S&P 500 To Remove Certain Chinese Cos. From Bond And Equity Indices

Dec 10 20, 06:51 GMT

General Trend

Asian tech shares trade mixed after decline on the Nasdaq
Australian equities trade broadly lower; Appen [developer of datasets related to machine learning/AI] declines on cautious outlook, suggested COVID-19 has impacted its clients in California [home of its largest customers]; Fortescue outperforms amid higher ore prices
Topix Marine Transportation and Electric Appliances indices are among the decliners; Information/Communication and Air Transportation indices gain; Softbank extends gain after DoorDash IPO, recent privatization speculation
Consumer and IT firms rise in Shanghai, Financials lag
Tsinghua Unigroup’s (Chinese chipmaker) bond default has led to cross-defaults on other bonds
AUD/USD extends gains
USD/JPY rises amid Gotobi day
GBP saw modest decline in Asia, European officials commented on Brexit after the US close
Australia 10-yr bond yield declines towards 1.00% amid stepped up RBA bond buying; Australia’s bill auction saw a negative lowest yield accepted for the first time ever
Bid to cover declined to multi-year low at 20-yr JGB auction
Japan’s Q4 BSI survey suggested improvements for the Tankan survey [due on Dec 14th]
Taiwan Semi may issue Nov sales later today

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened slightly lower
(NZ) New Zealand Nov Heavy Truckometer Index M/M: -0.3% v -2.2% prior, comments note this may indicated a contraction in Q3 GDP
IMMP Reports statistically significant survival benefit for key patient groups in the ongoing Phase IIb AIPAC Study in Metastatic Breast Cancer; final data expected mid 2021
APX.AU Cuts FY21 underlying EBITDA A$106-109M (prior 125-130M); usual q/q improvement seen in Q4, through typical ramp up is not occurring
(AU) Australia sold A$1.5B v A$1.5B indicated in March 2021 bills: lowest yield accepted: -0.010% (first time Australia has sold bills with a negative yield); avg yield: 0.0099%
(AU) Australia Dec Consumer Inflation Expectations: 3.5% v 3.5% prior
(AU) China Commerce Ministry (MOFCOM) Issues ruling on collecting anti dumping deposit on Australia Wine, To impose temporary anti subsidy deposit against Australia win imports on Dec 11th
(NZ) Reserve Bank of New Zealand (RBNZ) Updated weights for Trade-Weighted Index; increases weight of CNY, reduces A$

Japan

Nikkei 225 opened -0.5%
(JP) JAPAN Q4 BSI LARGE ALL INDUSTRY Q/Q: 11.6 V 2.0 PRIOR; LARGE MANUFACTURING Q/Q: 21.6 V 0.1 PRIOR
(JP) Japan planning to increase offshore wind power capacity to 45M KW – Japan press
(HK) Japan banks with US operations have been required to suspend any accounts related to Hong Kong Chief Executive Lam – SCMP
(JP) Japan MoF sells ¥1.2T v ¥1.2T indicated in 0.4% 20-year JGBs: avg yield: 0.3660% v 0.3880% prior; bid to cover 3.0x v 3.6x prior (Lowest bid to cover since 2015)

Korea

Kospi opened -0.2%
(KR) South Korea president Moon approval rating falls to 37.1% v 37.4% w/w (fresh low)
(KR) South Korea reports 682 additional coronavirus cases v 686 prior (2nd consecutive day in the 600s)
(KR) Bank of Korea (BOK) Quarterly Monetary Policy Report: Uncertainty around coronavirus pandemic remain high despite vaccine expectations, resurgence of cases could weigh on exports

China/Hong Kong

Hang Seng opened -0.6%; Shanghai Composite opened -0.2%
(CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v Injects CNY20B in 7-day reverse repos prior; Net injection CNY0B v Net injection CNY10B prior
(CN) Shanghai, China seeking to participate in PBoC Digital Yuan (DCNY) Trial
(CN) Economist see China 2021 GDP at 10% – Xinhua
(CN) China said to be working towards a plan that will measure social creditworthiness of companies – financial press
000938.CN Follow Up: Tsinghua Unigroup confirmed it will not be able to repay the principal on a bond that is due today; the move is said to have led to cross-defaults on other bonds
(CN) China PBOC sets Yuan reference rate: 6.5476 v 6.5311 prior
(CN) S&P Dow Jones Indices’ issues Consultation on the Executive Order Prohibiting U.S. Transactions in Certain Chinese Companies Results: China Based companies will be deemed ineligible for S&P and Dow Jones equity indices
(HK) Hong Kong to quarantine some residents of Richland Gardens in Kowloon Bay due to COVID outbreak of more than 100 cases in the housing estate; Govt concerned that the spread may come from drainpipes

Other

(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 2.00%; AS EXPECTED
(UK) UK and Singapore signed Free Trade Agreement (FTA) to replace EU agreement ahead of Brexit

North America

(MX) Mexico Senate passes Banxico bill, which makes Banxico buy USD from banks
(US) Attributed to high consumer buying Los Angeles Port is out of space to offload ships and expecting it to last for 3 more months – US press
(US) White House Coronavirus Task force said to support selected inbound travel from foreign countries, including UK and Brazil and EU 27 countries – Press
FB FTC and state AGs file suit alleging Facebook has used its monopoly power to crush competition from smaller rivals

Europe

(EU) PM Johnson’s office reportedly agrees to continue talks until Sunday, though large gaps remain between two sides – press
(UK) UK official says that large gaps remain between UK and EU and its unclear if it can be bridged; agreed to keep talking through the weekend but firm decision on future of talks needs to be made Sunday – press
(UK) EU Official: Both sides appear to see Brexit deal as possible, Johnson and Von der Leyen agree talks were constructive
(EU) EU’s Von der Leyen: confirms position with UK remains far apart; we will come to decision by end of weekend, teams should immediately reconvene
UK PM Johnson: Acknowledges [Brexit] situation is difficult; Will not leave any route to fair deal is left untested

Levels as of 12:15ET

Hang Seng -0.4%; Shanghai Composite +0.4%; Kospi -0.2%; Nikkei225 -0.1%; ASX 200 -0.7%
Equity Futures: S&P500 0.0%; Nasdaq100 -0.3%, Dax -0.1%; FTSE100 -0.0%
EUR 1.2101-1.2075; JPY 104.50-104.19; AUD 0.7480-0.7427; NZD 0.7043-0.7013
Commodity Futures: Gold +0.3% at $1,844/oz; Crude Oil +0.5% at $45.73/brl; Copper -0.1% at $3.49/lb