RBNZ Holds Rates And Policy

Sep 23 20, 06:02 GMT

General trend and points of interest:

Markets were generally weaker with Australia the only out performer with Service Stream and Nufarm leading the way. USD remained stronger against the majors as some risk off sentiment takes hold as COVID cases start to climb.
Japan PMI indicates manufacturing remained slow in September, though outlook is improving as sub-indexes had softer declines.
Australia PMI figures for September showed a nice increase with both services and composite rising into expansion (>=50)
Kiwi dollar erased its decline after RBNZ left rates on hold, kept LSAP program unchanged and reiterated its forward guidance. Reiterating additional measures to be taken if necessary
As the market await China’s 14th 5-year plan (draft to come in Oct) there is speculation it could include a cut to the GDP target of 6.5% to ~5% or wording that would reduce the importance of it as a major target.

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened +0.3%
(AU) AUSTRALIA SEPT PRELIMINARY CBA PMI MANUFACTURING: 55.5 V 53.6 PRIOR (4th consecutive month of expansion, highest reading since April 2018)
NUF.AU Reports FY20 (A$) Net -456.1M v +38.3M y/y; Rev 2.85B v 2.67B y/y
A$ declined after Westpac said it now sees RBA cutting rates at Oct 6th meeting
(AU) Australia Aug Preliminary Retail sales M/M: -4.2% v +3.3% prior
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 0.25%; (AS EXPECTED); Leaves QE bond purchases at NZ$100B and maintained forward guidance
(AU) Australia Sells A$25B of 0.50% Sept 2026 Bonds via syndication at yield to maturity 0.47%; bid to cover 2.64x (record sale)

Japan

Nikkei 225 opened -0.5%
(JP) Bank of Japan (BOJ) Gov Kuroda: Spoke with Japan PM Suga about Domestic and global economy; Agreed that BOJ and Govt will work together, no change to 2% inflation target
(JP) JAPAN SEPT PRELIMINARY PMI MANUFACTURING: 47.3 V 47.2 PRIOR (highest reading since Feb, 17TH STRAIGHT CONTRACTION)
(JP) Japan Defense Min to seek FY21 defense budget of ¥5.4T – Japan press
(JP) Japan said to be considering allowing foreign visitors from all countries – Japan Press
4901.JP Avigan has met its primary endpoint in Phase 3 trial for coronavirus; To apply for regulatory approval as early as Oct

Korea

Kospi opened +0.9%
(KR) South Korea Fin Min Hong: Housing prices are showing signs of stabilizing due to measures taken to cool prices and provide more housing – Yonhap
Battery makers LG Chem and others swung between gains and losses after Tesla’s battery event
(KR) Bank of Korea (BOK) Raises the loan ceiling for domestic companies hit by coronavirus

China/Hong Kong

Hang Seng opened -0.1%; Shanghai Composite opened +0.1%
(CN) China PBoC Open Market Operation (OMO): Injects CNY200B in 7-day and 14-day reverse repos v CNY350B in 7-day and 14-day reverse repos prior; Net inject CNY80B v Net inject CNY350B prior
(CN) China expected to de-emphasize or cut its GDP target to ~5% (currently 6.5%) in its 14th 5 year plan – press
(HK) HKMA sold a total of HK$961M v HK$16.872B prior to defend currency peg amid strength, currently at 7.7501
(CN) China National Health Commission Coronavirus Update for Sept 22nd: 10 additional cases v 6 prior; Additional deaths: 0 v 0 prior
(CN) China PBOC sets Yuan reference rate: 6.7986 v 6.7872 prior
(CN) China Liquor companies are trading lower after a Govt body issues a warning about the high alcohol prices from the China CCP Discipline Inspector
IPO, Joy Spreader Interactive Technology, fell over 6% in its first day of trade
(CN) China President Xi: world should follow the guidance of science in battling COVID-19 virus; global virus fight should not be politicized; many vaccines have entered Phase III clinical trials (overnight)
(CN) China Ministry of Finance (MOF): China Aug State Firm Profits +23% y/y; Rev +6% y/y; YTD: Net CNY1.82T, -24.2% y/y; Rev CNY38.3T, -2.1% y/y

Other

Keppel Capital, Singapore Exchange and National Stock Exchange of India to launch cross border trading link, end arbitration on derivatives trading – press
(TW) Taiwan Defense Ministry issues statement after China flew fighter jets over Taiwan Strait’s median line in response to US official visit, saying it has the right to counter attack in self defense
(SG) Singapore Aug CPI M/M: 0.6% v 0.5%e Y/Y: -0.4% v -0.5%e

North America

(US) Weekly API Crude Oil Inventories: +0.7M v -9.5M prior
NKE Reports Q1 $0.95 v $0.46e, Rev $10.6B v $9.17Be (+8.7% after hours)
SFIX Reports Q4 -$0.44 v -$0.18e, Rev $443.4M v $415Me (-15.5% after hours)
(US) House Speaker Pelosi office: Agreement has been reached on stopgap funding bill with GOP and Mnuchin; House has passed the Senate expected to pass this week, funding will cover through Dec 11th
TSLA CEO: Shanghai factory continues to scale up; expect in time it will be able to produce 1M vehicles a year, targeting to offer a $25K car within 3-years – Battery Day event

Europe

(LX) ECB’s Mersch (Luxembourg): Pandemic Bond buying Fund (PEPP) flexibility must not apply to QE; not aware of push to extend PEPP to APP program

Levels as of 1:15ET

Hang Seng -0.1%; Shanghai Composite +0.1%; Kospi 0.0%; Nikkei225 -0.4%; ASX 200 +2.3%
Equity Futures: S&P500 +0.1%; Nasdaq100 -0.3%, Dax +0.2%; FTSE100 +0.7%
EUR 1.1713-1.1675; JPY 105.19-104.90; AUD 0.7177-0.7117; NZD 0.6646-0.6599
Commodity Futures: Gold -0.9% at $1,889/oz; Crude Oil -0.9% at $39.45/brl; Copper -1.3% at $3.03/lb