Asia Summary
Asian equity markets opened the session mixed. S&P 500 and Nasdaq futures have risen after the US Senate gained enough votes to pass the budget, which may help pave the way for tax reforms. The Nikkei 225 opened lower following 13 straight sessions of gains, but has since pared losses.
Nissan has declined by over 1.5%. Following yesterday’s close, the company’s CEO said it decided to temporarily suspend the production of certain vehicles, as the company continues to grapple with the issue of unauthorized vehicle inspections in Japan. The company is also said to have found improper inspections going as far back as 20 years, according to Japanese media. Coupled with the declines in Nissan, shares of Honda have also traded lower.
In Hong Kong, insurer AIA Group has declined by over 2% on weaker than expected growth in quarterly new business value.
Following yesterday’s weakness seen in the technology sector, Taiwan Semi has traded flat after reporting Q3 results and issuing guidance. South Korean chip makers are also trading higher. Hynix has gained over 2%.
South Korean utility services firms, including KEPCO Engineering & Construction, have moved sharply higher following the release of a local public opinion poll, which showed public support for building two new nuclear reactors.
South Korean 3-year bond yields have continued to move higher on today’s session. Following the hawkish dissenter at yesterday’s BoK meeting, some of the tier 1 brokerage firms have started to move forward their views for rate hikes from 2018. US Treasury yields have moved higher in the Asian session following the Senate’s budget vote.
At the same time, USD/JPY has gained over 0.4%, amid broad strength in the US dollar. The Kiwi has traded below 70 cents for the first time since May, as the currency has continued to decline following the move by the NZ First Party to form a coalition with the opposition Labour Party.
Looking ahead, US companies due to report earnings later today include General Electric (GE), Honeywell, Manpower, P&G and Schlumberger. On Sunday (Oct 22nd), Japan is due to hold its general elections. On Thursday (Oct 26th), the ECB is due to hold its monetary policy meeting.
Speakers and Press
China
(CN) China mandates 10 banks for planned US dollar bond denominated issuance (first dollar issuance since 2004); to hold investor meeting in Hong Kong on Oct 25th
(CN) Shanghai said to plan Free-Trade Port – Chinese Press
(CN) China NDRC Head: China 2017 GDP to exceed CNY80T, (vs CNY74T y/y) and the GDP growth rate may exceed the official forecast of around 6.5% – Chinese Press
(CN) China gives sector breakdown for Q3 GDP: Tech +29% y/y, Finance +5.6%, Property +3.9%
Other
(US) Senate has the votes to adopt budget, which is a step toward tax overhaul
(JP) Japan Finance Min Aso: Japan companies’ piling up of internal reserves has gone too far; wants corporate reserves to be used for investments and wages
(GE) Germany Chancellor Merkel: UK PM May’s Brexit stance insufficient at this point; May offered ‘significantly’ more on Brexit than before, but presentation did not change stance
(KR) Analysts bring forward Bank of Korea rate hike calls to Nov from 2018 following hawkish dissenter at yesterday’s policy meeting
(KR) According to a South Korea public opinion survey, 59% support the building of two new nuclear reactors – financial press
(MY) Malaysia Think Tank MIER said to raise 2017 GDP growth forecast to 5.4% vs. 4.7% July forecast – Malaysian Press; Cites stronger domestic demand and exports.
(US) Follow Up: Fed Chair announcement unlikely to come this week as President Trump has yet to make up his mind; Advisers said to favor Taylor or Powell – US financial press
(US) SEMI: North America Sept Billings $2.03B (3-month avg basis), +36% y/y
(NZ) New Zealand Incoming PM Ardern: Will be ‘very pro-active’ government
(TW) Zhen Ding Technology: The Apple supplier is said to run factories at full capacity – Taiwan Press
Asian Equity Indices/Futures (00:30ET)
Nikkei flat, Hang Seng +1%, Shanghai Composite flat, ASX200 +0.2%, Kospi +0.5%
Equity Futures: S&P500 +0.3%; Nasdaq +0.3% , Dax +0.3% , FTSE100 +0.3%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1808-1.1858; JPY 112.52-113.31; AUD 0.7829-0.7882; NZD 0.6972-0.7037
Aug Gold -0.3% at 1,286/oz; Aug Crude Oil +0.2% at $51.38/brl; Sept Copper +0.8% at $3.196/lb
GLD SPDR Gold Trust ETF daily holdings flat at 853.1 metric tons
(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6092 V 6.6093 PRIOR
PBoC OMO: Injects CNY80B in 7 and 14-day reverse repos v CNY140B injected prior in 7 and 14-day reverse repos; Net daily injection CNY60B, net weekly injection CNY560B v CNY240B drain w/w
(CN) China MOF sells 30-year bonds at 4.28%, bid to cover 2.66x
US markets on close: Dow flat, S&P500 flat, Nasdaq -0.3, Russell -0.2%
Best Sector in S&P500: Utilities +1%
Worst Sector in S&P500: Consumer Staples -0.5%
At the close: VIX 10.05 (-0.02pts); Treasuries: 2-yr 1.535% (-3bps), 10-yr 2.320% (-2.5bps), 30-yr 2.838% (-1bp)
US Market Summary
Stocks moved lower on the open after a wave of risk-off sentiment engulfed markets during the European session, but stock prices along with risk assets recouped most losses into the afternoon. The S&P500 and Dow closed near the day’s highs, stretching into positive territory at the end of the session. Before the opening bell in NY, the VIX popped 15% back above 11, but volatility edged off as the day wore on. The Sept Philly business outlook blew through expectations, just as the Empire index did on Monday, while signaling acceleration for the manufacturing jobs market. Treasuries rallied on the risk-off sentiment led by the long end, but ended off their best levels, and gold futures gained for the first time in four sessions. Apple iPhone worries weighed on the tech sector. Consumer staples and energy were also in the red, while healthcare and materials outperformed.
US Afterhours Movers
PYPL Reports Q3 $0.46 v $0.44e, Rev $3.24B v $3.17Be; +3.0% afterhours
SKX Reports Q3 $0.59 v $0.43e, Rev $1.10B v $1.06Be; +18.6% afterhours
