Asia Mid-Session Market Update: Yen spikes, equities slide on soft China trade data
***US Session Highlights***
- British Pound stabilizes on softer commentary from PM May
- OPEC Sept monthly oil market report; Maintains 2017 global oil demand at 1.15M bpd
- (UK) Brexit Min Davis: No one will be able to veto Brexit referendum result; it is the govt's right to determine when to trigger Article 50
- (US) FOMC Minutes: Several voting Fed policymakers thought rates should rise 'relatively soon'
- Fed funds futures outlook for 1 rate hike this year remains around 70%
***US markets on close: Dow +0.1%, S&P500 +0.1%, Nasdaq -0.2%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Healthcare
- Biggest gainers: BBY +3.8%, LB +3.5%, KR +3.5%, SWK +2.9%, CCI +2.8%
- Biggest losers: HUM -5.1%, MOS -4.3%, ENDP -4.1%, FFIV -3.3%, REGN -3.3%
- At the close: VIX 15.91 (+0.6pts); Treasuries: 2-yr 0.84% (-3bp), 10-yr 1.78% (+2bp), 30-yr 2.51% (+1bp)
***US movers afterhours***
- CSX +2.6%: Reports Q3 $0.48 v $0.45e, R$2.71B v $2.69Be
- WFC +1.8%: Confirms Chairman/CEO Stumpf retires, effective immediately; Board elects Sloan CEO; Director Sanger to serve as Chairman
- MELI -6.3%: Commences 5.5M share follow-on offering by eBay affiliates through Morgan Stanley and JPMorgan (12% of shares outstanding)
***Asia Session Notable Observations, Speakers and Press***
- China trade surplus slows to 6-month lows in both USD and Yuan terms; USD-denominated exports fall -10.0% v -3.3%e, biggest decline in 7 months; Imports fall -1.9% v +0.6%e; Disappointing data sparks selloff in Hong Kong equities as Hang Seng index falls to a 2-month low below 23,200; USD/JPY erases its earlier session gains to test below ¥104; S&P500 futures down over 12 handles below 100-day EMA of 2,120; Offshore CNY falls through 6.738 after 7th consecutive weaker setting by PBoC.
- Bank of Korea leaves rates on hold for the 4th straight decision in another unanimous decision; Lowers 2017 GDP target to 2.8% from 2.9% on speculation of slower growth in the wake of Samsung Galaxy Note 7 scandal; Pledges to monitor household debt; expects some improvement in exports and a gradual rise in inflation next year. KRW weakens through 1,130 vs USD - 1-month low.
- BOJ speculated to downgrade its FY17/18 CPI forecast to low-1% range from 1.7% when it announces its latest GDP and inflation forecasts on Nov 1st.
- Donald Trump facing NY Times allegations of unwanted physical advances from two named women.
- CSX is the first US rail major to announce Q3 earnings - beats on top and bottom line with a 70bp expansion in Operating ratio to 69.0% and affirms long-term growth target of mid-60's. Focus on Delta in pre-market on Thursday and top banks (C, JPM, WFC) on Friday. WFC announces immediate departure of CEO Stumpf in the wake of fake account scandal.
***Asia Key economic data:***
- (CN) CHINA SEPT TRADE BALANCE (USD): $42.0B (6-month low) V $53.0BE; Trade Balance (CNY): 278.4B (6-month low) v 364.5Be
- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED; (4th straight pause in current easing cycle)
- (AU) AUSTRALIA OCT CONSUMER INFLATION EXPECTATION: 3.7% V 3.3% PRIOR; 3-month high
- (NZ) NEW ZEALAND SEPT BUSINESS MANUFACTURING PMI: 57.7 V 55.2 PRIOR; matches Jan 2016 high
- (NZ) NEW ZEALAND SEPT ANZ JOB ADVERTISEMENTS M/M: 0.3% V 3.2% PRIOR
- (NZ) NEW ZEALAND OCT ANZ CONSUMER CONFIDENCE INDEX: 122.9 V 121.0 PRIOR; M/M: 1.6% V +2.8% PRIOR
- (UK) SEPT RICS HOUSE PRICE BALANCE: 17% V 14%E; 4-month high
***Asian Equity Markets (23:00ET)***
- Nikkei -0.4%, Hang Seng -1.5%, Shanghai Composite -0.1%, ASX200 -0.9%, Kospi -0.6%
***FX ranges/Commodities/Futures/Fixed Income (23:00ET):***
- EUR 1.1000-1.1035; JPY 103.60-104.60; AUD 0.7520-0.7570; NZD 0.7035-0.7070
- Dec Gold +0.6% at 1,260/oz; Crude Oil -1.0% at $49.67/brl; Copper -0.2% at $2.17/lb
- Equity Futures: S&P e-mini -0.7%, Dax -0.4%, FTSE100 -0.4%
- (US) Weekly API Oil Inventories: Crude: +2.7M v -7.6M prior; 1st build in 4 weeks
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7296 V 6.7258 PRIOR (7th consecutive weaker setting, lowest CNY setting since Sept 2010)
- (CN) PBOC to inject CNY20B in 7-day reverse repos
- (JP) BOJ offers to buy ¥410B in 5-10yr JGBs, ¥190B in 10-25yr JGBs and ¥110B in JGBs with maturity over 25-yr
- (NZ) New Zealand sells NZ$100M in 2035 inflation indexed bonds; avg yield 1.9016%
***Asia movers***
- Consumer discretionary: Kirin Holdings Co 2503.JP -0.2% (acquisition of 25% of Brooklyn Brewery); Saizeriya Co 7581.JP -1.4% (annual result); Lawson 2651.JP +1.7% (H1 result)
- Consumer staples: Seven West Media SWM.AU -1.3% (may sell stake in Sky News); Cosmos Pharmaceutical Corp 3349.JP +2.5% (Q1 result)
- Financials: China Overseas Land 688.HK -1.9% (Sept result); Ping An Bank Co 000001.CN -0.3% (plans board change)
- Industrials: Suzuki 7269.JP +2.0% (speculation of partnership with Toyota); China Railway Construction Corp 1186.HK +1.9% (YTD result); Cathay Pacific Airways 293.HK -5.2% (lowers H2 outlook); Yamato Holdings Co 9064.JP +0.3% (H1 result speculation)
- Technology: Samsung Electronics 005930.KR +1.3% (cuts Q3 outlook)
- Materials: Evolution Mining EVN.AU +3.3%, Saracen Mineral Holdings SAR.AU +3.1% (gold rises); Alumina AWC.AU -3.7% (CitiGroup cuts to sell); Iluka Resources ILU.AU -1.9% (Q3 production result)
- Healthcare: Sigma Pharmaceuticals SIP.AU -3.7% (Morningstar cuts to reduce)