Asia Summary
Asian equity markets have traded mixed with markets in China and South Korea remaining closed for holidays. Markets in Taiwan are also closed on today’s session in observance of a national holiday. Japan’s Topix has underperformed amid weakness in the banking sector. Equity markets in the Philippines and Indonesia trade at record highs.
In corporate news, Amazon Japan is said to be planning to invest in the area of fashion. On the inflation front, beer maker Asahi Group is reported to be planning to raise prices by ~10% in March, which would be the first increase in 10-years. Shares of Japan Display have gained over 25%.
Following the US equity close, Fitch downgraded the credit ratings of banks including Fifth Third and Wells Fargo.
The US dollar has traded with a generally weaker tone ahead of the later today release of the ADP monthly payrolls report. The declines also have come amid lower Treasury yields and speculation related to the Fed chair position.
Bank of Japan (BoJ) Deputy Gov Nakaso did not rule out a deficit related to the central bank’s exit strategy from easing measures, but suggested that officials are prepared for this.
The World Bank raised China’s 2017 and 2018 GDP growth forecasts, putting them in line with those of the IMF.
Key economic data
(AU) Australia Sept AiG Perf of Services Index: 52.1 v 53.0 prior
(JP) Japan Sept Nikkei PMI Services: 51.0 v 51.6 prior
(NZ) New Zealand Sept ANZ Commodity Price: +0.8% v -0.8% prior
(UK) UK Sept BRC Shop Price Index Y/Y: -0.1% v -0.3% prior (smallest decline since May 2013)
Speakers and Press China
(CN) World Bank raises forecast for 2017 China GDP growth to 6.7% (6.5% prior); raises 2018 GDP growth forecast to 6.4% (6.3% prior)
Other
(JP) BoJ Dep Gov Nakaso: Does not rule out BoJ deficit in exit strategy – Japan Press; Revenue fluctuations in the short-term from exit strategy will not hurt policy execution as BoJ had been saving some of its revenues for future losses.
(US) President Trump aides said to deliver shortlist for Fed Chair; According to a separate report, Treasury Sec Mnuchin is said to have given support to Jerome Powell for the position.
(US) DoubleLine’s Gundlach: 2018 will be ‘ much tougher’ market environment; expects liquidity to marginally reverse in 2018 and hurt assets; Says ‘no chance’ President Trump wants Yellen to continue at Fed; "No way’ Gary Cohn will be Fed Chairman.
(US) White House said to be readying request for $29B in disaster aid, flood insurance claims – AP
(US) Rep Jim Jordan (R-Ohio): Confirms expects House to pass budget on Thursday
(US) US President Trump: Puerto Rico’s debt will have to be ‘wiped out’ – US media interview
(KR) North Korea negotiator said to meet former US officials later in Oct – US financial press
(MY) Malaysia expected to amend its tax act to include digital economy – Local Press
Uber: Board said to approve $1.0-1.25B investment from Softbank (implied valuation $69B) and corporate governance reforms; said to set 2019 deadline for IPO – US financial press
Asian Equity Indices/Futures (00:30ET)
Nikkei +0.2%, Hang Seng +0.8%, Shanghai Composite closed, ASX200 -0.7%, Kospi closed
Equity Futures: S&P500 flat; Nasdaq flat, Dax +0.2% , FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1736-1.1780; JPY 112.51-112.91; AUD 0.7830-0.7875; NZD 0.7185-0.7206
Aug Gold +0.3% at 1,278/oz; Aug Crude Oil -0.8% at $50.01/brl; Sept Copper +0.1% at $2.963/lb
GLD SPDR Gold Trust ETF daily holdings -0.6% to 854.3 metric tons
(AU) Australia sells A$700M in April 21, 2027 bonds, avg yield 2.7655%, bid to cover 4.46x
Equities notable movers Japan
Japan Display,6740.JP Japan government backed OLED firm said to consider mass production; +25%
Asahi Group, 2502.JP Expected price increase; +3.3%
US markets on close: Dow +0.4%, S&P500 +0.2%, Nasdaq +0.2%, Russell +0.2% – Best Sector in S&P500: Industrials +0.4%
Worst Sector in S&P500: Utilities -0.3%
At the close: VIX 9.51 (+0.06pts); Treasuries: 2-yr 1.475% (-1bp), 10-yr 2.318% (-1bp), 30-yr 2.868% (flat)
US Market Summary
The benchmark US stock indices all set fresh records today, with the S&P 500 notching its sixth consecutive session of gains in a row. The VIX stayed pinned around 9.5 after Warren Buffett acknowledged Berkshire has avoided making some equity sales in anticipation of potential changes to the tax code next year. Airlines climbed after Delta adjusted its Q3 outlook and reported Sept metrics. Sept auto sales topped expectations, helped by the effect of the hurricanes. Crude prices drifted lower, adding onto yesterday’s losses. All sectors were in the green for the day except for real estate and utilities.
US Afterhours Movers – CTMX Announces strategic collaboration with Amgen in Immuno-Oncology; Amgen to make $40M upfront payment and acquire $20M in CytomX stock; +37% afterhours
ODP Announced acquisition and cut FY17 forecast; -8.5%
NLNK Files to sell $50M public offering of common stock (15.6% of market cap); -5.7% afterhours
RIGL Files to sell $40M of common stock via Jefferies and BMO (10% of market cap); -8.7% afterhours
