China May Announce MLF Operation On Friday

Dec 05 19, 07:24 GMT

General Trend:

Australian equities outperform as Energy, Consumer Discretionary and Financial companies rise
Gainers in Japan include Iron/Steel, Securities and Marine/Transportation companies
Nissan plans to furlough US workers as part of cost cutting measures
Markets in Hong Kong and Shanghai rise less than 0.5% in early trading
South Korea Kospi underperforms amid weakness in Won
New Zealand bond yields rise as analysts examine implications of RBNZ’s final bank capital rules; RBNZ Gov said impact on monetary policy is ‘very limited’
Japan’s stimulus measures in line with press speculation
US Treasury Sec Mnuchin to appear at US House committee hearing on Dec 5th (Thursday) at 10 AM EST; The hearing relates to financial stability
China Commerce Ministry (MOFCOM) sometimes holds weekly press conference on Thursdays (comments generally seen during early European morning)
Reserve Bank of India (RBI) expected to cut rates later today

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened 0.6%
(AU) AUSTRALIA OCT RETAIL SALES M/M: 0.0% V 0.3%E
FCG.NZ Reports prelim Q1 (NZ$) normalized EBIT 171M v 26M y/y, gross margin 740M v 646M y/y
(NZ) NEW ZEALAND Q3 VOLUME OF ALL BUILDINGS Q/Q: 0.4% V 1.0%E
CTX.AU Guides FY19 RCOP Net A$320-360M; RCOP EBIT 580-620M; expect to sell 25 retail locations for A$136M; annonces 300-500M A$ hybrid capital securities offering – investor day slides
(NZ) New Zealand Commerce Commission releases final report into the retail fuel market: many fuel companies have been making persistently higher profits over the past decade than would expect in a workably competitive market
(NZ) Reserve Bank of New Zealand (RBNZ) raises bank capital levels as planned, banks are given 7-years from July 2020 to meet requirements
(NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Bank capital plans hit ‘sweet spot’ for NZ system; banks can reach capital level from retained profits
(AU) Australia Oct Trade Balance (A$): 4.5B v 6.5Be; Exports M/M: -5.0% v +3.0% prior; Imports M/M: 0.0% v +3.0% prior

Japan

Nikkei 225 opened +0.7%
7974.JP Nintendo reports 830K Nintendo Switch units sold in the US over Thanksgiving week (best week of sales ever in the U.S. for Nintendo Switch)
(JP) Japan PM Abe: To compile economic stimulus package worth about ¥13T ($119B) in fiscal spending (as speculated), total spending ¥26T
(JP) Bank of Japan Member of Policy Board Harada (dissenter): Bold stimulus has helped improve Japan’s finance; bold easing as improved economy; a rate hike now would bring back deflationary expectation
7201.JP As part of cost cutting measures, ordered 2 day unpaid furlough January 2nd and 3rd for the entire US organization, and cut employee travel expenses by 50%, effective immediately
(JP) Japan MoF sells ¥700B v ¥700B indicated in 0.4% coupon 30-year JGBs, avg yield: 0.43% v 0.4580% prior, bid to cover 3.69x v 3.66x prior

Korea

Kospi opened +0.5%
(NK) North Korea army’s general staff Pak Jong Un: US and North Korea can turn into an all out armed conflict any moment even by any accidental case – NK financial press
(JP) Japan Trade Min: Japan and South Korea have agreed to working level talks on Dec 16 in Tokyo related to export controls
(KR) South Korea President Moon: Will expand South Korea’s global networks of free trade to boost its economic growth and fend off protectionism
(KR) South Korea and US ended 4th round of defense cost share talks apart on a final figure
(US) Pentagon official Heino Klinck: US has never taken military options off the table when dealing with North Korea – Yonhap

China/Hong Kong

Hang Seng opened +0.9%; Shanghai Composite opened +0.3%
(CN) China PBoC Open Market Operation (OMO): Skips for 12th consecutive session; Net drains CNY0B v CNY0B prior
(CN) China PBOC speculated to conduct Medium Term Lending Facility (MLF) operation on Friday to roll over maturing loans – China Press
(CN) US and China said to be moving closer to a Phase 1 trade agreement despite recent rhetoric over Hong Kong and Xinjiang tensions; US expects Phase 1 deal to be completed before Dec 15th – press [released during European morning on Wed]
(CN) China PBOC sets Yuan Reference Rate: 7.0521 v 7.0382 prior
(CN) Online rumors have led to runs on certain smaller banks in China, including Yingkou Coastal Bank in early Nov and Yichuan Rural Commercial Bank in late Oct – Nikkei
(CN) China Foreign Min Wang Yi: China and South Korea should jointly uphold multilateralism, advocate free trade and strive to build an open world economy
200.HK CEO Ho: Yokohama is the main and only focus for Japan resort; resort to cost at least $10B; US China trade dispute bigger impact on Macau than HK protests

Other Asia

North America

(US) Sen Warren (D-MA) drafting legislation to reverse mega mergers – US press
(US) US Trade Rep: Expects Pres Trump to implement Japan trade deal next week, will go into effect Jan 1st (in line with original expected timing)
(US) Ag Sec Perdue: trade talks with China going well – CNBC interview
(US) President Trump: China talks going very well; cease fire is holding in Syria – NATO Summit press conference with Chancellor Merkel

Europe

(UK) Comres / Telegraph election poll: Tories 42 (-1); Labour 32 (-1); Lib Dems 12%, Brexit Party 3%

Levels as of 12:15ET

Hang Seng +0.2%; Shanghai Composite +0.3%; Kospi -0.4%; Nikkei225 +0.7%; ASX 200 +1.2%
Equity Futures: S&P500 -0.0%; Nasdaq100 -0.0%, Dax -0.0%; FTSE100 -0.1%
EUR 1.1087-1.1078; JPY 108.94-108.80; AUD 0.6855-0.6834; NZD 0.6562-0.6523
Commodity Futures: Gold +0.1% at $1,481/oz; Crude Oil -0.3% at $58.23/brl; Copper -0.3% at $2.65/lb