Asia Mid-Session Market Update: Australia Retail Sales top estimates; USD under modest pressure despite rising US yields
***US Session Highlights***
- (US) NOV FINAL MARKIT MANUFACTURING PMI: 54.1 V 53.9E (highest since Oct 2015)
- (US) NOV ISM MANUFACTURING: 53.2 V 52.5E; PRICES PAID: 54.5 V 54.5E (demand is straining US factory capacity slightly)
***US markets on close: Dow +0.4%, S&P500 -0.4%, Nasdaq -1.4%***
- Best Sector in S&P500: Industrials
- Worst Sector in S&P500: Technology
- Biggest gainers: DO +6.9%, SWN +6.9%, GM +5.5%, FLS +5.1%, HBAN +4.6%
- Biggest losers: MCHP -7.5%, ADI -7.0%, LRCX -7.0%, SWKS -6.6%, AMAT -6.5%
- At the close: VIX 14.1 (+0.7pts); Treasuries: 2-yr 1.14% (+2bp), 10-yr 2.44% (+7bps), 30-yr 3.10% (+8bps)
***US movers afterhours***
- FIVE: Reports Q3 $0.10 v $0.09e, R$199.5M v $200Me; +11.1% afterhours
- ULTA: Reports Q3 $1.40 v $1.37e, R$1.13B v $1.11Be; +5.9% afterhours
- ASNA: Reports Q1 $0.18 v $0.21e, R$1.68B v $1.71Be; +3.8% afterhours
- SBUX: CEO Howard Schultz to step down, to become exec Chairman; COO Kevin Johnson to take over as CEO; effective April 3, 2017; -3.3% afterhours
- ZUMZ: Reports Q3 $0.43 v $0.36e, R$221.4M v $220Me; -5.3% afterhours
- SWHC: Reports Q2 $0.68 v $0.55e, R$234M v $228Me; -5.3% afterhours
- AMBA: Reports Q3 $1.11 v $0.94e, R$100.5M v $96.0Me; Guides Q4 R$84-87M v $88.9Me; -6.3% afterhours
- ATI: Suspends quarterly dividend (prior 1.8% yield); -7.1% afterhours
- GIII: Reports Q3 $1.50 v $1.53e, R$883M v $938Me; -9.8% afterhours
- WDAY: Reports Q3 +$0.03 v -$0.04e, R$409.6M v $401Me; -11.8% afterhours
***Politics***
- (US) Goldman Sachs COO Cohn being considered for Energy Secretary by Pres-elect Trump - Fox Business
- (FR) France PM Manuel Valls to step down; To be replaced by Bernard Cazeneuve - press
- (KR) South Korea opposition parties agree to propose a motion to impeach Pres Park - Korean press
***Asia Session Notable Observations, Speakers and Press***
- Asian markets starting to strain under the pressure of rising US Treasury yields
- US tech sector under increasingly heavier selling pressure to fund rotation into Financials and Industrials.
- USD majors in narrow ranges ahead of Friday's non-farm payrolls. USD with marginal declines against JPY, EUR, AUD, NZD for 2nd straight day.
- Australia retail sales top expectations and CBA raises fixed rates as economist sentiment over RBA policy bias in 2017 differs between more cuts and highs
- Fitch joins Moody's in warning about China property sector correction in 2017.
China
- (CN) Former PBoC adviser Yu: China should cut intervention in FX market; Should not promote Yuan internationalization too aggressively - press
- (CN) Bank of Communications (BoCom) economist: Pickup of economy lifted by increasing infrastructure projects - Chinese press
- (CN) Fitch: China residential sales to fall about 15% in 2017
Japan
- (JP) Japan govt preparing to issue more debt-covering bonds due to likely shortfall in tax rev this year - Japan press
- (JP) Former BOJ member Shirai: BOJ should raise 10-year JGB yield target to 0.5-1.0% (**currenty at around 0%) - press
- (JP) Japan Fin Min Aso: no comment on appointment of Steven Mnuchin as US Treasury Sec
Australia
- (AU) NAB: Australia Q3 real GDP seen at -0.2% q/q v +0.5% in Q2
- CBA Raises fixed rates on owner occupied investment loans
***Asia Key economic data:***
- (AU) AUSTRALIA OCT RETAIL SALES M/M: 0.5% V 0.3%E
- (JP) JAPAN NOV MONETARY BASE Y/Y: 21.5% v 22.1% PRIOR; MONETARY BASE END OF PERIOD: ¥419.8T v ¥417.6T PRIOR
- (KR) SOUTH KOREA Q3 FINAL GDP Q/Q: 0.6% V 0.7%E; Y/Y: 2.6% V 2.7%E
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.8%, Hang Seng -1.3%, Shanghai Composite -1.0%, ASX200 -1.0%, Kospi -0.8%
- Equity Futures: S&P e-mini -0.2%, Dax -0.3%, FTSE100 -0.4%
***FX ranges/Commodities/Fixed Income (00:00ET):***
- EUR 1.0655-1.0690; JPY 113.60-114.20; AUD 0.7400-0.7435; NZD 0.7085-0.7105
- Dec Gold +0.6% at 1,176/oz; Jan Crude Oil -0.7% at $50.67/brl; Mar Copper -1.1% at $2.61/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 13.7 tonnes to 870.2 tonnes; 13th straight decline; lowest since May 31st
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8794 V 6.8958 PRIOR; Strongest Yuan fix since Nov 17th
- (CN) PBOC to inject CNY160B in 7-day reverse repos, CNY60B in 14-day reverse repos, and CNY25B in 28-day reverse repos; Injects net CNY70B this week v injected CNY40B prior
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥410B in 5-10yr JGBs, and ¥500B in T-Bills
- (AU) Australia Finance Ministry (AOFM) sells A$900M in 2019 bonds; avg yield 1.969%; bid-to-cover 2.72x
***Asia equities / Notables / movers by sector***
- Consumer discretionary: Clarion Co 6796.JP +13.3% (Credit Suisse raised to outperform); Sands China 1928.HK -5.1% (EPS expectations lower than peers)
- Consumer staples: Bellamy's Australia BAL.AU -41.6% (guidance)
- Industrials: Hanjin Shipping Co 117930.KR +4.0% (terminal sales speculation); Komatsu 6301.JP -1.9% (SMBC cuts to underweight); Tadano 6395.JP +5.2% (JPMorgan raises to overweight); Fuji Heavy Industries 7270.JP -1.0% (Macquarie cuts to underperform); Honda Motor 7267.JP -0.7% (Macquarie cuts to neutral); Hyundai Motor Co 005380.KR +1.5% (Nov result)
- Technology: NetDragon Websoft 777.HK -2.7% (Q3 result); Taiwan Semiconductor Manufacturing Co 2330.TW -2.5%, Catcher Tech 2474.TW -0.8%, Pegatron Corp 4938.TW -1.7% (iPhone shipment expectations reduced)
- Materials: Sims Metal Management SGM.AU +1.2% (share buyback); Alumina AWC.AU -3.5% (UBS cuts to sell); Nippon Steel & Sumitomo Metal Corp 5401.JP +1.1% (Mizuho raised to buy); Evolution Mining EVN.AU +5.8% (gold rises)
- Energy: Beach Energy BPT.AU -0.9% (Copper energy lowers stake); Karoon Gas Australia KAR.AU -1.7% (Wellington Management cuts stake); China Shenhua 1088.HK +1.6%?(China to stabilize coal market)