>>> Asian Update

Asian Mid-session Update: Growth in China industrial output and urban investment fall to new multi-month lows; BOJ's Kuroda steadfast on current policy stance


***Economic Data***
- (CN) CHINA OCT YTD FIXED URBAN ASSETS Y/Y: 10.2% V 10.2%E; multi-year low
- (CN) CHINA OCT INDUSTRIAL PRODUCTION Y/Y: 5.6% (7-month low) V 5.8%E; INDUSTRIAL PRODUCTION YTD Y/Y: 6.1% V 6.2%E
- (CN) CHINA OCT RETAIL SALES Y/Y: 11.0% (9-month high) V 10.9%E; RETAIL SALES YTD Y/Y: 10.6% V 10.6%E
- (AU) AUSTRALIA NOV WESTPAC CONSUMER CONFIDENCE INDEX: 101.7 (highest since May) V 97.8 PRIOR, M/M: 3.9% V 4.2% PRIOR
- (JP) JAPAN OCT M2 MONEY STOCK Y/Y: 3.6% (6-month low) V 3.8%E; M3 MONEY STOCK Y/Y: 2.9% V 3.1%E
- (KR) SOUTH KOREA OCT UNEMPLOYMENT RATE: 3.4% V 3.5%E

***Index Snapshot (as of 02:00 GMT)***
- Nikkei225 +0.1%, S&P/ASX +0.4%, Kospi -0.1%, Shanghai Composite -0.4%, Hang Seng flat, Dec S&P500 +0.1% at 2,079

***Commodities/Fixed Income***
- Dec gold +0.3% at $1,091/oz, Dec crude oil -1.0% at $43.76/brl, Dec copper +0.2% at $2.22/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.7 tonnes to 663.4 tonnes; Lowest since 2008
- (US) API Petroleum Inventories: Crude: +6.3M v +2.8M prior (5th straight build, largest build since Oct 20th)
- (CN) China may ease restrictions on oil and gas exploration and development qualifications - financial press
- (CN) China MOF sells 5-yr bonds, avg yield 2.98% v 3.14% on Sept 6th
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3614 v 6.3602 prior setting; 8th straight weaker setting; weakest Yuan setting since Oct 20th
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, ¥400B in 5-10yr JGBs
- (AU) Australia MoF (AOFM) sells A$900M in 3.25% 2025 Bonds; avg yield: 2.8839%; bid-to-cover: 2.55x

***Market Focal Points/FX***
- Asian equity markets were fairly mixed in the morning hours before succumbing to generally underwhelming economic data out of China. Industrial output growth hit a 7-month low, missing expectations, while urban asset investment hit new multi-year low. Silver lining in the dataset was another beat on retail sales, coming in at a 9-month high and substantiating progress made in transitioning the economy toward consumption. Similar evidence was displayed in the China "singles day" metrics posted that saw triple digit growth in online orders made on JD and Alibaba. Delving into some of the key components of China figures, power output fell by the biggest margin in 7 months at -3.2%. Fixed urban asset investment data saw some modest deterioration in the property sector - YTD new property construction at 1.27B sqm was down -13.9% v -12.6% prior. Earlier, PBoC adviser Yu called for China to shift to targeted fiscal expansion policy. Chief China economist with Goldman Sachs noted China is likely to cut RRR by another 50bps again before the end of 2015, adding the soft CPI data this week also adds to probability of another interest rate cut.

- RBNZ semiannual financial stability report saw a rise in the risks to financial system, particularly in the property space where the bank saw potential for a damaging correction. NZ central bank also noted there was an increased risk in the dairy sector given the rising indebtedness of farms, but added credit losses on dairy exposure were manageable thanks to low-rate loans granted to farmers by Fonterra. RBNZ Gov Wheeler spoke after the release, mainly focusing on the property sector and deferring comments on monetary policy to the next decision in 3 weeks. NZD/USD initially fell to 0.65 but recovered to 0.6560s later in the day. ANZ economists noted the bounce is due to less worry related to the dairy industry and more focus on housing which is already correcting. Also down under, Australia Westpac consumer confidence index rallied to a 6-month high of 101.7 ahead of tomorrow's key employment data.

- BoJ Gov Kuroda comments did not indicate that he is any closer to favoring additional easing, reiterating that while BOJ is committed to achieve 2% inflation target as early as possible, the delay to achieve target is mainly due to lower energy prices. More dovish BOJ member Harada noted the central bank should be able to tell by March 2016 if CPI can reach 2%, calling for more easing if virtuous cycle is threatened. Harada added consumption and investment are still weak, and that the BOJ is monitoring external risks - shock from US rate hike and slowdown in China. USD/JPY session lows coincided with non-committal Kuroda stance, falling about 50pips from the highs below 122.80.

***Equities***
US equities / ADRs:
- ALRM: Reports Q3 $0.07 v $0.04e, R$54.0M v $47.6Me; +11.2% afterhours
- OPXA: Announces Supportive Preclinical Study Results for its Neuromyelitis Optica (NMO) Program; +9.2% afterhours
- OPWR: Reports Q3 -$0.06 v -$0.14e, R$39M v $38.2Me (2 est); +5.9% afterhours
- INGN: Reports Q3 $0.13 v $0.13e, R$40.8M v $37.5Me; +1.0% afterhours
- BOOT: Reports Q2 $0.04 v $0.04e, R$129.7M v $132Me; -9.0% afterhours
- WPRT: Reports Q3 -$0.58 (unclear if comparable) v -$0.25e, R$22.3M v $27.5Me; -12.2% afterhours
- EVDY: Reports Q3 $0.07 v $0.08e, R$54.3M v $57.2Me; -18.7% afterhours

Notable movers by sector:
- Consumer discretionary: Chow Tai Fook Jewellery Group 1929.HK -7.2% (profit warning); Flight Centre FLT.AU +0.2% (reaffirms guidance); Dulux Group DLX.AU +1.9% (FY15 result)
- Financials: China Resources Land 1109.HK +0.5% (Oct result); Evergrande Real Estate Group 3333.HK +0.8% (raises annual sales target); Computershare CPU.AU -0.6% (reaffirms guidance); Eclipx Group ECX.AU +4.6% (investor lowers stake)
- Industrials: Aurizon Holdings AZJ.AU +2.1% (share buyback)
- Technology: Tencent 700.HK +2.3% (Q3 result); Samsung Electronics 005930.KR +1.3% (pre-order for Gear VR); Hon Hai Precision Industries 2317.TW -1.2% (Oct result); Acer Inc 2353.TW -4.3% (Oct result); Taiwan Semiconductor Manufacturing 2330.TW -1.8% (Oct result)
- Materials: Sumitomo Metal Mining Co 5713.JP -9.5% (H1 result); Fortescue Metals Group FMG.AU +6.5% (pays back debt)
- Energy: Inpex Corp 1605.JP +6.1% (H1 result)
- Healthcare: Healthscope HSO.AU +2.4% (potential investor speculation)

>>> US After Hours Summary: HCKT +12.2%, OPXA +12%, ALRM +11.8%,


After Hours Summary: HCKT +12.2%, OPXA +12%, ALRM +11.8%, EVDY -18.8%, WPRT -16.5%, BOOT -8.9% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: HCKT +12.2%, OPXA +12%, ALRM +11.8%, GURE +7.5%, OPWR +5.9%, LITE +4.9%, JNP +4.3%, INGN +2.7%, WGBS +2.5%, HTHT +1.5%, ARNA +1.1%, OXGN +0.9%

Companies trading higher in after hours in reaction to news: ANFI +28.6% (announced the completion of the Independent Third Party Forensic Investigation; BDO has independently concluded that allegations against the company are 'unsubstantiated and/or unfounded'), AMDA +22.2% (submitted 24-month clinical data outcomes from its CASCADE study to the FDA; results showed comparable clinical and radiographic performance through a number of clinical outcome measures), OPXA +12% (announced 'supportive' preclinical study results for its Neuromyelitis Optica program; co also reported earnings), LITE +4.9% (filed to delay Form 10-Q in connection with separation from JDS Uniphase), CEMP +1.5% (provided updates on commercialization plans for the anticipated launch of solithromycin; entered into a new three-year API Manufacturing and Supply Agreement with Wockhardt), IAG +0.7% (acquired ~21.5 mln shares of Merrex Gold, as a settlement for debt owed to it from the Siribaya Joint Venture)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: EVDY -18.8%, WPRT -16.5%, BOOT -8.9%, NEOS -5.7%, MNGA -4.4%, DOX -3.2%, EXEL -2.1%, FENG -2%, JUNO -1.2%, BC -0.8%, PNNT -0.2%

Companies trading lower in after hours in reaction to news: NEOS -5.7% (received Complete Response Letter from the FDA regarding the NDA for Cotempla XR-ODT; co also reported earnings), MNGA -4.4% (filed for $50 mln mixed securities shelf offering), VWR -3.3% (filed for a 9 mln share offering of common stock by selling stockholder), SMCI -2.6% (filed to delay Form 10-Q; co has determined that certain contracts for product extended warranties were recorded as revenue in prior periods instead of being deferred and amortized over the contractual period), AFSI -2.4% (commenced an underwritten public offering of 5 mln of its common stock), LOXO -0.9% (announced a proposed offering of 2 mln shares of common stock)

>>> SocGen’s Top 10 Stock Picks for Bet on Further ECB Action

SocGen’s Top 10 Stock Picks for Bet on Further ECB Action
Euro Stoxx components screened for highest 1D implied move, highest realized/implied vol ratio and highest negative correlation to EUR/USD excluding earnings reporters pre-Dec. expiry, SocGen strategists led by Kokou Agbo-Bloua wrote.
  • 10 stock picks: CA FP, AIR FP, BAYN GR, BAS GR, AI FP, ORA FP, SU FP, AKZA NA, OR FP, RI FP
  • EUR should continue to drop, European equities benefit from any additional supply of liquidity

>>> US Close Dow+0.16% S&P+0.16% Nasdaq-0.24% Russell+0.28%

Closing Market Summary: S&P 500 Snaps Four-Day Skid While Technology Lags

The stock market ended Tuesday on a mixed note as the Nasdaq Composite (-0.2%) settled with a modest loss while the Dow Jones Industrial Average (+0.2%) and S&P 500 (+0.2%) overcame the weakness in the technology sector (-0.7%), eking out slim gains.

Equities stumbled at the start of the trading day with the opening move paced by the largest stock in terms of market cap. Specifically, Apple (AAPL 116.73, -3.84) fell 3.2% in reaction to a Credit Suisse report, which indicated the tech giant has cut its orders for iPhone 6s components by as much as 10.0%. Shares of Apple slid below their 100-day moving average (117.33) after struggling with the 200-day average (122.06) over the past few days. Meanwhile, supplier names like CirrusLogic (CRUS 29.43, -2.78), Broadcom (BRCM 51.45, -1.74), AvagoTechnologies (AVGO 119.86, -6.64) lost between 3.3% and 8.6% while the PHLX Semiconductor Index fell 1.8%.

Apple's weakness kept the technology sector (-0.7%) deep in the red throughout the session, which in turn, weighed on the Nasdaq. Meanwhile, six of the remaining nine sectors settled in the green. That included the health care sector (+1.0%), which gathered steam late in the day while biotechnology recovered from early weakness. The iShares Nasdaq Biotechnology ETF (IBB 331.96, +1.38) climbed 0.4% after being down more than 1.0% in the early going.

Elsewhere, influential sectors like consumer discretionary (+0.7%) and financials (+0.5%) held slim gains in morning action, but extended higher in the afternoon. Also of note, the energy sector (+0.2%) settled just above its flat line while crude oil rallied 0.8% to $44.21/bbl. Meanwhile, the other commodity-linked sector—materials (-0.7%)—spent the day at the bottom of the leaderboard.

Staying on the cyclical side, the industrial sector (unch) struggled throughout the day with transport stocks responsible for some of the weakness. However, the Dow Jones Transportation Average returned to unchanged by the end of the day. It is worth noting Norfolk Southern (NSC 88.57, -0.05) shed just 0.1% after surging 11.0% yesterday with today's downtick taking place after Canadian Pacific (CP 139.95, -2.23) denied interest in NSC.

Treasuries snapped their six-day skid with the 10-yr note settling near its high, dropping the benchmark yield three basis points to 2.32%.

Today's participation was just below average with about 820 million shares changing hands at the NYSE floor.

Economic data was limited to Import/Export Prices and Wholesale Inventories:

  • Export prices, excluding agriculture, decreased 0.3% in October after decreasing 0.5% (revised from -0.6%) in the prior reading
    • Excluding oil, import prices decreased 0.3%, which followed last month's decrease of 0.2% (revised from -0.3%)
  • Wholesale inventories increased 0.5% in September on top of an upwardly revised 0.3% increase (from 0.1%) for August
    • The consensus expected an increase of 0.1%
    • Wholesale sales increased 0.5% after declining 0.9% in August
    • The inventory-to-sales ratio held steady versus the prior month at 1.31, but is up from 1.20 in the same period a year ago

Investors will not receive any economic data tomorrow and the bond market will be closed for Veterans Day.

  • Nasdaq Composite +7.3% YTD
  • S&P 500 +1.1% YTD
  • Dow Jones Industrial Average -0.4% YTD
  • Russell 2000 -1.2% YTD