Asia Summary
Asian equity markets have opened generally higher, tracking the gains seen during the US session. These opening gains had put the Nikkei 225 on track for its 11th straight gain, while the Topix index was heading towards its 7th straight advance.
Markets in Japan have since pared gains. Shares of Softbank have underperformed and mixed trading in the Japanese banking sector.
At the same time, shares of Kobe Steel have traded higher, after the over 40% losses seen during the prior week amid the company’s data falsification issue. The company is said to have told analysts that it is not having any current funding issues and that it plans to release its corporate earnings, as scheduled, on Oct 30th, according to a Japanese Press report. Coupled with in the gains in Kobe Steel, the sector is moving broadly higher (Nippon Steel +1.5%, JFE +1.4%).
Australian energy companies are generally higher (Woodside Petroleum +0.7%, Santos +1%), following Mondays gain in oil prices. Rio Tinto’s shares have traded higher after its Q3 iron ore shipments beat estimates and it affirmed its full year shipment guidance. Fellow iron-ore miner, BHP, is due to release its quarterly production report on Oct 18th.
In South Korea, video game companies are moving higher. A Chinese official is said to have noted that the government will do its best to lift restrictions related to various types of Korean media.
In China, the small-cap ChiNext index has extended losses after the over 2% decline seen on Monday’s session, with the Oct 18th start of the Communist Party Congress in focus.
Thus far China’s 10-year bond yield has risen again on today’s session, after rising over 2bps on Monday’s session. An economist from the China State Information Center (think tank) said the government should tighten monetary policy, as the room for policy loosening is seen as limited in 2018.
There has been little initial reaction in the bond market following the release of the Reserve Bank of Australia’s Oct policy meeting minutes. Of note the October policy meeting was held on Oct 3rd, which was ahead of the weaker than expected Aug retail sales data which was released on Oct 5th (AUSTRALIA AUG RETAIL SALES M/M: -0.6% V +0.3%E). Looking ahead, the Australia Sept employment change data is due to be released on Thursday Oct 19th.
In New Zealand, the Kiwi initially gained following the above forecast Q3 CPI data. However, the currency has since pared gains. Inflation is still within the RBNZ’s 1-3% target range and a rate hike is not fully priced in until Nov of 2018. Besides this, the government formation talks in New Zealand continue to linger.
Looking ahead to the US session, corporate earnings are starting to pick up with results expected out of companies including Goldman Sachs, Morgan Stanley, Harley Davidson and J&J. UnitedHealth earlier reported better than expected Q3 earnings and in line revenues. Additionally, the company raised its FY17 EPS forecast.
Key economic data
(NZ) NEW ZEALAND Q3 CPI Q/Q: 0.5% V 0.4%E; Y/Y: 1.9% V 1.8%E
(SG) SINGAPORE SEPT NON-OIL DOMESTIC EXPORTS M/M: -11.0% V -2.2%E; Y/Y: -1.1% V 12.7%E;ELECTRONIC EXPORTS Y/Y: -7.9% V 15.0%E
(AU) Australia Sept New Motor Vehicle Sales m/m: -0.5% v 0.0% prior; y/y: -0.8% v 1.7% prior
(NZ) New Zealand RBNZ Q3 Sectoral Factor Model Inflation Index y/y: 1.4% v 1.4% prior
Speakers and Press
Japan
(JP) Japan and US reach agreement to boost cooperation on infrastructure development, financing, maintenance and transport technology – press
(JP) Japan Government Official: No discussion of FX at meetings between US and Japan officials
Korea
(KR) US North Korean envoy Joseph Yun reportedly to travel to Seoul this week – Axios
(KR) North Korea govt reportedly rejects any diplomacy with United States at this point – CNN
China
(CN) State Information Center Economist Zhu Baoliang: China should tighten monetary policy and strengthen property controls – Chinese press
(CN) S&P Comments: China is running unconventional monetary policy
Australia/New Zealand
(AU) RESERVE BANK OF AUSTRALIA (RBA) MEETING MINUTES OCT 3RD: Any rate changes would be dependent on domestic economy; Appreciation in A$ expected to contribute to subdued pricing pressures
(AU) RBA Assistant Gov Ellis (economic): Starting to see spillover effect from public infrastructure spending on non-mining private sector
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.2%, Hang Seng +0.1%; Shanghai Composite +0.1%; ASX200 +0.8%, Kospi +0.2%
Equity Futures: S&P500 -0.0%; Nasdaq100 +0.0%, Dax +0.1%; FTSE100 -0.0%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1797-1.1775; JPY 112.31-112.04; AUD 0.7857-0.7835;NZD 0.7198-0.7163
Dec Gold -0.6% at $1,295/oz; Nov Crude Oil -0.1% at $51.80/brl; Dec Copper -0.3% at $3.23/lb
(CN) China PBOC injects CNY190B in combined 7-day and 14-day reverse repos v CNY20B in 7-day prior
USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.5883 V 6.5839 PRIOR
(JP) Japan MoF sells ¥800.1B in 0.6% (prior 0.6%) 2-yr JGBs; avg yield 0.5900% v 0.5600% prior; bid-to-cover 4.05x v 4.15x prior
(AU) Australia MoF sells A$2.1B in 3% 2047 bonds, yield 3.565%
Equities notable movers
Australia/New Zealand
RIO.AU Reports Q3 Pilbara iron ore production 85.0Mt (100% basis), 83.2Mt y/y; shipments 85.8Mt (100% basis) v 85.2Mte v 80.9Mt y/y; +1.4%
ANZ.AU IOOF to acquire One path pension business for A$975M cash; IOOF has also entered into a 20 year Strategic Alliance Agreement with ANZ
OSH.AU Reports Q3 Rev $380.8M v $332.5M q/q; production 7.91 MMBOE (record high) v 7.2 q/q; +0.8%
CIA.AU Completes series of previously announced financing arrangements raising C$300M; +15%
Japan
5406.JP Told investors that it is not having funding issues at the current time – Japanese Press; +6%
US/Canada
BBD.B.CA Airbus to acquire majority stake in the C Series Aircraft Limited Partnership; +1.3% after hours
UNH Reports Q3 $2.66 adj v $2.58e, Rev $50.3B v $50.3Be, Raises FY17 $10.00 adj v $9.88e (prior $9.75-9.90); +0.7%
