Asia Mid-Session Market Update: New Zealand trade deficit rises to 2-year high; Clinton-Trump in dead heat ahead of first debate
***Economic Data***
- (NZ) NEW ZEALAND AUG TRADE BALANCE (NZ$): -1.27B V -0.7BE; biggest deficit since Sept 2014; 2nd consecutive deficit
- (NZ) NEW ZEALAND Q3 WESTPAC EMPLOYMENT CONFIDENCE INDEX: 110.1 v 101.5 PRIOR
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 -0.7%, S&P/ASX flat, Kospi -0.3%, Shanghai Composite -0.7%, Hang Seng -0.7%, Dec S&P500 -0.2% at 2,154
***Commodities/Fixed Income/FX***
- Dec gold -0.3% at $1,338/oz, Nov crude oil +0.7% at $44.81/brl, Dec copper -0.2% at $2.20/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 0.3 tonnes to 951.2 tonnes; Highest since Sept 7th; 3rd straight increase
- SLV: iShares Silver Trust ETF daily holdings rise to 11,337 tonnes from 11,305 tonnes prior; multi-year high
- CitiGroup: 2016 will be the best year for commodities in 4 years - financial press
- (CN) PBOC to inject CNY120B in 14-day reverse repos and CNY10B in 28-day reverse repos
- (KR) South Korea sells 20-yr govt bond, avg yield at 1.505%
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥430B in 5-10yr JGBs and ¥25B in JGBs outright
- EUR 1.1225-1.1240; JPY 100.70-101.00; AUD 0.7605-0.7630, NZD 0.7220-0.7250
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6744 V 6.6670 PRIOR; weakest Yuan setting since Sept 19th
***Market Focal Points***
- Quiet session in Asia with focus falling on Energy and US Elections - Oil comes off Friday lows after Algeria Oil Min said negotiators will not come out from the meeting empty-handed, with a freeze deal remaining a potential outcome. Ahead of Monday's first Presidential debate, Hillary Clinton and Donald Trump are in a dead-heat according to Washington Post survey on both 2-party basis and including Libertarians and Greens. Some analysts have indicated that the market may come under pressure if Trump is perceived to be victorious when the candidates take the stage together for the first time.
- New Zealand dominated economic calendar, posting its biggest trade deficit in 2 years at -1.27B V -0.7BE. Exports came in at a 3-year low of 3.39B v 3.60Be while Imports were at a 9-month high of 4.65B v 4.30Be. Shipments of dairy were especially unsettling, falling 22% to NZ$475M, which analysts attributed to base-year effects. Q3 Westpac employment index rose to 110.1 from 101.5, but analysts warned "earnings expectations over the next 12 months continue to linger well below average levels and are only a touch above the all-time low reached late last year." Also down under, NAB chairman said Australia AAA credit rating may be at risk, while Treasurer Morrison stressed bringing the budget under control to borrow for infrastructure.
- In notable press reports, outspoken former Japan MOF official Sakakibara (Mr. Yen) concluded that the yield curve strategy the BOJ announced last week is appropriate, but also forecast USD/JPY declining toward to ¥90 in 2017. In China, Nanjing property regulators joined their 2nd tier city peers in imposing restrictions to cool the resurgent mainland housing market.
- Among emerging currencies, Turkish Lira plunged to a 6-week low near 3.00 after Moody's cut its credit rating on the sovereign by 1 notch to BA1. Rating agency said "Turkey continues to operate in a fragile financial and geopolitical environment, and its vulnerability has risen as a result of unpredictable political developments and volatile investor perception."
***Equities***
US equities / ADRs:
- CHMT: LANXESS signs contract to acquire Chemtura for $33.50/shr (€2.4B enterprise value)
- WFC: Former employees file a $2.6B class action law suit in California - NY Post
Notable movers by sector:
- Consumer discretionary: Olympus Corp 7733.JP -4.5% (Macquarie cuts to Neutral); Nichirei Corp. 2871.JP +5.9% (Daiwa raised to outperform); Fonterra FCG.NZ -0.2% (Jun-Aug milk collection)
- Industrials: Hyundai Merchant 011200.KR +7.2% (company may assess Hanjin assets); Daewoo Engineering & Construction 047040.KR +2.1% (KDB to sell stake); Calsonic Kansei Corp.7248.JP -2.1% (Mizuho cuts to neutral)
- Technology: Japan Display Inc 6740.JP -5.5% (asked banks for loan); TDK Corp 6762.JP -6.5% (Credit Suisse cuts to Neutral); Nikon Corp 7731.JP +2.3% (Citi raised to buy); E Ink Holdings Inc 8069.TW +4.7% (Apple said to assess electronic paper display)
- Materials: Sumitomo Bakelite Co 4203.JP +0.8% (Mitsubishi UFJ Financial Group raised to overweight); Chinalco Mining Corp International 3668.HK +25.7% (Chalco privatization plan); Rio Tinto RIO.AU +0.5% (Yancoal and Glencore said to acquire its certain assets); Resolute Mining RSG.AU -0.5% (Morgan Stanley cuts to equal weight)