General Trend:
- Fedex declines over 6% in US afterhours trading, cut outlook
- Banks and financials lead early gains in Shanghai amid PBOC liquidity injection
- Hong Kong gaming firms trade generally lower amid focus on Xi’s visit to Macau (Dec 18-20th)
- Cowell E Holdings [1415.HK, camera module firm] rises over 14% in HK on guidance
- Financials (NAB and QBE) weigh on the Australian markets
- Japanese equity markets drop, declining sectors include Marine/Transportation and Real Estate; Brokerage firms rise as Nomura trades at a 52-week high
- Isuzu rises on speculated tie-up with Volvo
- Japan’s exports decline for the 12th straight month in Nov, exports to the US -12.9% y/y
- There has been renewed press speculation that Japan may increase 40-year JGB issuance in FY20/21, expected to lower overall issuance
- BoJ is due to issue its monetary policy decision on Thursday (Dec 19th)
- Aussie declines ahead of Thursday’s release of Nov labor market data
- Kiwi drops ahead of Thursday’s Q3 GDP release
- British pound remains volatile after last week’s elections amid focus on ‘hard’ Brexit.
- PBOC injected liquidity for the first time in 21 sessions, cut 14-day reverse repo rate by 5bps [On Nov 18th, the PBOC cut the 7-day reverse repo rate by 5bps to 2.50% (first cut since 2015)]: The central bank said it will keep liquidity stable at year-end
- The PBOC is next scheduled to set its loan prime rate (LPR) on Friday (Dec 20th)
- PBOC Adviser suggested some local government financing vehicles (LGFVs) might need to be taken over amid recent default concerns (Chinese press)
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +0.1%
- (NZ) Reserve Bank of New Zealand (RBNZ) to form board to oversee financial stability; to implement bank deposit insurance
- (NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -5.1% v -0.5% prior
- (NZ) NEW ZEALAND Q3 BOP CURRENT ACCOUNT BALANCE (NZ$): -6.4B V -6.3BE
- PRT.AU ACCC will not oppose Seven West Media’s proposed acquisition of Prime Media Group, scheme with Seven West Media unlikely to be approved based on proxies
Japan
- Nikkei 225 opened -0.2%
- 7203.JP Union to seek base pay raise of at least ¥3,000 – Nikkei
- (JP) Japan govt considering issuing around ¥32.5T of total new JGB’s in the next FY, down from ¥32.7T in current FY; reportedly mulling boosting issuance of 40-year JGBs next fiscal year from current year amounts – press
- (JP) JAPAN NOV TRADE BALANCE: -¥82.1B V -¥355.5BE; ADJ TRADE BALANCE: -¥60.8B V -¥56.4BE; Exports Y/Y: -7.9% v -8.9%e (12th straight decline)
- 7011.JP Mitsubishi Heavy and Hitachi are near settlement over losses related to coal fired power plants in South Africa; Hitachi could pay about $4.6B to Mitsubishi Heavy – Nikkei
Korea
- Kospi opened flat
- 003620.KR Has asked Govt and KDB for support – Korean press
- (KR) Bank of Korea (BOK) Gov Lee: recently announced housing measures won’t constrain monetary policy – financial press
- (KR) US envoy for North Korea Biegun to visit China to discuss North Korea – Yonhap
- (KR) No signs of North Korea satellite launch preparations at its west coast site – Korean press
China/Hong Kong
- Hang Seng opened +0.4%; Shanghai Composite opened flat
- (CN) China PBoC Open Market Operation (OMO): Injects CNY200B in 7-day and 14-day reverse repos v skips prior (1st injection in 21 sessions); Net injection CNY200B v CNY0B prior; cuts 14-day rate 5bps
- (CN) PBOC Adviser Ma said to urge China to prevent risks of local government financing vehicle (LGFV) failures, calls for takeover of weaker LGFVs – Chinese press
- (CN) Fitch: A signed and mutually honored ‘Phase One’ US-China trade deal would lessen near-term tariff risk for US Corporates and ease trade tensions, at least temporarily; Phase One’ deal alone is not likely to eliminate trade-related uncertainty or restore business confidence, given potentially prolonged ‘Phase Two’ negotiations on structural issues
- (CN) As part of Phase 1 trade deal, China is considering re-routing trade that currently passes through Hong Kong to mainland ports in order to meet agreed upon targets and will restart purchases of ethanol by lifting or waiving tariffs – financial press
- (CN) Treasury Sec Mnuchin: Enforcement mechanism is very strong in China deal and will be binding for entire China deal
- (CN) China PBOC sets Yuan Reference Rate: 6.9969 v 6.9971 prior
North America
- (US) Weekly API Oil Inventories: Crude: +4.7M +1.4M prior
- PCG Reaches $1.7B settlement with regulators over 2017 fires – press
- FDX Reports Q2 $2.51 v $2.79e, Rev $17.3B v $17.6Be; Cuts FY20 guidance
Europe
- (UK) Fitch revises UK Sovereign rating outlook to negative from watch negative; Affirms AA rating
- (UK) S&P revises UK outlook to Stable from Negative; affirms AA sovereign rating
- (UK) Bank of England (BOE) Gov Carney: challenge for monetary policy globally is to provide enough stimulus while powerful forces push down on equilibrium interest rates
Levels as of 00:20 ET
- Nikkei 225, -0.6%, ASX 200 +0.1%, Hang Seng flat; Shanghai Composite +0.1%; Kospi -0.1%
- Equity Futures: S&P500 flat; Nasdaq100 flat, Dax -0.1%; FTSE100 +0.1%
- EUR 1.1155-1.1130 ; JPY 109.56-109.41 ; AUD 0.6861-0.6840 ;NZD 0.6578-0.6554
- Gold flat at $1,481/oz; Crude Oil -0.7% at $60.45/brl; Copper -0.3% at $2.802/lb
