Asian Market Update: Equities continue to surge on dovish Yellen comments as Senate confirmation hearings yield little surprise
***Observations/Insights*** - Nikkei225 and Shanghai Composite saw another session of hefty gains in the wake of the increasingly apparent "Yellen put" as the Fed chair nominee stuck to a familiar dovish script during her Senate Banking Committee testimony - prioritizing supporting economy as long as unemployment is elevated and inflation is low. Nikkei225 built on its gains above the psychological 15,000 mark - the highest since May. Shanghai Composite hit a 1-week high above 2,150, rising for the 2nd consecutive day despite continued tightening in the money markets following a more hands-off approach by the PBoC. - Yen weakness was more apparent after a technical break above the ¥100 level in USD/JPY. Analysts pointed to surprising comments from Fin Min Aso overnight that Japan is open to more intervention if the currency moves become one-sided to have sparked more pronounced yen selling. Econ Min Amari attempted to backtrack from the those remarks earlier today, noting it was not appropriate for cabinet members to make yen-linked comments, with Tokyo facing increasing scrutiny this week from the likes of the US auto industry in rigging favorable conditions through exchange rate means.
***Economic Data*** - (SG) SINGAPORE SEPT RETAIL SALES M/M: 0.5% V 1.0%E; Y/Y: -5.9% V -4.4%E; RETAIL SALES EX-AUTO Y/Y: -0.3% V 1.8%E - (KR) South Korea Sept Conference Board Leading Economic Index m/m: +0.6% v +0.3% prior
***Fixed Income/Commodities/Currencies*** - (CN) Daily Shibor fixings: O/N: 4.4540% v 4.1880% prior (3rd consecutive rise, highest since Oct 30th); 1-week: 5.3110% v 4.1930% prior(3rd consecutive rise, highest since Oct 29th) - (JP) BOJ offers to buy ¥110B in JGB with maturity less than 1-yr, ¥250B in 1-3yr JGB and ¥350B in 3-5yr JGB - (AU) Australia MoF (AOFM) sells A$800M in 6.0% 2017 Bonds; avg yield: 3.0545%; bid-to-cover: 3.89x - (US) Weekly Fed Balance Sheet Assets Week ending Nov 13th: $3.864T (record high) v $3.808T prior; M1 y/y change: 8.5% v 8.8% w/w; M2 y/y change: 6.5% v 6.6% w/w
- SLV: iShares Silver Trust ETF daily holdings fall to 10,392 tonnes (3-week low) from 10,443 tonnes - (CN) China National Energy Administration (NEA): China Oct power consumption 437.5B kwh v 444.8B kwh m/m, +9.5% y/y - (CN) China National Development and Reform Commission (NDRC) confirms it will cut fuel prices: Diesel by CNY155/ton and gasoline by CNY160/ton (3rd consecutive cut) - update
- Risk-on sentiment is reflected by more strength in high-beta currencies AUD and NZD at the expense of the familiar funding choice of JPY and, increasingly, EUR. AUD/USD is up nearly 50pips around 93.50, NZD/USD up 30pips above 0.8290, while AUD/JPY and NZD/JPY crosses are up 60 and 50 pips respectively above 93.70 and 83.10. USD/JPY briefly retreated on Amari comments but remains well bid above the 100 yen handle - having broken out of a 4-month-long pennant overnight. EUR/AUD cross is down about 60pips below 1.4390.
***Speakers/Political/In the Papers*** - (CN) Fitch: implementation is key for China long-term reform; Recent announcements could lay the groundwork for measures that help rebalance the economy and limit the build-up of further stresses on the sovereign credit profile. We do not view these announcements as a definitive roadmap - China is only at the start of a busy policy-making calendar leading up to the National People's Congress in March. - (CN) China to release the full Plenum decision document within a week - Chinese press - (CN) China vice Commerce Minister Wang: China to actively promote overseas investment in US - (CN) According to market research, China Jan-Oct ten major real estate companies increased land acquisition to record CNY238.7B, +176% y/y - Chinese press - (HK) Hong Kong Monetary Authority (HKMA) Chief Chan: Hong Kong large-sized apartment prices fell 2.2% from Feb; Property price outlook uncertain
- (JP) Japan Econ Min Amari: Japan will strive to avoid new debt issues for extra budget; Inappropriate for ministers related with economy to comment on weakening Yen - (JP) Japan Fin Min Aso: Expect US to properly deal with debt ceiling issue - (JP) Japan govt considering seeking to avoid bond issuance for stimulus - Japanese press
- (KR) Goldman Sachs: There is less room for KRW appreciation; More room for Kospi to strengthen
- (US) Moody's concludes review of 8 large banks, lowers some senior holding company ratings, affirms others
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +1.7%, S&P/ASX +0.7%, Kospi +1.8%, Shanghai Composite +2.3%, Hang Seng +1.5%, Dec S&P500 +0.1% at 1,789, Dec gold +0.1% at $1,288, Dec crude oil +0.5% at $94.18/brl
US markets: - A: Reports Q4 $0.81 v $0.76e, R$1.72B v $1.71Be; +5.6% afterhours - KMB: Pursuing Spin-Off Of Health Care Business; +4.9% afterhours - WPX: Announces Plan to Form Master Limited Partnership (MLP); +4.7% afterhours - AMAT: Reports Q4 $0.19 (adj) v $0.18e, R$1.99B v $1.98Be; -0.1% afterhours - MCD: Long-term annual targets: Rev +3-5%, op income +6-7%, ROIIC in high teens; expects commodity pressure to continue in 2014 - analyst day comments; -0.1% afterhours - JWN: Reports Q3 $0.69 v $0.66e, R$2.88B v $2.88Be; -1.6% afterhours
Notable movers by sector: - Consumer discretionary: Matsumotokiyoshi Holdings Co Ltd 3088.JP -3.7% (H1 results); Dwango 3715.JP +21.5% (FY12/13 results); Fancl Corp 4921.JP -7.1% (H1 results); LG Corp 003550.KR +1.2% (Q3 results); Panasonic Corporation 6752.JP +2.0% (increase auto batteries production); Bega Cheese BGA.AU +2.9% (received 20 acceptances totalling 22.4K Warrnambool shares) - Industrials: Lend Lease Corp LLC.AU +1.5% (sees strong growth); Xi'An Aero-Engine PLC 600893.CN +6.2% (awarded order) - Materials: China West Construction Group Co Ltd 002302.CN +3.7% (awarded contract) - Financials: T&D Holdings 8795.JP +4.8% (H1 results); Haseko Corp 1808.JP +3.5% (H1 results); Dai-Ichi Mutual Life Insurance 8750.JP +6.8% (H1 results) - Technology: DDS Inc 3782.JP +14.4% (9-month results) - Healthcare: Zhejiang Jingxin Pharmaceutical Co Ltd 002020.CN +2.7% (receives subsidy) - Utilities: TEPCO 9501.JP +1.1% (press speculation on FY14/15 results; analyst action)