asia Mid-Session Market Update: Australia employment data mixed as AUD/USD tests 6-week lows; New Zealand GDP undershoots consensus
***Economic Data***
- (AU) AUSTRALIA AUG EMPLOYMENT CHANGE: -3.9K (first decline in 6 months) V +15.0KE; UNEMPLOYMENT RATE: 5.6% (3-year low) V 5.7%E
- (AU) AUSTRALIA SEPT CONSUMER INFLATION EXPECTATION: 3.3% V 3.5% PRIOR; 4-month low
- (AU) AUSTRALIA AUG NEW MOTOR VEHICLE SALES M/M: +0.1% v -1.4% PRIOR; Y/Y: 2.9% v 1.3% PRIOR
- (NZ) NEW ZEALAND Q2 GDP Q/Q: 0.9% V 1.1%E; Y/Y: 3.6% V 3.6%E; YTD: 2.8%
- (NZ) NEW ZEALAND AUG BUSINESS MANUFACTURING PMI: 55.1 V 55.5 PRIOR; 5-month low
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -1.2%, S&P/ASX -0.2%, Kospi closed, Shanghai Composite closed, Hang Seng +0.5%, Dec S&P500 -0.1% at 2,111
***Commodities/Fixed Income***
- Dec gold +0.1% at $1,328/oz, Oct crude oil +0.2% at $43.65/brl, Dec copper -0.1% at $2.15/lb
- (JP) Japan investors sold net ¥607B in foreign bonds v sold ¥1.3T in prior week; Foreign investors sold net ¥479B in Japan stocks v bought ¥1.9B in Japan stocks in prior week
***Market Focal Points/FX***
- Asian equity markets are mixed with volatility remaining compressed as China, Taiwan, and Korea indices remained untraded in observance of Mid-Autumn Festival. Rate decisions from SNB and BOE loom large in the upcoming European session, while stateside the focus falls on the upcoming retail sales data on Thursday morning. Outlook for the BOJ next week is also playing into the overall uncertainty, with two separate press reports tipping in favor of more easing - Kyoto forecast another 10bps drop in negative interest rates to -0.2%, while Abe's advisor Hamada suggested there is more room for easing whether through negative rates or expanded asset purchases. US equity futures were down as much as 0.3% but recovered to trade just slightly lower. In FX, USD/JPY tested below ¥102 in spite of building BOJ move expectations, AUD/USD traded down some 40pips from the highs below $0.7550 on mixed employment data in Australia, and NZD/USD fell about 40pips below 0.7260 in the wake of a slight miss in NZ Q2 GDP.
- Australia August employment change was in the red for the first time in 6 months at -3.9K. Although unemployment rate fell further to a 3-year low of 5.6%, participation rate played into that decline with a 15-month low of 64.7% v 64.9%e. Aggregate hours worked were similarly unimpressive at -3.9M v +3.6M prior. AUD/USD fell 30pips to session lows on the release and S&P/ASX200 erased its declines, as the data could give the RBA a bit more leeway to consider another rate cut. In New Zealand, Q2 GDP was a slight miss q/q at 0.9% V 1.1%E, though components were less worrisome - Private consumption rose to 1.9% v 0.4% prior, capital formation rose to 6.0% v 4.2% prior, and exports grew 4% after a 1% drop last quarter. In the corporate space down under, Myer beat on top and bottom line in FY16, even though stock traded lower on plans for store closures.
***Equities***
US equities / ADRs:
- AERI: Reports positive Roclatan (netarsudil/latanoprost ophthalmic solution) 0.02%/0.005% Phase 3 topline efficacy results; +61.0% afterhours
- APOG: Reports Q2 $0.77 v $0.67e, R$278.5M v $271Me (1 est); +8.0% afterhours
- CLC: Reports Q3 $0.73 v $0.70e, R$331M v $340Me; -4.7% afterhours
Notable movers by sector:
- Consumer discretionary: China Southern Airlines Co 1055.HK -0.9% (Aug result); Lawson 2651.JP +5.8% (Mitsubishi confirms talks with Lawson about investment); Myer Holdings MYR.AU -2.7% (FY16 result); Reject Shop TRS.AU +7.5% (Morgan Stanley raised to Overweight)
- Financials: Commonwealth Bank of Australia CBA.AU +1.4% (Macquarie raised to Neutral); Mitsubishi Estate Co 8802.JP -3.4% (Jefferies cuts to Hold)
- Industrials: Nippon Electric Glass 5214.JP +3.3% (forms venture with Dongxu Optoelectronic); Komatsu 6301.JP +0.3% (Citi raised to Buy); BAIC Motor Corp 1958.HK +6.1% (may form China venture with Fiat)
- Technology: Screen Holdings Co 7735.JP -2.6% (UBS cuts to Sell)
- Utilities: Hokkaido Electric Power Co. 9509.JP -6.5% (Goldman cuts to Neutral)