Asian Mid-session Update: China CPI slows on lower food prices; Singapor avoids technical recession as MAS policy via SGD slope reduction
***Economic Data***
- (CN) CHINA SEPT CPI Y/Y: 1.6% V 1.8%E; Rate of CPI growth slows for the first time in 4 months
- (CN) CHINA SEPT PPI Y/Y: -5.9% V -5.9%E; (43RD MONTH OF DECLINE)
- (SG) SINGAPORE CENTRAL BANK (MAS) BI-ANNUAL POLICY STATEMENT: KEEPS SGD CURRENCY ON APPRECIATION PATH WITH BAND WIDTH AND CENTER UNCHANGED; REDUCES SLOPE - (2nd adjustment in 2015)
- (SG) SINGAPORE Q3 ADVANCED GDP Q/Q: +0.1% V -0.1%E; Y/Y: 1.4% V 1.3%E; Avoids technical recession
- (JP) JAPAN SEPT M2 MONEY STOCK Y/Y: 3.8% V 4.3%E; M3 MONEY STOCK Y/Y: 3.1% V 3.5%E
- (JP) JAPAN SEPT CGPI (PPI) M/M: -0.5% V -0.4%E; Y/Y: -3.9% V -3.9%E
- (AU) AUSTRALIA OCT WESTPAC CONSUMER CONFIDENCE INDEX: 97.8 V 93.9 PRIOR, M/M: +4.2% V -5.6% PRIOR
- (KR) SOUTH KOREA SEPT UNEMPLOYMENT RATE: 3.5% V 3.6%E; 8-month low and 3rd straight decline
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -2.0%, S&P/ASX -0.2%, Kospi -0.3%, Shanghai Composite +0.1%, Hang Seng -0.6%, Dec S&P500 flat at 1,994
***Commodities/Fixed Income***
- Dec gold +0.5% at $1,171/oz, Nov crude oil +0.4% at $46.84/brl, Dec copper +0.4% at $2.39/lb
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3408 v 6.3231 prior setting; first weaker Yuan setting since Sept 24th
- (CN) China MoF sells 10-yr bonds at 2.99% v 3.10%e
- JGB: (JP) Japan MoF sells ¥2.32T in 0.1% coupon 5-year JGB bonds; Avg yield: 0.053% v 0.067% prior; Bid-to-cover: 2.79x (lowest since 2011) v 3.49x prior
***Market Focal Points/FX***
- Asian equity markets are mixed as investors digest slowing inflation in China, monetary policy adjustment in Singapore, and more bad news on the US earnings front going into tomorrow's key retail sales data. USD majors were also volatile - USD/JPY fell about 30pips below ¥119.50 before recovering much of lost ground, AUD/USD fell for 2nd straight day about 50pips below $0.72, and NZD/USD outperformed with a 60pip rally off the lows to $0.6680. SGD strengthened after Singapore avoided a technical recession with a positive Q3 GDP, and MAS maintained strengthening pace of the currency in its semiannual policy, with USD/SGD falling some 100pips below S$1.3920.
- China CPI missed expectations and the rate of inflation slowed after 3 straight months of increases. Most of the deceleration however was behind the food component which slowed to 2.7% v 3.7% prior - Non-food inflation was little changed around 1%. China Stats bureau said the lower CPI was mainly due to high base effect in the prior year, though economist did speculate that the figures give PBoC some scope for easing.
- Singapore central bank's biannual policy statement maintained SGD currency on appreciation path with unchanged band width, but reduced the slope of appreciation for the 2nd time this year. MAS added core inflation would remain subdued in 2015 around -0.5% vs prior forecast of -0.5% to +0.5, but forecast it would rise to about 0.5-1.5% in 2016. MAS also remarked the global outlook has been softer and warned the headwinds may persist.
- Westpac decided to pass on some of the higher capital requirements to consumers, raising the variable mortgage rate by 20bps, along with announcing a capital raise. Analysts with Macquarie see the Westpac move as helping build the case for lower RBA rates next month to help offset the effect on borrowers. Accompanying the surprise decision, WBC reported prelim FY15 Net A$8.01B v A$7.56B y/y on Rev A$21.6B v A$19.9B y/y. The bank did post some encouraging metrics - CET1 capital ratio was up to 9.4% v 9.0% y/y while 90day+ delinquencies in mortgage and credit card units were down marginally. Also down under, commentary from RBNZ Gov Wheeler briefly sent NZD/USD lower as he noted additional easing seems likely and China outlook posed a key concern.
- Intel and JPMorgan were down nearly 3% and 2% respectively after posting Q3 results. The former met consensus numbers but gross margins slowed, as INTC also cut its outlook for FY15 capex. JPM missed on both top and bottom line, though CET1 ratio rose 80bps. WFC, DAL, and BLK highlight the US pre-market earnings session.
***Equities***
US equities / ADRs:
- SNDK: Said to have hired advisors to explore sale of company; +11.7% afterhours
- LLTC: Reports Q1 $0.46 v $0.46e, R$342M v $343Me; +4.0% afterhours
- JPM: Reports Q3 $1.32 (adj) v $1.38e, R$23.5B v $23.8Be; -1.7% afterhours
- UA: UA: Piper Jaffray Cuts UA to Neutral from Overweight, price target: $113; -1.3% afterhours
- INTC: Reports Q3 $0.64 v $0.59e, R$14.5B v $14.2Be; -2.8% afterhours
- CPHD: Reports Q3 prelim -$0.13 adj v -$0.26e, R$126.5M v $128Me; -14.2% afterhours
Notable movers by sector:
- Consumer discretionary: Domino's Pizza Enterprises DMP.AU +5.6% (acquisition)
- Consumer staples: Daio Paper Corp 3880.JP +3.4% (H1 result speculation)
- Financials: Greentown China 3900.HK +0.8% (YTD result); Huatai Securities Co 6886.HK -1.1% (Sept result); Westpac Banking Corp WBC.AU -0.6% (FY15 prelim result); iSelect ISU.AU +2.4% (confirms receiving acquisition proposal)
- Industrials: Zoomlion Heavy Industry Science and Technology Co 000157.CN -0.6% (profit warning); BAIC Motor Corp 1958.HK -1.7% (Q3 result); Weichai Power 2338.HK -4.8% (profit warning); AVIC Aero-Engine Controls Co 000738.CN +10.0%, AVIC Aviation Engine Corp 600893.CN +10.0% (AVIC may ends control)
- Technology: Nikon Corp 7731.JP -5.5% (H1 result speculation)
- Materials: Yunnan Salt & Chemical Industry Co 002053.CN +5.8% (profit alert); Xiamen Tungsten 600549.CN +10.0% (cuts production); Regis Resources RRL.AU +2.6% (exploration drilling result); Lynas Corp. LYC.AU +15.8% (Q1 result)