General Trend:
- ASX 200 outperforms amid recent speech by RBA Gov; Rate-sensitive Telecom and Consumer Discretionary sectors rise
- Shanghai Composite lags in early trading as China’s Oct Industrial profits saw largest decline since 2011
- Gainers in Shanghai include Telecom Services and IT shares
- Gainers in Japan include Iron/Steel and Electric Appliances companies
- Toshiba rises over 3%, Tokyo Stock Exchange (TSE) confirmed it is considering easing listing requirements for moving to its main board
- Australian bond yields declined early session after RBA Gov Lowe’s overnight speech
- Some analysts believe near-term QE odds declined in Australia after speech by Lowe, early 2020 rate cut remains on the table
- However, Westpac expects RBA to begin QE in H2 2020 [previously said it was possible that the RBA adopted asset purchase program in 2020], also now sees 2 RBA rate cuts by June 2020
- BoJ Board Member Sakurai: there is a chance BOJ will need to respond with policy action if overseas growth slows further, negative impact on Japan’s economy materializes; Need to monitor policy side effects is rising
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened 0.0%
- (AU) S&P: Australia fiscal stimulus could put AAA sovereign rating under increased “downward pressure” if the government opted to deploy fiscal stimulus that changed the trajectory of the budget
- (NZ) Reserve Bank of New Zealand (RBNZ) fiscal stability report: To leave mortgage restrictions unchanged; considering potential impacts of unconventional monetary tools on bank profitability
- (NZ) New Zealand Oct Trade Balance (NZ$): -1.0B v -1.0Be; Exports: 5.0B v 5.0Be; Imports: 6.1B v 6.0Be
- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: we were not particularly close to relaxing LVR rules; seeking more confidence in bank lending standards
- (NZ) Reserve Bank of New Zealand (RBNZ) Deputy Gov Bascand: Will watch bank deposit growth trends, so far bank deposits are holding up
- WBC.AU Speculation that the bank may need to raise funds in order to pay penalty associated with money laundering charges, fine seen in the A$1.0B range – press
- (AU) Australia sells A$1.2B v A$1.2B indicated in 1.50% June 2031 bonds, avg yield 1.1042% v 1.3249% prior, bid to cover 2.42x v 3.74x prior
- (AU) AUSTRALIA Q3 CONSTRUCTION WORK DONE Q/Q: -0.4% V -1.0%E
- (AU) Australia Treasurer Frydenberg: RBA policy on QE is not likely – press
- (AU) RBA Gov Lowe: Reiterates negative rates are ‘extraordinarily’ unlikely, Threshold for using QE has not been reached – comments from Sydney (overnight)
- (AU) Westpac: Now sees RBA cutting rates by 25bps in June 2020 [implies RBA cash rate of 0.25%], RBA starting quantitative easing (QE) in H2 2020 [Westpac previously said it expected the RBA to act in Feb 2020 by cutting rates by 25bps (implied a RBA cash rate of 0.50%), previously said it was possible that the RBA adopted asset purchase program in 2020]
Japan
- Nikkei 225 opened +0.3%
- (JP) Bank of Japan (BOJ) Member Sakurai: Will patiently continue with powerful monetary easing, vital to continue with easing; there is a chance BOJ will need to respond with policy action if overseas growth slows further, negative impact on Japan’s economy materializes
- 8697.JP Tokyo Stock Exchange to ease requirements for inclusion in its main market from the second tier market, as soon as next year – Nikkei
- 8031.JP Guides will recognize impairment loss for Moatize, unclear the final amount yet
- (JP) Japan LDP Official: Government is looking to compile extra budget around ¥10T (in line with prior estimates)
Korea
- Kospi opened +0.6%
- 005930.KR Samsung and LG Display are expected to supply OLED panels for iPhones in 2020 – Korea Press
- (KR) South Korea Cabinet approves reserve fund for KRW98.5B shortfall in budget
China/Hong Kong
- Hang Seng opened +0.1%; Shanghai Composite opened -0.1%
- (CN) China releases draft to solicit public opinion on measures for evaluating systemically important banks as part of path to improve the regulatory framework for systemically important financial institutions – Xinhua
- (CN) CHINA OCT INDUSTRIAL PROFITS Y/Y: -9.9% V -5.3% PRIOR; (largest decline since 2011) YTD Y/Y: -2.9% V -2.1% PRIOR
- (CN) China Ministry of Finance (MOF) seeing strong demand for sovereign USD bond offering, total orders for all offerings >$16.5B v $6.0B offered
- (CN) China PBOC sets Yuan Reference Rate: 7.0349 v 7.0344 prior
- (CN) China PBoC Open Market Operation (OMO): Skips for 6th consecutive session; Net drains CNY0B v CNY120B prior
- (CN) China PBOC to conduct CNY6.0B in Central Bank bill swaps (CBS) v CNY6.0B prior (6th ever CBS operation); coupon 2.35%
- (CN) MSCI: Will only consider adding more yuan denominated shares to its indexes after China addresses concerns over market accessibility
- (HK) Hong Kong property prices are expected to decline further due to lingering protesting; Property owners continue to reduce prices to fund their emigration plans – SCMP
North America
- (CN) Pres Trump: has been speaking with Pres Xi; we’re in ‘final throes’ of reaching trade deal with China
- (US) Weekly API Oil Inventories: Crude: +3.6M v +6.0M v prior
- BA FAA: have not completed reviewing 737 Max design changes and associated pilot training, told Boeing it will retain authority over the issuance of airworthiness certificates for all new 737 Max aircrafts
- (US) Pres Trump: – I am the one holding up the deal with China; the deal has ‘got to be good’ – interview with Bill O’Reilly
- (US) NAFTA ministers to meet in Washington DC Wednesday to discuss replacement deal
Levels as of 00:20 ET
- Nikkei 225, +0.4%, ASX 200 +0.9%, Hang Seng +0.1%; Shanghai Composite +0.1%; Kospi +0.5%
- Equity Futures: SP500 +0.1%; Nasdaq100 +0.1%, Dax flat; FTSE100 +0.1%
- EUR 1.1027-1.1010 ; JPY 109.15-109.02 ; AUD 0.6792-0.6771 ;NZD 0.6434-0.6422
- Gold -0.1% at $1,466/oz; Crude Oil -0.2% at $58.28/brl; Copper -0.3% at $2.688/lb
