Asian Market Update: China Manufacturing PMI meets consensus; AUD, JPY hit new multi-month lows; CDC announces US case of Ebola
***Economic Data*** - (CN) CHINA OFFICIAL SEPT MANUFACTURING PMI: 51.1 V 51.0E - (AU) AUSTRALIA AUG RETAIL SALES M/M: 0.1% (3-month low) V 0.4%E - (AU) AUSTRALIA SEPT RPDATA/RISMARK HOUSE PRICE INDEX: 0.1% (4th consecutive increase) V 1.1% PRIOR - (JP) JAPAN Q3 TANKAN MANUFACTURING INDEX:13 V 10E; LARGE ALL INDUSTRIAL CAPEX Y/Y: 8.6% V 7.0%E; LARGE MANUFACTURING OUTLOOK: 13 V 13E - (JP) JAPAN SEPT FINAL MARKIT/JMMA MANUFACTURING PMI: 51.7 (4th straight month of expansion) V 51.7 PRELIM - (KR) SOUTH KOREA SEPT TRADE BALANCE: $3.4B V $3.8BE - (KR) SOUTH KOREA SEPT HSBC MANUFACTURING PMI: 48.8 (3-month low) V 50.3 PRIOR - (KR) SOUTH KOREA SEPT CPI M/M: -0.1% V +0.2%E; Y/Y: 1.1% (7-month low) V 1.5%E; CORE CPI Y/Y: 1.9% (6-month low) V 2.1%E
***Index Snapshot (as of 02:30 GMT)*** - Nikkei225 +0.3%, S&P/ASX +0.1%, Kospi -0.6%, Shanghai Composite closed, Hang Seng closed, Dec S&P500 -0.2% at 1,962
***Commodities/Fixed Income/Currencies*** - Dec gold -0.5% at $1,206/oz, Nov crude oil +0.3% at $91.43/brl, Dec copper -0.1% at $3.00/lb - (US) API PETROLEUM INVENTORIES: CRUDE: -0.46M v +0.9Me, GASOLINE: -2.5M v -0.8Me, DISTILLATE: -1.8M v -0.2Me - GLD: SPDR Gold Trust ETF daily holdings fall 2.4 tonnes to 769.9 tonnes; Lowest level since Dec 2008 - (JP) BOJ offers to buy ¥100B in JGB with maturity of 1-year and under, ¥300B in 1-3yr JGB, ¥200B in 3-5yr JGB - (AU) Australia MoF (AOFM) sells A$700M in 2023 Bonds; Avg yield: 3.3933%; Bid-to-cover: 3.62x
***Market Focal Points/Key Themes*** - China official manufacturing PMI figure released despite the market holidays in Shanghai was a decimal above consensus, however state economists noted sentiment remains weak as decline in new orders reflects business destocking. New export orders rose slightly to 50.2, employment component remained unchanged, and input prices fell 1.9pts to 47.4, boding poorly for September inflation data. Separately, China Real Estate Index System saw home prices in the largest cities fall 0.9% - a 5th consecutive decline and the biggest drop since 2010.
- Bank of Japan's Q3 Tankan Survey topped consensus for manufacturing components but missed widely in services. Non-Manufacturing Index came in at a 5-quarter low of 13, well below 17 estimate. Tankan silver lining was in industrial capex, with 8.6% increase registering the biggest increase since late 2007. Recall the most recent wage inflation data saw base earnings post the highest increase in 9 years.
- AUD/USD hit 8-month lows and traded within 10pips of 4-year lows of $0.8660 after slower than expected retail sales figures from Australia. 0.1% m/m increase was below 0.4% and marked a 3-month low. RPData house price index was also up 0.1%, but slowed from 1.1% prior. RPData head of reseach said the figures would likely to be seen as a positive indicator by the Reserve Bank, which has alluded to taking macroprudential measures to deal with property sector inflation.
- Economic data out of South Korea was mixed - HSBC manufacturing PMI fell into contraction with a 3-month low print of 48.8. Trade surplus was below expectations, but exports growth was the highst in 9 months and imports growth the highest since early 2012.
- US Center for Disease Control confirmed a single case of Ebola diagnosis in Texas. CDC director said the patient arrived from West Africa on 20th of Sept and checked into a hospital when symptoms occured on the 26th. Shares of Ebola related companies (TKMR, BCRX, SRPT) were sharply higher afterhours, while airlines traded lower.
***Equities*** US markets: - TKMR: CDC confirms first case of Ebola diagnosed in the US - financial press; +30.8% afterhours - ANGI: Said to have hired bankers, may mull possible sale - FT; +19.5% afterhours - SYNC: Raises FY14 EBITDA to -$1M to breakeven (prior -$2.5M to -$1M), Reaffirms Rev $100-103M v $100Me; +7.3% afterhours - ASEI: Expects a net loss in Q2 and plans to reduce workforce by 10%; -6.3% afterhours - WPRT: Lowers FY14 Rev guidance to $130-140M v $179Me (prior $175-185M); -17.0% afterhours
Notable movers by sector: - Industrials: ANA Holdings Inc 9202.JP +0.5% (partnership with Philippine Airlines) -Technology: Hon Hai Precision Industries 2317.TW +1.5% (speculation to increase workforce for iPhone6); Softbank Corp 9984.JP +0.5% (exclusive sales rights of Sony's smartwatch) - Materials: PanAust PNA.AU -3.9% (halts Phu Kham copper-gold ops); Sedgman SDM.AU +2.5% (contract) - Energy: Lonestar Resources LNR.AU +2.5% (positive shale results)
U.S. Takes Asteroid Threat Seriously Some Nuclear Warheads, Once Slated for Disassembly, Are Kept in Reserve
Some U.S. nuclear-warhead components, scheduled for disassembly in the next year, have gotten at least a temporary new lease on life. The reason: possible use in defending the Earth against killer asteroids.
That bit of information was tucked deep inside a 67-page Government Accountability Office report on the National Nuclear Security Administration, which manages the U.S. atomic-weapons arsenal. The warhead components, containing highly enriched uranium, are being retained "pending a senior-level government evaluation of their use in planetary defense against earthbound asteroids," the April report said.
An NNSA spokesman declined to comment.
Government officials and space scientists say we aren't anywhere near a real-life replay of "Armageddon," the 1998 science-fiction extravaganza in which actor Bruce Willis and friends used a nuclear weapon to smash apart a giant asteroid hurtling toward Earth. While hundreds of asteroids with a diameter of about a kilometer or bigger—the size that could "produce global devastation," according to a 2010 National Research Council report—pass relatively near the Earth's orbit, none are expected to be a worry for at least 100 years and probably much longer, they say.
However, while no such mega-space rocks are on the horizon, an estimated 100,000 or more asteroids at least 50 meters in size also pass through Earth's neighborhood, said Lindley Johnson, a program executive at the National Aeronautics and Space Administration who oversees the effort to find such "near-earth objects." Probably no more than 5% of those objects have been catalogued so far, he said.
If a 100-meter-wide asteroid hit Washington, D.C., for instance, it "could wipe out everything inside the Beltway," Mr. Johnson said.
Global upheavals from a roughly 10-kilometer asteroid or comet striking near the Yucatan Peninsula 65 million years ago are believed by many scientists to have caused the extinction of the dinosaurs.
Early last year, an asteroid exploded in the skies near Chelyabinsk, Russia. That object—estimated to be nearly 20 meters in size and carrying a force of more than 400,000 tons of TNT—injured several hundred people, mostly as a result of flying window glass and other debris.
NASA estimates that more than 100 tons worth of tiny space debris hits Earth daily, much of it burning up in the atmosphere.
NASA and others are searching the skies for more potentially dangerous objects. Mr. Johnson said he would like to launch a space telescope with infrared-detection capability, which he estimates could locate more than 90% of the 100-meter-plus asteroids within a decade. But his $40 million annual detection budget, a tenfold increase from what it was for most of the past decade, isn't large enough to accommodate the estimated $500 million satellite cost, he said.
One relatively low-cost new earthbound detection project—known as the Asteroid Terrestrial-impact Last Alert System, or ATLAS—will use small telescopes and powerful cameras to scan the night sky. The NASA-funded effort, scheduled to be operational in Hawaii by the end of next year, aims to provide emergency planners with advance warning, ranging from a day to a few months, of an impending impact, said John Tonry, a University of Hawaii professor and head of ATLAS.
Government officials and scientists are also looking at ways to defend the planet, which is where nuclear weapons come in. A nuclear-armed craft could be sent into deep space, where the atomic explosion would aim to alter the object's course long before it got to Earth and without any fallout affecting the planet. However, some scientists say that in certain scenarios, radioactive asteroid debris from an explosion might intersect with Earth.
Back on Earth, the U.S. government has detonated underground nuclear blasts for nonmilitary purposes, such as trying to stimulate natural-gas production. But such work stopped in the 1970s, according to the Energy Department.
"Any time you talk about nuclear weapons, it's controversial," said NASA's Mr. Johnson.
In an era when the size of the atomic-weapons stockpile has been shrinking as a result of arms-control treaties and other factors, asteroid defense "may be an excuse for keeping the nuclear arsenal together," said Jay Melosh, a professor of earth, atmospheric and planetary sciences at Purdue University. But he thinks there are better, nonnuclear ways for defending the planet.
Among possible options: a "gravity tractor" or an "impactor." The former involves using the thrusters and the gravitational tug from the mass of a large space vehicle to change an asteroid's course. The impactor, as its name suggests, would crash at high speed into the asteroid with the same purpose.
However, some argue that such approaches would only work if the asteroid is small enough and seen soon enough. For larger objects and shorter response times, a nuclear explosion, because of the huge amount of energy it can deliver, "is the only option," said Bong Wie, a professor and director of Iowa State University's Asteroid Deflection Research Center.
After Hours Summary: Ebola drug stocks higher (TKMR +21%, HEB +19%, NLNK +16%)/airline stocks lower on US Ebola case... WPRT -19%, SYNC +10%, ASEI -8% on guidance
After Hours Gainers: Companies trading higher in after hours in reaction to earnings/guidance: SYNC +9.9%,
Ebola stocks moving on first confirmed Ebola case in US: TKMR +21%, HEB +18.8%, NLNK +15.8%, LAKE +15.1%, BCRX +14.0%, NNVC +13.0%, INO +4.1%
Companies trading higher in after hours in reaction to news: RHT +1.3% (proposes to offer $700 mln aggregate principal amount of its convertible senior notes due 2019); AKRX +2.0% (Akorn acquires Xopenenx Inhalation Soplutions for approx $45 mln in cash; expects this transaction to add ~$18 million to $20 million in revenues and approximately $0.07 to $0.08 of net income per diluted share in 2015).
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: WPRT -19%, ASEI -7.6%
Airline stocks moving lower on Ebola case news: AAL -2.3%, JBLU -2.0%, HA -1.9%, UAL -1.7%, LUV -1.7%, DAL -1.2%
Companies trading lower in after hours in reaction to news: RTRX -1.2% (appointed Stephen Aselage as interim CEO, effective immediately, to replace Martin Shkreli, Founder and CEO).
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BFW 10/01 04:15 *FRENCH BUDGET DEFICIT WILL BE EU87B IN 2014, ECHOS SAYS BN 10/01 04:15 *FRENCH BUDGET DEFICIT WILL BE EU87B IN 2014, ECHOS SAYS BFW 10/01 04:14 *FRENCH BUDGET DEFICIT WILL BE EU75.7B IN 2015, ECHOS REPORTS BN 10/01 04:14 *FRENCH BUDGET DEFICIT WILL BE EU75.7B IN 2015, ECHOS SAYS BFW 10/01 04:13 *FRENCH BUDGET DELAYS 3% DEFICIT GOAL TO 2017, ECHOS SAYS BN 10/01 04:13 *FRENCH BUDGET DELAYS 3% DEFICIT GOAL TO 2017, ECHOS SAYS
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French Budget Delays 3% Deficit Goal to 2017, Echos Says 2014-10-01 04:20:01.176 GMT
By David Whitehouse Oct. 1 (Bloomberg) -- The budget law to be presented today predicts a budget deficit of EU87B ($110B) this year and EU75.7B in 2015, Les Echos reports, without saying where it got the information. * France will have to seek a delay in meeting the deficit goal from the EU for a third time, Les Echos says. Link to story: {NSN NCQKSB3HBS3K <GO>}
For Related News and Information: First Word scrolling panel: {FIRST<GO>} First Word newswire: {NH BFW<GO>}
To contact the editor responsible for this story: David Whitehouse at +33-1-5365-5059 or dwhitehouse1@bloomberg.net
The stock market finished the third quarter on a cautious note with small caps leading the retreat. The S&P 500 shed 0.3% to narrow its Q3 gain to 0.6%, while the Russell 2000 (-1.5%) widened its quarterly loss to 7.9%.
Equity indices endured another volatile affair after the S&P 500 alternated between gains and losses during the past five trading days. Today's retreat represented the second consecutive decline for the benchmark index, which registered a September loss of 1.6%.
The benchmark index displayed modest strength in the early going with help from influential sectors like technology (+0.2%), financials (-0.2%), and industrials (-0.1%). The three cyclical groups helped the S&P 500 climb to a late morning high at 1985.18, but the index spent the next two hours in a steady retreat.
The slide from highs took place amid significant weakness in the two commodity-related sectors. Most notably, the energy space (-1.2%) widened its Q3 loss to 9.2% and was pressured by a 3.6% decline in crude oil. The energy component finished the pit session at $91.16/bbl, which represented a 13.6% loss for the quarter.
Similarly, the materials sector (-1.2%) stumbled in reaction to sliding prices of metals. Silver plunged 2.9% to $16.85/ozt, while gold (-0.6% to $1211.40/ozt) and copper (-1.6% to $3.01/lb) held up a bit better.
Also weighing on commodities was the continued strength of the Dollar Index, which added 0.4% to book a 3.9% gain for the month and an even more impressive 7.8% surge for the third quarter.
On the upside, the technology sector (+0.2%) finished ahead of the remaining cyclical groups and helped the S&P 500 trim its loss into the close. Large cap components displayed strength with Apple (AAPL 100.75, +0.64), Cisco Systems (CSCO 25.17, +0.24), and Visa (V 213.37, +2.44) climbing between 0.6% and 1.2%. Meanwhile, chipmakers traded alongside small-cap stocks as evidenced by a 0.9% decline in the PHLX Semiconductor Index.
Likewise, the high-beta biotechnology group underperformed, causing the health care sector (-0.6%) to finish behind the other three countercyclical sectors. The iShares Nasdaq Biotechnology ETF (IBB 273.63, -2.43) lost 0.9%.
Treasuries registered losses after spending the entire session in the red. The 10-yr note fell seven ticks to send its yield higher by three basis points to 2.50%.
Today's participation was ahead of average with more than 910 million shares changing hands at the NYSE floor.
Economic data included Chicago PMI, Consumer Confidence, and the Case-Shiller 20-City Index:Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, while ADP Employment Change for September (consensus 202K) will be released at 8:15 ET. The day's data will be topped off with the 10:00 ET release of the ISM Index for September (consensus 58.5) and the Construction Spending report for August (consensus 0.4%).
- The Chicago PMI fell to 60.5 in September from 64.3 in August, while the consensus expected a decline to 61.5
- Even though the PMI dropped more than expected, the current reading is far from a disappointment. Levels have remained above 60 for five of the past six months, and readings above 60 are generally considered too strong for long-term stability
- The Conference Board's Consumer Confidence Index dropped to 86.0 in September from an upwardly revised 93.4 (from 92.4), while the consensus expected a fall to 92.0
- This was the lowest reading in the Consumer Confidence Index since May
- The Case-Shiller 20-city Home Price Index for July rose 8.1%, while a 7.4% increase had been expected by the consensus
- The reading followed June's increase of 8.1%
- Nasdaq Composite +7.6% YTD
- S&P 500 +6.7% YTD
- Dow Jones Industrial Average +2.8% YTD
- Russell 2000 -5.3% YTD