Asia Mid-Session Market Update: NZ GDP comes in better than expected; South Korea warns of weaker growth in 2017; Japan passes FY17/18 budget
***US Session Highlights***
- (US) EIA Crude Oil Stockpiles released today showed an unexpected increase of 2.256M barrels, compared to a decline last month of 2.563M barrels and expected figure of -2.515M. WTI crude fell by 1.4% on the day after the number was released.
- (IT) Banca Monte dei Paschi shares fell to record low on fears the institution could fail to raise €5 billion in new shares to save the oldest bank in the world. Markets have previously been concerned on the fall-out from a bank failure and bailout, whereas today's 10-year BTP yield declined as Italian bonds continued to rally.
- US Existing Home Sales reaches levels of 2007 at 5.61 million, compared to last month's 5.57 million. That sales figure was equivalent to an increase of 0.7% M/M and up 15% from year earlier. It is likely that as increasing interest rates make mortgages more expensive and houses begin to be more scarce, sales volumes begin to decrease in 2017.
- Boeing CEO Muilenberg tells Trump that the Air Force One airplanes are to cost less than $4 billion. Muilenberg gave his personal commitment on behalf of Boeing to keep costs under that number.
***US markets on close: Dow -0.16%, S&P500 -0.25%, Nasdaq -0.23%***
- Best Sector in S&P500: Energy
- Worst Sector in S&P500: Real Estate
- Biggest gainers: SWN 5.8%; MNST 4.2%; CNC 3.1%; MHK +1.8%; COG 2.8%; HAL +3.1%
- Biggest losers: BXP -2.1%, KIM -2.2%; CELG -2.3%; FSLR -3.7%; CAN -5%; VRTX -5%; TRIP -5.1%
- At the close: VIX 11.26 (-0.19pts); Treasuries: 2-yr 1.19% (-0.03bps), 10-yr 2.54% (-0.02bps), 30-yr 3.12% (-0.03bps)
***US movers afterhours***
- RHT: Reports Q3 $0.61 v $0.58e, R$615.3M v $618Me; CFO to step down; -12.8% after hours
- MU: Reports Q1 $0.32 v $0.28e, R$3.97B v $3.78Be; +7.7% afterhours
- OVAS: Announces Business Update; To undergo corporate restructuring and cut workforce by 30%; -0.7% after hours
- MLHR: Reports Q2 $0.54 v $0.55e, R$577M v $594Me; -8.5% after hours
- BBBY: Reports Q3 $0.85 v $1.00e, R$2.96B v $3.02Be; -4.4% after hours
- CAMP: Reports Q3 $0.21 v $0.26e, R$83.4M v $83.5Me; -4.6% after hours
***Asia Key economic data:***
- (NZ) NEW ZEALAND Q3 GDP Q/Q: 1.1% V 0.8%E; Y/Y: 3.5% V 3.6%E
- (NZ) NEW ZEALAND Q3 CURRENT ACCOUNT BALANCE (NZ$): -4.89B V -4.89BE
- (UK) NOV GFK CONSUMER CONFIDENCE: -7 V -8E
- (NZ) New Zealand Nov M3 Money Supply y/y: 5.9% v 7.1% prior
***Asia Session Notable Observations, Speakers and Press***
- Asian markets were widely weaker in quiet pre-holiday trade, volumes remain thin and currencies range bound.
- Icahn confirms he will serve as a special advisor to President Trump and Trump names China critic Peter Navarro chief of newly formed White House Trade Council - a move seen that will put China/USD trade relations on ice.
- New Zealand saw the Kiwi rise 25pips to 0.6917 after Q3 GDP q/q came in at 1.1%, higher than analysts' expectations; y/y also higher than expected.
- McDonald's (MCD) said to sell its Taiwan units to Ambassador Hotel's Lee for a reported $300M and China units expected to be sold to CITIC with a deal announced after the new year.
- (JP) Japan Cabinet approves FY17/18 budget spending plan of ¥97.5T (record high) v ¥96.7T in current year. Also reduced JGB issuance plans to ¥154T from the current ¥162T. They also cut new JGB issuance budget seen at ¥34.37T v ¥34.43T in current year.
- (KR) Bank of Korea Gov Lee: Economy risks slowing down in 2017 lower than projected 2.8%; Govt needs to step up fiscal stimulus to rev up growth; planning to keep its own policy accommodative - parliament comments
China:
- (CN) PBoC said to have ordered cash injection yesterday to suppress sharp declines in bond markets - financial press
- (CN) Said that China Insurance Regulatory Commission (CIRC) is making more difficult for insurers to get new licenses as it seeks to reduce risks resulting from the aggressive business and investment practices of some players
- (CN) China to focus on reducing asset bubble risks in 2017 including limiting speculative activity in the real estate market, high corporate leverage and local govt debt - Chinese press
Japan:
- (JP) Under new voluntary rules after pressure from Govt, Japan automakers will pay subcontractors in cash as a rule and refrain from demanding unwarranted price cuts - Nikkei
- (JP) Based on the BOJ's ~¥10.7T in ETFs and the GPIF's disclosed equity positions the BOJ and Govt Pension Investment Fund account for one of the top 10% shareholders in 96% of listed companies - Nikkei
Australia/New Zealand:
- Focus will be on Cyclone Yyette, which is expected to make landfall this weekend in Western Australia's Pilbara iron ore region, this could impact shipping operations of the big miners.
- (NZ) New Zealand Fin Min Joyce: Will focus on fundamentals to boost growth; starting to see the benefits of a clear and stable focus on economic fundamentals
- (AU) According to data from IBISWorld Australia Dec retail sales are tracking -0.4% - press
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.3%, Hang Seng -0.8%, Shanghai Composite -0.2%, ASX200 +0.6%, Kospi -0.1%
- Equity Futures: S&P500 -0.2%; Nasdaq -0.1%, Dax -0.1%, FTSE100 flat
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0423-1.0448; JPY 117.40-117.71; AUD 0.7226-0.7257; NZD 0.6894-0.6923
- Feb Gold -0.1% at 1,132/oz; Jan Crude Oil +0.3% at $52.64/brl; Mar Copper -0.2% at $2.49/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 3.6 tonnes to 824.5 tonnes; 23rd straight decline; Lowest since Apr 29th
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.9435 V 6.9489 PRIOR
- (CN) PBOC to inject CNY100B in 7-day reverse repos, CNY70B in 14-day reverse repos and CNY50B in 28-day reverse repos
- (CN) China 10-yr bond yield falls 9.24bps to 3.28%
***Asia equities / Notables / movers by sector***
- Consumer discretionary: Bega Cheese BGA.AU +7.3% (continues recovering from losses); Seven West SWM.AU -0.3% (plans further inquiry re: CEO); Olympus Corp 7733.JP -5.0%; Cabcharge Australia CAB.AU -2.6% (Moringstar cuts to sell); PMP Ltd PMP.AU -15% (ACCC concerned about merger with IMG)
- Financials: Chiba Bank 8331.JP -1.9% (Credit Suisse cuts to underperform); Resona Holdings 8308.JP -2.4% (JPMorgan cuts to underweight)
- Industrials: Nissan Motor Co 7201.JP +1.1% (Nov result); NHK Spring Co. 5991.JP +5.0% (Morgan Stanley raised to equal weight); Kawasaki Kisen Kaisha 9107.JP -3.2%(reports on container tie up)
- Technology: LG Display Co 034220.KR +1.6% (Shinhan top picks); Reffind RFN.AU -7.7% (to cut cash burn in FY17); Oracle Corp Japan 4716.JP +3.0% (H1 result)
- Materials: Heemskirk Consolidated HSK.AU +50.0% (receives proposal)
- Energy: Caltex Australia CTX.AU -1.9% (acquisition); China Singyes Solar Technologies Holdings 750.HK +4.3% (contract award)
- Healthcare: Primary Health PRY.AU +0.9% (Bateman family may make bid);Ono Pharmaceutical Co 4528.JP -2.6% (cuts guidance)