Asian Market Update: RBA still concerned with high AUD; China non-manufacturing PMI slows
***Observations/Insights*** - RBA releases nearly identical statement in its last policy decision of 2013; Most notably still concerned about AUD which it continues to view as "still uncomfortably high" despite a 400pip drop since the November decision. - Australia retail sales top estimates and prior month's figure revised higher. - China Nov non-manufacturing PMI slows for the first time in 3 months. - PBoC regular liquidity injection more modest than in recent sessions, even as local think tank notes the 2014 China GDP forecast may be downgraded to 7%. - Yen remaining under pressure amid further speculation the core CPI will not achieve 2% target in 2 years, calling for more BOJ easing down the line; Nikkei outperforms, tracking softer yen.
***Economic Data*** - (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 2.50%; AS EXPECTED - (AU) AUSTRALIA Q3 CURRENT ACCOUNT BALANCE (A$): -12.7B V -11.5BE (3-quarter low); NET EXPORTS OF GDP: 0.7% V 0.4%E - (AU) AUSTRALIA OCT RETAIL SALES M/M: 0.5% V 0.4%E - (CN) CHINA NOV NON-MANUFACTURING PMI: 56.0 V 56.3 PRIOR (frist decline in 3 months) - (NZ) NEW ZEALAND NOV ANZ COMMODITY PRICE M/M: -0.4% V 1.4% PRIOR (1st decline in 5-months) - (JP) JAPAN OCT LABOR CASH EARNINGS Y/Y: +0.1% V -0.2% PRIOR - (JP) JAPAN NOV MONETARY BASE Y/Y: 52.5% V 45.8% PRIOR (multi-year high) - (TH) THAILAND NOV CONSUMER CONFIDENCE: 75.0 V 77.6 PRIOR (22-month low, 8th consecutive monthly decline); CONSUMER CONFIDENCE ECONOMIC: 65.0 V 66.6 PRIOR - (UK) UK NOV BRC SALES LFL Y/Y: 0.6% V 1.1%E (7-month low)
***Fixed Income/Commodities/Currencies*** - (CN) PBoC to inject CNY18B in 7-day reverse repos
- USD/JPY rises above 103.30, highest level since May, amid further speculation over the need for more BOJ easing. GBP/JPY cross rises above 169 handle and EUR/JPY approaching 140 - multi-month highs. Latest CFTC data showing 2nd consecutive week of multi-year highs in yen shorts. AUD/USD rises to 0.9130 after stronger than expected retail sales data before falling below 0.9060 after RBA policy statement reiterating AUD remains uncomfortably high.
***Speakers/Political/In the Papers*** - (CN) China may set 2014 GDP growth target at 7.0% v 7.5% in 2013; may target 2014 CPI growth at 3.5% - Chinese press citing thinktank - (CN) China National Meteorological Center (NMC) issues smog warnings in Central and Eastern China - (JP) Japan Coast Guard said to have spotted two China vessels near the disputed Senkaku Islands (3rd consecutive day) - Kyodo News - (JP) Japan Chief Cabinet Sec Suga: US, Japan on same footing about finding China's air defense identification zone being unacceptable - (JP) Japan Fin Min Aso: Not yet at stage where we can determine size of economic package - financial press - (JP) According to QUICK Corp survey, bond market participants only expect Japan core CPI to reach 1.4% over the next 2 years, well below the 2% target - Nikkei - (AU) Deutsche Bank economist: Australia retail sales clearly showing improvement trend - SMH - (SG) Singapore Central Bank (MAS) in annual Financial Stability Review: Risks for Asia's economic growth tilted to the downside; Sudden increase in interest rates could strain debt-service ability in Asia.
- (US) NY Fed's Potter: Repo plan not a sign of FOMC policy intentions; Repo plan may aid Fed control of money market rates
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +0.7%, S&P/ASX -0.3%, Kospi -0.8%, Shanghai Composite -0.1%, Hang Seng -0.6%, Dec S&P500 flat at 1,800, Feb gold -0.2% at $1,220, Jan crude oil +0.2% at $96.01/brl
US markets: - TSLA: German transport regulator (Kraftfahrt-Bundesamt) completes review of Model S incidents; review found no manufacturer-related defects; +1.8% afterhours - AAPL: Said to have acquired social analytics startup Topsy Labs for over $200M - financial press; +0.1% afterhours - YUM: Reports Nov China SSS +1% v -5% m/m; affirms FY13 forecast; provides 2014 outlook; -1.8% afterhours - THO: Reports Q1 $0.68 v $0.71e, R$800M v $803Me; -4.4% afterhours - KKD: Reports Q3 $0.16 adj v $0.16e, R$114.2M v $115Me; -13.8% afterhours - OCZ: Reaches agreement with Toshiba to sell solid state drive business; -42.3% afterhours
Notable movers by sector: - Consumer discretionary: Pigeon Corp 7956.JP +2.0% (9M results); Jiangling Motors Corp Ltd 000550.CN +5.1% (Nov vehicle sales); Sands China 1928.HK +1.7%, Wynn Macau Ltd 1128.HK +2.6% (Macau reports Nov casino Rev) - Industrials: Kia Motors 000270.KR -5.5% (Nov sales); Hyundai Motor 005380.KR -4.4% (Nov sales); Zhengzhou Yutong Bus 600066.CN +2.6% (Nov vehicle sales); Shandong Hi-Speed Road & Bridge +10.1% (resumes trading; announces refinancing for road infrastructures); Shuangliang Eco-Energy Systems Co Ltd 600481.CN +2.6% (awarded orders) - Materials: Sekisui Chemical Co Ltd 4204.JP +6.0% (speculation on lithium-ion batteries); Shandong Nanshan Aluminum Co Ltd 600219.CN +5.2% (to invest in new material project); Anhui Conch Cement 914.HK +2.6%, BBMG Corp 601992.CN +1.5%, Henan Tongli Cement 000885.CN +9.6% (China cement price rising for eight consecutive weeks); Rio Tinto RIO.AU -0.8% (lower CAPEX forecasts) - Technology: High Tech Computer Corp 2498.TW +1.0% (Nov sales results); Universal Scientific Industrial Shanghai Co Ltd 601231.CN -2.1% (faces loss due to supplier's financial issues)