Headlines/Economic Data
Japan
(JP) Bank of Japan (BOJ) Gov Kuroda: we continue to pursue powerful monetary easing to make sure that positive inflation developments are not cut short – comments in Zurich
(JP) Japan MoF sells ¥1.8T v ¥2.2T indicated in 0.10% 5-yr bonds; avg yield -0.107%; bid-to-cover 4.19x
Korea
(KR) North Korea will continue its pursuit of nuclear missiles in the wake of the United States’ rare deployment of three aircraft carrier groups near the Korean Peninsula – letter from North Korea’s top envoy to the UN Ja Song-nam to UN Secretary-General Antonio Guterres
China/Hong Kong
(CN) CHINA OCT INDUSTRIAL PRODUCTION Y/Y: 6.2% V 6.7%E ; YTD Y/Y: 6.7% V 6.3%E
(CN) CHINA OCT RETAIL SALES Y/Y: 10.0% V 10.5%E; YTD Y/Y: 10.3% V 10.4%E
(CN) China Oct Foreign Direct Investment (FDI): CNY60.1B v CNY70.3B prior; YTD y/y: +1.9% v 1.6% prior
(CN) CHINA OCT YTD URBAN FIXED ASSETS Y/Y: 7.3% V 7.3%E
(CN) China PBoC Open Market Operations (OMO): CNY280B v CNY180B injected in 7, 14 and 63-day reverse repos prior; Net injection CNY140B v CNY150B prior
USD/CNY (CN) PBOC sets yuan reference rate at 6.6299 v 6.6347 prior
(CN) China National Stats Bureau (NBS): Jobless rate below 5%; CPI is at ideal level
(CN) Former SAFE Official (fx regulator) Guan Tao: China reforms of its mechanism for determining the exchange rate should include FX market development and loosening of controls
(CN) China State Researcher Zhu sees 2018 GDP growth of 6.5% and CPI at 3% – China Financial News (yesterday)
(CN) China Premier Li Keqiang said to tell Japan PM Abe that both countries should boost cooperation on trade
(HK) According to Credit Suisse analysts Macau Nov 1-12th gaming Rev +20-22% y/y v 15%e
(CN) China 10-year bond yield trades at 4%, first time since 2014
(HK) Macau Gaming Regulator’s Chan: To continue existing regulations on junkets, have banned over 200 people entering casino this year
Australia/New Zealand
(AU) Australia Oct NAB Business Conditions: 21 v 14 prior (record high); Confidence: 8 v 8 prior
(AU) Australia sells A$150M v A$150M indicated in Aug 2035 indexed bonds; avg yield 0.9732%; bid-to-cover 2.93x
(NZ) Reserve Bank of New Zealand (RBNZ) confirms dashboard approach to quarterly bank disclosures
US
(US) US Treasury Sec Mnuchin: Looks forward to successful House tax vote this week; Imposes 183.4-194.9% duties on China plywood imports
Levels as of 23:00ET
Nikkei +0.5%, Hang Seng -0.0%; Shanghai Composite -0.5%; ASX200 -0.9%, Kospi -0.2%
Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 -0.2%
EUR 1.1676-1.1662; JPY 113.73-113.57; AUD 0.7638-0.7609;NZD 0.6903-0.6860
Dec Gold -0.2% at $1,276/oz; Dec Crude Oil -0.2% at $56.63/brl; Dec Copper -0.3% at $3.12/lb
Narrative
Asian equity markets opened today’s trading session mixed. Australia’s equity market has declined by over 0.9%. The S&P ASX 200 Materials and Energy indices have each lost over 1% on the session. Shares of Woodside Petroleum have declined by over 3%. On Monday, Shell announced that it would sell down shares in the Australian energy producer.
Besides this, the ASX 200 Financials index has lost over 0.6%. In Japan, large bank Mizuho Financial has declined on the session, as the company reported better than expected Q2 results and affirmed its FY forecast. Later today, mega banks Mitsubishi UFJ and Sumitomo Mitsui are due to issue their financial reports. In Hong Kong, the Hang Seng Financials index has traded little changed. China Oct M2 money supply and new yuan loans data, which were released on Monday, missed market expectations.
Property shares in Hong Kong have traded generally lower. Sunac China has declined by more than 5%. In Oct, China’s Home Sales Value declined by over 3%, which was the largest y/y drop in over 2 years.
The Hang Seng Information Technology index has risen by over 0.6%, amid gains in shares of Tencent. In South Korea, shares of chipmaker Hynix have risen by over 0.5%. Shares of Micron rose by over 1.5% during Monday’s NY session. Toshiba has gained over 7% amid speculation that the firm could reach a settlement agreement with Western Digital.
Japan’s Fast Retailing has traded marginally higher. The S&P 500 Consumer Discretionary sector gained 0.3% on Monday’s trading session.
Shares of Samsonite have traded higher by over 3% in Hong Kong following the company’s Q3 results and the overall Hang Seng Consumer Goods index has gained over 0.7%. In Australia, the ASX Consumer Discretionary index has declined by over 0.8%. Shares of JB Hi-Fi (home products retailer) have declined by over 3%, while HT&E (media company) and Harvey Norman (consumer retailer) have lost over 2%.
At the same time, the interest rate sensitive sectors are declining in Australia. The ASX 200 Utilities index has declined by over 1.4%, while the REIT index is off by more than 0.9%. Australia’s 3-year bond yield has risen by more than 4bps on the session. In Oct, Australia’s NAB business conditions index rose to a record high.
Following the data the Aussie moved slightly higher, but has since pared some of its gains amid the release of China’s Oct data points.
China Retail Sales in Oct rose at the slowest pace since Jan, while Industrial Production growth slowed to 6.2% y/y (from 6.6% prior). Monthly, power output growth slowed to 2.5% vs 5.3% prior. Despite the data, China’s 10-year bond yield has risen to 4%, for the first time since 2014.
US Treasury Futures are currently little changed. However, USD/JPY volatility has hit 3-week highs. Looking ahead, the US House of Representatives may vote on its tax reform bill by as early as this Thursday, according to press reports.
In the corporate bond market, Resolute Energy withdrew its proposed high-yield offering of $550M in 2025 notes citing broader market conditions. Recall, at the end of last week NRG Energy withdrew a $870M 2028 high-yield offering, citing a similar reason.
In emerging market sovereigns Venezuela, which held a meeting with bondholders on Monday, had its credit rating cut to ‘SD’ from ‘CC’ at S&P on the expectation that another debt payment could be missed.
Japanese companies due to report earnings later today: include Ai Holdings, Amada, DIC Corp, Daido Metal, Dentsu, Ferrotec, Fukui Computer Holdings, Heiwa Corp, Idemitsu Kosan, Hikari Tsushin, Japan Post Bank, Japan Post Holdings, Japan Post Insurance, Kajima, Kansai Urbank Banking, Kyushu Financial Group, Mitsubishi UFJ, Nippon Paint Holdings, Okumura Corp, Open House, Otsuka Holdings, Recruit Holdings, Seiko Holdings, Showa Denko, Sumitomo Mitsui Financial, Sumitomo Realty & Development, Takamatsu Construction Group, The Dai-ichi Insurance, Yokohama Rubber, Toei, Tokyo Seimitsu; Tsubaki Nakashima and Unipres Corp.
Japan’s Q3 preliminary GDP data is due to be released on tomorrow’s session, along with Australia’s Q3 wage price index.
Equities notable movers
Australia/New Zealand
TWR.AU Reports FY17 (A$) underlying net 18M v 201M y/y; Net earned premium 256.9M v 253.8M y/y; To launch NZ$70M rights issue priced at NZ$0.42/shr; -10.5%
SDA.AU Awarded fully managed communications contract for Nabors in South America; no terms disclosed; +7%
Japan
9984.JP No final agreement on investment into Uber, may not make investment if terms are not satisfactory; -0.4%
382.JP Weakness due to being removed from MSCI Japan Index; -12%
China/Hong Kong
1316.HK Added to MSCI China Index; +7%
US
BWLD Reportedly receives >$150/shr takeover offer from Roark Capital – press; +27.9% afterhours
