Asia Market Update: Markets little moved on latest N. Korea missile launch even though it puts US in range; Bitcoin surges past $10,000, making fresh highs
***Headlines/Economic Data***
Asian equities markets trade mixed despite sharp gains seen in the US.
-Gains in Japan and Korea capped amid North Korean missile and upcoming Bank of Korea policy meeting
-Shanghai and Hong Kong markets trade generally lower
- Asian steelmakers outperform
- Semiconductor names continue to be pinned under Morgan Stanley note on the industry issued Monday
- BTC/USD Continues its surge above $10,000 (fresh record high) and continues to extend gains
Japan
-Nikkei 225 opened +0.6%; closed +0.5%
-TOPIX Securities Index +1.7%; Nomura +1.7% (announced a new ¥100B principal investment fund, buyback)
-Nomura: New principle business will provide funding for areas including corporate restructurings and MBOs; To inject up to ¥100B in the investment fund
-Megabanks track earlier rise in US financials: Mitsubishi UFJ +2.5%, Mizuho +1.8%, Sumitomo Mitsui +1.5%
-TOPIX Iron & Steel Index +2.7%; Steelmakers trade generally higher, JFE +4.5%, Nippon Steel +3.5% (broker commentary)
- Some chip-related shares remain under pressure: Tokyo Electron -5.5%, SUMCO -0.7%
-Yamaha Motor -3% (Yamaha Corp to lower stake)
-Nikkei looks at BOJ's vulnerability to a stock market downturn given the ¥20.3T worth of equity ETFs sitting on its balance sheet
- OECD thinks BOJ should maintain easing
- JAPAN OCT RETAIL SALES M/M: 0.0% V 0.2%E; RETAIL TRADE Y/Y: -0.2% V 0.2%E
-According to Japan Business Federation (Keidanren): to ask for 3% wage increase - Japan press
- (JP) Nikkei looks at BOJ's vulnerability to a stockmarket downturn given the ¥20.3T worth of equity ETFs sitting on its balance sheet
Korea
-KOSPI opened +0.1%, has since pared gains
-Samsung Electronics -0.9%
-North Korea: Confirmed fired new type of ICBM at HWASONG-15 that puts entire US in range; launch was successful
- South Korea Pres Moon: South Korea will strengthen its capabilities against North Korean provocations
-South Korea military conducts drills following earlier North Korea missile launch – South Korean Press
-Bank of Korea (BOK) Deputy Gov Yoon: says North Korea impact on markets to be limited – South Korean Press (Note: The BoK is said to have held an unscheduled meeting earlier today amid the North Korean launch)
-Looking ahead: The Bank of Korea is due to hold its regularly scheduled policy meeting tomorrow. The central bank is expected to raise rates by 25bps to 1.50%, according to one poll; Bank of Korea last raised rates in 2011
China/Hong Kong
-Shanghai Composite opened +0.1%, Hang Seng -0.3%
-Markets are currently in negative territory, as of the time of writing
-Hang Seng Information Technology Index -1.1%; Semiconductor Manufacturing -2.4% (capital raise), Tencent -1%
-Even still, Chinese steelmakers trading generally higher on supply constraints; Baosteel +2.6%
- China property names, higher on Moody's report, Rated China property developers' sales rise strongly, amid slower national sales growth
-(CN) China Banking Regulatory Commission (CBRC) official Yu Xuejun: China's economy is still facing relatively large downward pressure; economic stimulus measures have been overly strong
-(CN) Turkey imposes anti-dumping duty on some China flat sleet products
-(CN) China CIRC (Insurance Regulator): Q3 solvency was generally adequate; 167 insurers avg solvency ratio 253%
-(CN) NDRC: China to promote long-term coal contract implementation for 2018 – Chinese Press
-(CN) PBoC OMO: Injects CNY240B in 7, 14-day, 63-day reverse repos v CNY250B injected in 7,14 and 63-day reverse repos prior; Net: Nil v nil prior (3rd consecutive net nil)
-(HK) Hong Kong Dollar (HKD) 1-month HIBOR 1.18927%, up over 5bps (highest since 2008)
-Alibaba planning to sell 5.5, 10, 20, 30 and 40 year US dollar denominated bonds
Yuan denominated bond issuance: Originwater Technology [300070.CN] said to cancel CNY1B bond offering on market volatility
-Philippines now targeting planned issuance of yuan-denominated ‘Panda Bonds’ in Q1 (had targeted 2017)
-(CN) PBoC sets yuan reference rate at 6.6011 v 6.5944 prior
-Looking Ahead: China Nov Official Manufacturing and Non-Manufacturing due for release on Thursday
Australia/New Zealand
-ASX200 opened -0.1%, pared losses as session progressed; closed +0.4%
-ASX 200 Utilities Index +1.6%, Consumer Discretionary +1.2%, Financials +0.7%, Resources +0.7%, Energy +0.7%
-(AU) Australia sells A$900M v A$900M indicated in 2.75% Nov 21 2028 Bonds, avg yield, bid to cover 3.4x
- (NZ) RBNZ semi-annual Financial Stability Report: financial system remains sound and risks to the system have reduced over the past six months
- (NZ) RBNZ Spencer comments following release of Financial Stability Report: Does not have target for house price inflation; Expects extra 5K houses/year from Kiwibuild
- OECD expects RBA to tighten in 2018 due to robust economic growth
- (NZ) Fitch: New Zealand banks housing risk unlikely to up on easing of curbs
- IDX.AU Capitol Health preparing unsolicited takeover offer at A$2.46/shr; +23%
- Looking Ahead: Australia Q3 Private New Capital Expenditure data due for release on Thursday
Other Asia
- (PH) Philippines Finance Sec Dominguez: Will reset panda bond offering to Q1 (had targeted 2017)
North America
- US markets closed higher as Senate Budget Committee advanced tax bill: Russell 2000 +1.5%, Dow +1.1%, S&P500 +1%, Nasdaq +0.5%
-S&P 500 Financial Sector +2.6%, Industrials Sector +1.5%
Tax Reform: (US) Senate Budget Committee advanced the tax bill; All 12 Republicans vote 'yes' including Senators Johnson and Corker; the 11 Democrats vote 'no'; The Budget Committee approval moved the bill to the full Senate, which could consider the bill later this week
Politics: (US) Congress unlikely to pass legislation this year to fund government agencies through Sept 30, 2018 – financial press; Therefore, Congress is likely to need a stop-gap, temporary funding legislation at least until late Jan to keep the federal government operating.
- (US) Democratic leaders pull out of meeting with Trump on govt funding; will instead seek meeting with GOP leaders in Congress - press
Energy: Reportedly joint OPEC and non OPEC committee to support 9-month production cut extension (through 2018), with an option to review in June (as previously speculated)
(US) Weekly API Oil Inventories: Crude: +1.8M v -6.4M prior
Mexico Central Bank Chief: Board needs to take most recent information into account with decisions; board agrees on need to remain 'vigilant' and to be cautious on inflation outlook
After Market Movers: Marvell Technology [MRVL] +3% (Q3 results above ests, mid-point of Q4 guidance above ests); Autodesk [ADSK] -13% (reported financial results and guidance, announced restructuring measures)
Looking Ahead: Second reading of US Q3 GDP, Fed’s Yellen to testify before Congress, DOE weekly Crude Inventories
Europe
- (UK) Reportedly UK and EU agree Brexit divorce bill with tab between €45-55B (vs. EU demands of €60B) - UK Telegraph
- (UK) Govt official: do not recognize UK Telegraph newspaper account of Brexit negotiations
- (UK) Brexit ministry spokesperson: we are exploring how to build on recent momentum in talks so that we can move negotiations to the next phase
M&A: Cineworld [CINE.UK]: Regal Entertainment confirms merger talks
-Looking ahead: Spain and German Nov prelim CPI
***Levels as of 01:00ET***
- Nikkei225 +0.4%, Hang Seng -0.2%; Shanghai Composite -0.5%; ASX200 +0.5%, Kospi -0.1%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.0%, Dax -0.0%; FTSE100 -0.0%
- EUR 1.1856-1.1839; JPY 111.67-111.38; AUD 0.7608-0.7583;NZD 0.6904-0.6884
- Dec Gold +0.0% at $1,295/oz; Jan Crude Oil -0.5% at $57.70/brl; Mar Copper +0.5% at $3.11/lb