
- TXMD: Announces positive top-line results from its Phase 3 Rejoice Trial in postmenopausal women with vulvar and vaginal atrophy (VVA) treated with 25 mcg, 10 mcg or 4 mcg of TX-004HR; +42.4% afterhours
- DRYS: Reports Q3 -$0.03 adj v +$0.04 y/y, R$50.7M v $601.9M y/y; +6.9% afterhours
- HRB: Reports Q2 -$0.54 v -$0.49e, R$128M v $128Me; -3.9% afterhours
- UNFI: Reports Q1 $0.63 adj v $0.69e, R$2.08B v $2.09Be; -8.5% afterhours
- OUTR: Cuts FY15 guidance to $7.65-8.15 v $9.17e; Rev $2.17-2.19B v $2.24Be (guided $8.82-9.52, R$2.21-2.24B prior); -23.8% afterhours
Notable movers by sector:
- Consumer discretionary: Hainan Airlines Co 600221.CN +2.8% (cuts private placement size); China Airlines 601111.CN +6.6%, China Southern Airlines 600029.CN +3.7% (China to trial competitive slot allocation)
- Financials: PICC Property & Casualty 2328.HK -6.9% (AIG's share sale); Country Garden Holdings Co 2007.HK -2.3% (YTD result)
- Industrials: Guangzhou Automobile Group 2238.HK -3.6% (Nov result); Kia Motors Corporation 000270.KR -1.1% (expects vehicle sales to top record high this year); Orica ORI.AU -2.7% (impact on FY result)
- Technology: BYD Electronic International 285.HK -1.4% (transaction with parent); Advanced Semiconductor Engineering 2311.TW -1.8% (Nov result); Taiwan Semiconductor Manufacturing Co 2330.TW -0.7% (to launch wafer plant in China); AU Optronics Corp. 2409.TW -1.7% (Nov result)
- Energy: Oil Search OSH.AU -16.0%, Woodside Petroleum WPL.AU -3.8% (Woodside withdraws merger proposal of Oil Search)