Asia Mid-Session Market Update: China PMI's show continued stabilization; Deutsche Bank in talks with DOJ, nothing definitive decided on settlement
***Asia Notes/Observations***
- China official PMIs out over the weekend show continued improvement, with manufacturing in expansion for the 2nd straight month and services edging higher following last month's drop. Key manufacturing components saw New Export Orders hit a 4-month high, New Orders in expansion for 7th straight month, Input Prices reaching a 5-month high, and Employment rising to its best level of the year. Some analysts suggest the stable PMIs could keep the PBoC on the sidelines as long as the bounce continues.
- China mainland markets are closed for the Golden Week holiday, though focus will fall on the property developers after regulators announced some fresh housing curbs - Chengdu and Zhengzhou banned people from buying a 3rd house, Beijing increased down-payments for first-time purchases to 35%.
- US financial press notes analysts speculate that OPEC production cut of 700K bpd is not large enough and will not happen quickly enough to address global supply glut; Oil prices fell about 0.5% in early electronic trade.
- After Friday's report that Deutsche is near a $5.4B settlement with US officials over mortgage bonds, a follow-up report on Sunday indicated that while DB is in continued talks with the DOJ, no deal has been presented to senior decision-makers for approvals by either side; Separately, German press reported top German corporates have voiced their support for DB and its integral importance in the economy.
- Tesla surprised with a Q3 preannouncement of sales and production - output was up 70% q/q at 24.5K (15.8K were Model S and 8.7K Model X) and company also maintained its H2 target of 50K deliveries; Q4 seen at or slightly above Q3, despite Q4 being a shorter quarter.
***Equity Futures (23:30ET): S&P e-mini +0.1%, Dax closed, FTSE100 +0.2%***
***FX / Commodities ranges (23:30ET):***
- EUR 1.1225-1.1245; JPY 101.20-101.60; AUD 0.7640-0.7665, NZD 0.7255-0.7285
- Gold +0.1% at 1,319/oz; Oil -0.5% at $48.02/brl; Copper flat at $2.21/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.1 tonnes to 948.0 tonnes; 2nd straight decline
- SLV: iShares Silver Trust ETF daily holdings fall to 11,270 tonnes from 11,287 tonnes prior; 2nd straight decline
***Asian Equity Markets (23:30ET)***
- Nikkei +1.1%, Hang Seng +1.3%, ASX +0.9%, Shanghai closed, Kospi closed
***Key economic data:***
- (CN) CHINA SEPT MANUFACTURING PMI (GOVT OFFICIAL): 50.4 V 50.5E; 2nd straight expansion; matches 23-month high; Non-manufacturing PMI (Services): 53.7 v 53.5 prior
- (HK) Macau Sept casino revenue 18.4B patacas v 18.8B m/m, y/y: +7.4% (2nd straight increase after 26 months of decline) v +1.1% prior
- (JP) JAPAN Q3 TANKAN LARGE MANUFACTURING INDEX: 6 V 7E; MANUFACTURERS OUTLOOK: 6 V 8E; ALL-INDUSTRY CAPEX: 6.3% V 6.5%E
- (JP) JAPAN SEPT FINAL PMI MANUFACTURING: 50.4 V 50.3 PRELIM
- (AU) AUSTRALIA SEPT AIG MANUFACTURING INDEX: 49.8 V 46.9 PRIOR (2nd consecutive month of contraction)
- (AU) AUSTRALIA SEPT MELBOURNE INSTITUTE INFLATION M/M: 0.4% (3-month high) V 0.2% PRIOR; Y/Y: 1.3% (3-month high) V 1.2% PRIOR
- (AU) AUSTRALIA SEPT CORELOGIC RPDATA HOUSE PRICES M/M: 1.0% V 1.1% PRIOR
- (KR) SOUTH KOREA SEPT TRADE BALANCE: $7.1B V $7.3BE; Exports Y/Y: -5.9% v -4.2%e; Imports Y/Y: -2.3% v -2.7%e
***Speakers / Press / Fixed Income***
China:
- (CN) China implements additional property control measures in more cities over the past several days - financial press
- (CN) ANZ: China PMI figures indicate that September's economic statistics will be much more resilient than expected
- (CN) ING raises China 2016 GDP target to 6.7% from 6.6% - financial press
- (CN) PBOC pledges to maintain prudent monetary policy and proper level of liquidity - China Daily
Japan:
- (JP) BOJ Gov Kuroda: Reiterates there is plenty of room to ease policy; new framework boosted previous one
- (JP) Japan Chief Cabinet Sec Suga: BOJ govt appointment issue is far in the future
- (JP) Japan PM Abe's advisor Nakahara: BOJ Gov Kuroda may have lost his chance of getting a 2nd term - financial press
- (JP) Japan's top 5 mortgage lenders are keeping their rates unchanged in October; In wait-and-see mode after the latest BOJ policy shift to yield control - Nikkei
Australia:
- (AU) Montgomery Investments: Australia banks' ROE, which averaged 14%, is expected to fall - AFR
- (AU) S&P/ASX200 extending gains above 5,480; 1-month high
***Asia movers***
- 3382.JP Seven & I Holdings +1.2%; Cuts FY16/17 guidance to Net ¥80B from ¥172B, Op profit ¥353B from ¥379B; Rev cut to ¥5.77T from ¥6.14T prior forecast; To take a ¥61B impairment charge
- 7012.JP Kawasaki Heavy: -11.3%; Cuts FY16/17 guidance to Net ¥16.5B v ¥49B prior, Op Profit ¥34B v ¥70B prior, Rev ¥1.51T v ¥1.5T prior (update)
- 6502.JP Toshiba +0.9%; Deutsche Bank Initiates 6502.JP with Buy
- 1381.HK Canvest Environment Protection +1.4%; Awarded Lufeng City waste to energy project; terms not disclosed
- 1190.HK: Bolina Holding +48.6%; Updates on share price activity; There has been negotiation regarding sale of Chairman holdings
- 992.HK Lenovo +0.8%; Sells Beijing Lenovo Research Tower in Beijing for CNY1.78B; gain arising from the Disposal is estimated to be ~CNY1.381B (update)
- 1928.HK Sands China LTD +1.6%, 2282.HK MGM China +3.3%, 27.HK Galaxy Entertainment +3.4%, 880.HK SJM Holdings +2.1%; Macau Sept casino revenue was 2nd straight increase