>>> Asian Update

Asia Mid-Session Update: Japan machine orders surprise to the upside; China NDRC hints at tougher housing curbs

***Asia Summary***
- Asian equity markets opened mixed again before turning positive, the Nikkei 225 is heading for its highest close since December 1996, thought the yen remained slightly weaker; the upward trend in equities being attributed to more solid economic and market conditions. Uncertainty around the upcoming Japan election and the ramifications of BOJ Gov Kuroda losing his position if PM Abe is not re-elected have started to circulate in the press. Currencies on the whole were little changed in the session, with little economic data to give direction.

- China MOF to offer $2B in 5 and 10-year sovereign bonds in Hong Kong, this is the 1st dollar bond offering since 2004, and will compromise of $1B in 5-year bonds and $1B in 10-year bonds. There is speculation that the bonds could be sold at the end of October. The offshore yuan fell for the first time in four sessions amid speculation that traders are squaring up positions amid recent performance and ahead of China’s 19th congress next week. China property names fell after a press report citing China National Development and Reform Commission (NDRC) official that China was developing property measures that would have long lasting effects.


***Key economic data***
- (AU) Australia Sept Westpac Consumer Conf Index: 101.4 v 97.9 prior; m/m: 3.6% v 2.5% prior
- (JP) JAPAN AUG CORE MACHINE ORDERS M/M: 3.4% V 1.0%E; Y/Y: 4.4% V 0.7%E

***Speakers and Press***
China/Hong Kong
- (HK) Hong Kong Chief Exec Lam: Sees 2017 GDP higher than 3.5%
- (CN) China National Development and Reform Commission (NDRC) deputy chief Ning Jizhe: China is formulating a set of property control measures that will have long-lasting effects, and will unveil the measures at an appropriate time - Xinhua

Japan
- (JP) Financial press comments on future of BOJ Gov Kuroda may depend on PM Abe's re-election

US
- (US) Fed's Kaplan (moderate, voter): will be assessing the progress of the US economy toward full employment and looking for more signs of upward inflation as while weighing potential interest-rate hikes

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.3%, Hang Seng -0.0%; Shanghai Composite +0.3%; ASX200 +0.6%, Kospi +0.8%
- Equity Futures: S&P500 +0.0%; Nasdaq100 +0.1%, Dax +0.0%; FTSE100 +0.0%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1828-1.1795; JPY 112.58-112.22; AUD 0.7809-0.7777;NZD 0.7098-0.7069
- Dec Gold -0.3% at $1,289/oz; Nov Crude Oil +0.3% at $51.09/brl; Dec Copper -0.1% at $3.06/lb
- (AU) Australia buys backs A$900M v A$900M indicated in 2018 (avg yield 1.7925%) and 2019 bonds (avg yield 1.9492%)
- (AU) Australia sells A$3.5B (record amount) v A$3.5B indicated in Nov 2022 bonds, bid to cover 3.68x, avg yield 2.4167%
- (CN) China MOF to offer $2B in 5 and 10-year sovereign bonds in Hong Kong
- USD/CNY (CN) China PBOC sets yuan reference rate at 6.5841 v 6.6273 prior
- (CN) China PBOC injects CNY20B v CNY40B in 7-day reverse repos prior, injections match maturities for 2nd consecutive day
- (KR) Bank of Korea (BOK) sells KRW2.77T v KRW2.8T indicated in 2-yr monetary stabilization bonds; avg yield 1.85% v 1.73% prior
- (CN) China MOF sells 1-yr and 10-yr bonds
- (JP) Japan MoF sells ¥643B v ¥800B indicated in 0.80% (0.8% prior) 30-yr bonds; Avg yield: 0.8810% v 0.8320% prior; Bid to cover: 3.98x v 3.67x prior

***Equities notable movers***
Australia/New Zealand
- LHC.AU Acquires rights to promote spinal allograft biologics range from Australian Biotechnologies for A$3.3M; +5.5%
- PEB.NZ Announces NZ$21.3M capital raise through a fully underwritten 1 for 6 pro-rata Rights Offer; -16.5%

Japan
- 5406.JP Follow Up: Says reports about iron powder data are 'true'; founder falsified information for 1 product, no safety issues; -16%
- 8136.JP Cuts FY17/18 guidance Net ¥4.8B from ¥7.6B; Op ¥6.3B from ¥10.8B; Rev ¥60.3B from ¥65.7B; cuts dividend to ¥55 from ¥80; -9.3%

Korea
- 069620.KR To expand production of botulinum toxin, named “Nabota”, at new plant in Hwaseong city, South Korea following govt approval; +12%

China/Hong Kong
- 2333.HK Reports Sept sales 102K units, +4.5% y/y; production 97.8K units, +0.2% y/y; +15%

>>> US After Hours Summary: HDSN -14%, VOXX -12%, CUDA -7% following e

After Hours Summary: HDSN -14%, VOXX -12%, CUDA -7% following earnings/guidance

After Hours Gainers:

Companies trading lower in after hours in reaction to earnings/guidance: IPCI +4.3%

Companies trading higher in after hours in reaction to news: CASI +14.4% (Director discloses the purchase of 200K shares), WPCS +9.7% and HMNY +7.6% (continued strength), NBEV +2.2% (announced the expansion of Aspen Pure Probiotic throughout the more than 2,000 Ahold Delhaize  banner stores across 23 states), ANAB +1.4% (continued strength after 100%+ move higher today; files for 3 mln share common stock offering; expects to report that it had cash and cash equivalents and investments of $116.7 million as of September 30, 2017), CC +1% (still checking), V +0.3% (coverage transferred / upgraded at Wells Fargo)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: HDSN -14%, VOXX -11.6%, CUDA -7.1%

Companies trading lower in after hours in reaction to news: ATEC -11.5% (NuVasive has filed a lawsuit in the Delaware Chancery Court against Patrick S. Miles, former vice chairman of the Company and a member of NuVasive's Board of Directors-lawsuit asserts that before abruptly resigning from the Company to join Alphatec), EBMT -5.5% (thinly traded; commenced underwritten public offering of approximately $18 million of common stock), XPER -5.1% (German Federal Patent Court issued preliminary opinion that all claims of Invensas (an affiliate of Xperi XPER) patent asserted against Broadcom in Germany should be null and void), FLXN -5% (to offer 4 mln shares of its common stock in public offering), MU -4.2% (launches $1 billion offering of common stock; files mixed securities shelf offering), MOH -1.8% (light volume; named Joseph Zubretsky as new President and Chief Executive Officer, effective November 6), FEYE -0.9% (ticking lower; CUDA sympathy), UVE -0.6% (UPCIC anticipates Q3 gross losses relating to Hurricane Irma will be $350-450 million; expects to recognize net pre-tax losses of only $35 million)

>>> Gartner says worldwide PC shipments declined 3.6 in Q3

Gartner says worldwide PC shipments declined 3.6 percent in third quarter of 2017

In the third quarter of 2017, HP Inc. (HPQ) and Lenovo (LNVGY) were in a virtual tie for the top spot in the PC market based on shipments. However, HP Inc. is in an upward trend, as it has experienced five consecutive quarters of global PC growth, while Lenovo is in a downward trend with declining shipments in eight of the last 10 quarters. Lenovo experienced its steepest year-over-year decline of PC shipments in the U.S. since it acquired the IBM PC business division in 2005. Lenovo continues to face the dilemma of market share gains versus profitability. It appears the company is putting more emphasis on profitability than share gain. Dell's worldwide PC shipments were slightly down compared with a year ago, as it registered its first year-over-year shipment decline since the first quarter of 2016.

>>> Dow +0.31$ S&P +0.23% Nasdaq +0.85% Russell +0.30%

Closing Market Summary: Bounce Back

Equities bounced back from back-to-back losses on Tuesday, but the performance was somewhat disappointing considering the major U.S. indices hit their session highs in the opening minutes and petered out shortly thereafter. All three major averages touched new all-time highs, but the Dow (+0.3%) was the only one to finish at a new record mark. The S&P 500 and the Nasdaq added 0.2% and 0.1%, respectively.

The S&P 500's consumer staples sector moved higher by 1.0% on Tuesday, with the world's largest retailer leading the advance. Wal-Mart (WMT 84.13, +3.60) surged 4.5%, settling at its highest level in more than two years, after reaffirming its guidance for fiscal year 2018, announcing a $20 billion share repurchase program, and projecting a 40.0% increase in next year's online sales.

Amazon (AMZN 987.20, -3.79) slipped 0.4% following Wal-Mart's ambitious ecommerce forecast, breaking a four session winning streak.

Meanwhile, multinational giant Procter & Gamble (PG 91.62, -0.50) was one of just a few components within the consumer staples space to finish Tuesday in negative territory. P&G shares lost 0.5% after shareholders narrowly voted against giving activist investor Nelson Peltz a seat on the company's board. Mr. Peltz plans to challenge the vote.

Airlines outperformed on Tuesday, sending the U.S. Global Jets ETF (JETS 31.34, +0.56) higher by 1.8%, after American Airlines (AAL 53.05, +2.43) and United Continental (UAL 67.72, +3.02) raised their third quarter guidance. The two names settled with gains of 4.8% and 4.7%, respectively, helping the Dow Jones Transportation Average climb 0.6%.

The lightly-weighted utilities space (+1.0%) finished in line with the consumer staples group at the top of the sector standings. Seven other sectors also advanced, but they finished with more modest gains, adding no more than 0.4%. The consumer discretionary sector (-0.1%) was the lone decliner while the lightly-weighted materials space finished flat.

In the bond market, U.S. Treasuries moved higher on Tuesday, leaving yields below their unchanged marks. The 2-yr yield and the 10-yr yield slipped two basis points apiece, settling at 1.51% and 2.35%, respectively. Meanwhile, the U.S. dollar dropped 0.5% against the euro to 1.1804 despite the ongoing situation in Spain.

Catalan President Carles Puigdemont was expected to declare independence from Spain on Tuesday, but gave Madrid a chance to accept mediation instead. As a reminder, Catalonia voted to split from Spain on October 1, but the Spanish central government has refused to recognize the results.

Also of note, WTI crude futures rallied on Tuesday, jumping 2.6% to $50.86/bbl. The bullish sentiment was attributed to several factors, including Saudi Arabia's announcement that it will cut its monthly exports in November. However, the energy sector only advanced 0.1%.

Investors did not receive any notable economic data on Tuesday.

On Wednesday, market participants will receive the weekly MBA Mortgage Applications Index at 7:00 ET, the Jobs Openings and Labor Turnover Survey (JOLTS) for August at 10:00 ET, and the minutes from the September 19-20 FOMC meeting at 14:00 ET.

  • Nasdaq Composite +22.4% YTD
  • Dow Jones Industrial Average +15.5% YTD
  • S&P 500 +13.9% YTD
  • Russell 2000 +11.1% YTD