TheChek News Flow

Asian Market Update: RBA on hold, expects inflation to remain in target range; Aussie retail spending and trade deficit rise

***Economic Data*** - (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 2.50%; AS EXPECTED (14TH STRAIGHT PAUSE) - (AU) AUSTRALIA SEPT TRADE BALANCE (A$): -2.3B V -1.78BE (largest deficit in 22 months) - (AU) AUSTRALIA SEPT RETAIL SALES M/M: 1.2% V 0.3%E (8-month high) - (AU) Australia ABS revised Sept employment higher to -23.7K from -29.7K, unemployment rate revised higher to 6.2% from 6.1% - (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 114.6 v 114.6 prior - (JP) JAPAN OCT FINAL MARKIT/JMMA MANUFACTURING PMI: 52.4 V 52.8 PRELIM - (NZ) NEW ZEALAND OCT ANZ COMMODITY PRICE M/M: -0.8% (8th month of decline) V -1.3% PRIOR - (KR) SOUTH KOREA OCT CPI M/M: -0.3% V -0.1%E; Y/Y: 1.2% V 1.3%E; CORE CPI Y/Y: 1.8% V 1.9%E

***Index Snapshot (as of 02:30 GMT)*** - Nikkei225 +3.5%, S&P/ASX +0.3%, Kospi -0.9%, Shanghai Composite flat, Hang Seng +0.2%, Dec S&P500 -0.1% at 2,009

***Commodities/Fixed Income*** - Dec gold -0.2% at $1,167, Dec crude oil -0.5% at $78.38/brl - (AU) Australia Port Hedland Oct iron ore shipments 37.5M tonnes v 36.3M prior - (JP) BOJ offers to buy ¥550B in 1-3yr JGB, ¥550B in 3-5yr JGB, ¥240B in 10-25yr JGB and ¥120B in JGB with maturity over 25-yr ; Also to buy ¥2.25T in T-bills - USD/CNY: (CN) PBoC sets yuan mid point at 6.1543 v 6.1525 prior setting (weakest since Sept 4th) - (CN) PBoC to drain CNY20B in 14-day repos (27th consecutive drain); Offer yield at 3.4%, unchanged from prior

***Market Focal Points/Key Themes/FX*** - AUD trading was rather volatile amid a set of economic data and a policy statement from the RBA. Stronger than expected retail sales initially gave the aussie a lift, before disappointing trade and an upward revision in unemployment sent AUD/USD to its lows around $0.8650. The reaction to the RBA statement was largely positive however, and AUD/USD spiked up to its highs of $0.8730. RBA left rates on hold for the 14th time, adding the exchange rate is "above estimates of fundamental value particularly given further declines in key commodity prices." On inflation, the RBA added that recent data on prices confirmed that inflation is running between 2-3%, reiterating it would also be consistent with the target over the next two years.

- Japan Final manufacturing PMI was revised slightly lower, as resident economist cited the benefit of weaker JPY outweighed by output expansion failing to accelerate. PM Abe's economic advisor Hamada urged for the consumption tax increase to be delayed by 18 months. A Fitch report stated the surprise decision by the BoJ to increase its asset purchases is indicative of the challenges confronting the Abenomics agenda, while Moody's said the added QE was a positive development. USD/JPY is coming off its US session highs of 114.20, falling below 113.50 amid an overall USD retreat. Nikkei225 has returned from the holiday with a steep rally tracking softer Yen, rising well over 3%.

- In other USD majors, EUR/USD was up about 50pips at $1.2530, GBP/USD rose 30pips toward the $1.60 level, and USD/CHF fell nearly 40 pips below 0.9630 - these all mark the first USD decline in 5 days. Gold was holding above 1,160, while Silver fell another 1% below $16.

- In China, PBoC once again maintained the offering yield on its 14-day repo operations. Hong Kong's CY Leung said he would for the central govt support for Shanghai-Hong Kong stock connect trading.

***Equities*** US markets: - THC: Reports Q3 $0.10 v $0.10e, R$4.18B v $4.01Be; +3.3% afterhours - LB: Guides Q3 higher to $0.38-0.40 v $0.32e ($0.26-0.31 prior), Oct SSS in low single digits; +3.2% afterhours - AIG: Reports Q3 $1.21 v $1.08e, R$8.95Bv $9.77Be; +0.8% afterhours - MRO: Reports Q3 $0.57 v $0.58e, R$2.97B v $2.96Be; +0.8% afterhours

- JPM: FX trading unit in a criminal probe by the DOJ in the US; Also probed by UK's FCC as well as CFTC in the US - filing; -0.4% afterhours - CYH: Reports Q3 $1.00 v $0.75e, R$4.80B v $4.96Be; -1.4% afterhours - AGU: Reports Q3 $0.60 adj v $0.52e, R$2.92B v $3.03Be; Increase annualized dividend by 4% to $3.12/shr; -1.4% afterhours - S: Reports Q2 -$0.19 v -$0.05e, R$8.49B v $8.65Be; To cut 2,000 jobs; -7.9% afterhours - HLF: Reports Q3 $1.45 v $1.53e, R$1.30B v $1.33Be; -13.0% afterhours - SALE: Reports Q3 $0.16 v $0.13e, R$56.5M v $55.7Me; Announces CFO transition; -20.6% afterhours

Notable movers by sector: - Consumer staples: Woolworths Limited WOW.AU -2.5% (Q1 results) - Financials: Sinolink Securities 600109.CN +0.9% (acquisition) - Materials: Mirabela MBN.AU -20.6% (Q3 nickel production results) - Industrials: Great Wall Motor 2333.HK +7.3% (Oct production results); Honda Motor 7267.JP +3.2%, Toyota Motor 7203.JP +4.1%, Nissan Motor 7201.JP +3.5% (Yen weaker over the weekend); Worley Parsons WOR.AU +0.9% (awarded contract) - Technology: FujiFilm Holdings 4901.JP +1.7% (to invest in R&D facilities)

After Hours Summary: ELNK +12.3%, ININ +9%, NLS +7.8%, BRDR -22.5%, SALE -20.9%, HLF -12.7% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to earnings: ELNK +12.3%, ININ +9%, NLS +7.8%, ARCI +7.1%, SKH +6.6%, EOX +5.2%, AFSI +4.9%, PLOW +4.7%, NCMI +4.4%, SNHY +4.4%, NTRI +3.7%, THC +3.3%, LB +3.2%, RKT +2.9%, SYKE +2.8%, DXPE +2.3%, TSLX +2%, QLYS +1.9%, EPAM +1.7%, TXRH +1.6%, VNR +1.6%, GALE +1.6%, RKUS +1.4%, MRO +0.8%, AIG +0.6%, NYRT +0.5%, CHSP +0.3%, VNO +0.2%, APL +0.1%

Companies trading higher in after hours in reaction to news: NLS +7.8% (announced that its Board of Directors has authorized the repurchase of up to $15 mln of the co's outstanding common stock), TBPH +4.9% (announced positive results from Phase 1 proof-of-concept study of TD-6450, an NS5A Inhibitor to treat Hepatitis C; 240 mg achieved a median maximal viral load decline of 4.9 Log10 IU/mL following three daily doses in Genotype 1a Patients), TSLX +2.0% (announced $50 mln stock repurchase plan), SGOC +2.0% (appointed Mr. Shi-Bin Xie as President and CEO), BABA +1.9% (mentioned positively by Jim Cramer), TRN +1.3% (co's subsidiary, Trinity Rail Group, LLC, has entered into a supply agreement with GATX Corporation (GMT) to deliver 8,950 railcars over a four-year period, beginning March 2016)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: BRDR -22.5%, SALE -20.9%, HLF -12.7%, CHGG -9.4%, LF -8.3%, S -7.6%, PQ -4.5%, CKP -3.9%, LCI -3.5%, EGAN -1.9%, TDW -1.9%, CRK -1.7%, CYH -1.3%, RTEC -1.1%, NOR -0.8%, ANV -0.7%, JMI -0.7%, FTR -0.5%, MR -0.4%, RLD -0.1%

Companies trading lower in after hours in reaction to news: UMPQ -3.4% (announced the commencement of a secondary public offering of 31 mln shares of the co's common stock), HTA -3.2% (announced a public offering of 8 mln shares of common stock), DCT -2.2% (announced public offering of 13.5 mln common shares), NWE -1.1% (filed for $348 mln common stock offering), JPM -0.6% (updated in its 10-Q filing the range of possible losses for legal proceedings to $0 to $5.9 bln from $0 to $4.6 bln)

Market Mixed as Oil Slides below $79.00/bbl

The stock market had its issues on Monday, mostly because of what was happening outside the stock market. To that end, the dollar hit a seven-year high against the yen, crude futures slumped below $80/bbl, and economic reports from around the globe were mixed at best. On top of that, market participants were staring straight ahead at political issues wrapped up in election day for the U.S. on Tuesday.

Those items were reason enough not to expect the stock market to do all that well on Monday, never mind that it also had to contend with the thought that it was overbought following a 10.8% gain off the October 15 low and due for a period of consolidation.

That's pretty much what happened, too. The major indices went into a consolidation mode, holding to narrow trading ranges for most of the session and not distancing themselves all that far from the unchanged mark.

The technology (+0.4%) and financial (+0.3%) sectors exhibited relative strength throughout the session and provided an influential measure of support that helped the market avoid steep losses. However, it was the weakness in the energy sector (-1.7%) that collared the market and kept it from running away to the upside.

That weakness was limited for most of the session, yet it grew more pronounced in the afternoon session when oil prices failed to respond enthusiastically to the seemingly bullish news that Saudi Arabia will be raising December crude prices for Asia and Europe. In conjunction with that report, it was also noted that crude prices will be decreased for U.S. customers.

Crude futures pushed above $80.50/bbl following the aforementioned report, but just as quickly rolled over. When they did, weak-handed bulls bailed out and created an air pocket that sucked prices below $80.00/bbl and then $79.00/bbl in a fast retreat. Crude settled the session down $2.20 at $78.34/bbl.

That weakness pulled down the energy sector, which declined 1.7% for the session after being up as much as 0.8% when the Saudi Arabia headline first hit.

The energy sector was the only sector to make a move greater than 1.0% for the session. That was a big reason, along with the relative strength of the financial and technology sectors, why the broader market didn't trade down in a more noticeable manner. The utilities sector (+0.7%) was actually the biggest percentage gainer on Monday, yet its small weight didn't make as much difference as the heavy weight of the financial and technology sectors did.

To that end, a 1.3% gain in Apple (AAPL 109.40, +1.40) was a big driver of the broader market's resilience along with gains in Dow components American Express (AXP 90.85, +0.90), Goldman Sachs (GS 190.83, +0.84), and JPMorgan Chase (JPM 60.88, +0.40) that helped offset weakness in Caterpillar (CAT 100.22, -1.19) and Home Depot (HD 96.09, -1.43).

Home Depot was downgraded by Raymond James to Market perform from Outperform.

The S&P 500 set a new all-time high earlier in the day at 2024.54, but slipped back from that record-setting level in afternoon trading.

Consistent with the overall mixed tone of Monday's trading, key economic releases were mixed. The ISM Index for October hit a three-year high at 59.0 while final October PMI readings for China, Germany, and the eurozone were revised slightly lower.

The Construction Spending report for September revealed a disappointing 0.4% decline and pointed to the prospect of a downward revision to the third quarter GDP report as the results for July were revised sharply lower from the original report (to +0.3% from +1.2%).

Tuesday's economic calendar will feature the Trade Balance report for September (consensus -$40.2 bln) and the Factory Orders report for September (consensus -0.5%).

* Dow Jones Industrial Average +4.8% YTD * Nasdaq Composite +11.1% YTD * S&P 500 +9.2% YTD * Russell 2000 +0.4% YTD