Asia Mid-Session Market Update: Japan consumption on the mend as Household Spending and Retail Sales data top forecasts
***US Session Highlights***
- (US) NOV DALLAS FED MANUFACTURING ACTIVITY: 10.2 V 1.5E (first positive reading in 23 months)
- (RU) Kremlin spokesperson: Russia Pres Putin and Iranian President Rouhani agree to coordinate actions on hydrocarbons markets - press
- IBM: Pre-holiday online shopping was up +10% y/y; sees double-digit online sales growth on Cyber Monday
- Gold miners bounce along with prices; Post-election favorites see profit-taking
***US markets on close: Dow -0.3%, S&P500 -0.5%, Nasdaq -0.6%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Financials
- Biggest gainers: CTSH +7.0%, NRG +5.5%, NEM +4.8%, PEG +3.3%, ED +2.8%
- Biggest losers: HRB -9.0%, VMC -5.7%, PXD -4.9%, MRO -4.6%, MLM -4.0%
- At the close: VIX 13.2 (+0.8pts); Treasuries: 2-yr 1.10% (-1bp), 10-yr 2.32% (-5bp), 30-yr 2.98% (-4bp)
***US movers afterhours***
- TIVO: Netflix and TiVo enter into intellectual property agreements, which will allow both companies to deliver better experience to their customers; +9.6% afterhours
- THO: Reports Q1 $1.49 v $1.23e, R$1.71B v $1.52Be; +8.7% afterhours
- UNH: Guides initial FY17 $9.30-9.60 v $9.13e, R$197-199B v $197.5Be; +2.2% afterhours
- BOJA: Announces secondary of 6M shares (16.4% of shares outstanding); -7.1% afterhours
- SCVL: Reports Q3 $0.54 v $0.54e R$274.5M v $276M: Cuts FY16 $1.46 - $1.51 v $1.59e; -13.5% afterhours
- NVLS: Cavosonstat Phase 2 clinical trial results for treatment of Cystic Fibrosis failed to meet primary endpoint; -53.0% afterhours
***Asia Session Notable Observations, Speakers and Press***
- Markets appear to be in the holding pattern going into major risk events this week, namely the OPEC meeting on Wed, jobs data on Friday, and Italian referendum on Sunday. Currencies were in narrow ranges and metals off their highs on profit taking.
- Oil prices tracked lower in electronic trade in the wake of late US-hours reports that OPEC experts did not reach an output deal at their working meeting on Monday before the formal Wednesday summit. Subsequent reports in Asia suggest Saudi Arabia has offered Iran a freeze at 3.7MBD, below 3.97MBD requested by Tehran as it recovers from western sanctions.
- Economic data calendar focused on Japan, where the domestic component of the economic picture has brightened. Household spending y/y decline was at the lowest rate in 6 months, while sequential Retail Sales growth hit a 2-year high. Recall the private consumption part of Japan economy in Q3 was a paltry 0.1%.
Energy:
- (SA) Saudi Arabia offering Iran freeze at 3.7MBD v 3.97MBD requested by Iran; both delegates have made proposals at OPEC meeting
China:
- (CN) China State Administration of Foreign Exchange (SAFE): To pause outbound deals with $50M+ remaining FX quota; asked banks to report capital account trades of $5.0M+
- (CN) PBoC said to request some local banks to cap home mortgage loans - financial press
- (CN) PBoC Deputy Gov Yi Gang: Capital that has flown from China will return in the future citing abundant FX reserves and strong business environment - Chinese press
Japan
- (JP) Japan Iron and Steel Federation Chairman Kosei Shindo: Steel demand and production is recovering
- (JP) Japan considering tax breaks for home improvements - Nikkei
Australia:
- (AU) Macquarie: S&P/ASX200 to rise 7.5% in 2017 to reach 5,875
***Asia Key economic data:***
- (JP) JAPAN OCT RETAIL SALES M/M: 2.5% (2-year high) V 1.1%E; RETAIL TRADE Y/Y: -0.1% (smallest decline in 8 months) V -1.6%E
- (JP) JAPAN OCT OVERALL HOUSEHOLD SPENDING Y/Y: -0.4% V -1.0%E (8th consecutive decline, smallest decline in 6 months)
- (JP) JAPAN OCT JOBLESS RATE: 3.0% V 3.0%E; Job to applicant: 1.40 v 1.39e; multi-year high
- (AU) AUSTRALIA OCT HIA NEW HOME SALES M/M: -8.5% V 2.7% PRIOR
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.4%, Hang Seng flat, Shanghai Composite +0.6%, ASX200 flat, Kospi -0.2%
- Equity Futures: S&P e-mini -0.1%, Dax flat, FTSE100 +0.2%
***FX ranges/Commodities/Fixed Income (00:00ET):***
- EUR 1.0590-1.0620; JPY 111.60-112.25; AUD 0.7460-0.7500; NZD 0.7065-0.7085
- Dec Gold flat at 1,190/oz; Jan Crude Oil -0.7% at $46.75/brl; Mar Copper -1.4% at $2.62lb
- JGB: (JP) Japan MoF sells ¥2.08T in 2-yr 0.1% JGBs; Avg yield: -0.156% v -0.237% prior; bid to cover: 4.27x v 4.41x prior
- (KR) South Korea Central Bank sells 30-yr bond; Yield: 2.205% v 1.805% prior
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8889 V 6.9042 PRIOR (2nd consecutive firmer setting; Strongest fix in a week)
Notable movers by sector:
- Consumer discretionary: Tingyi Cayman Islands Holding Corp 322.HK -2.7% (Q3 result); Samsonite 1910.HK +2.7% (Q3 result)
- Financials: Tower TWR.AU -3.6% (FY16 result)
- Industrials: Bridgestone Corp 5108.JP -0.5% (Deutsche Bank cuts to hold); SMC Corp 6273.JP +0.7% (Jefferies raise to buy); Furukawa Electric Co 5801.JP +3.4% (Nomura raises to buy)
- Technology: Ourgame International 6899.HK +0.9% (Q3 result); Samsung Electronics 005930.KR +0.1% (to raise dividend)
- Materials: Pact Group Holdings PGH.AU +5.4% (UBS raises to neutral); ALS ALQ.AU -6.6% (H1 result)
- Energy: Horizon Oil HZN.AU +2.6% (guidance)
- Healthcare: Estia Health EHE.AU -6.7% (liquidity issues); Mayne Pharma MYX.AU -1.7% (Oct result)
- Telecom: Vocus Communications VOC.AU -24.3% (guidance)
- Utilities: Yaskawa Electric 6506.JP -2.1% (Jefferies cuts to underperform)