Headlines/Economic Data
General Themes: Asian equity markets trade broadly higher, after US gains. MSCI Asia Pacific Index on track for record close-Best performing sectors include Energy and Materials
Japan
Nikkei 225 opened +0.8%, closed +0.5%
Continued strength in Auto (Toyota +1%, Honda +0.5%) and Steel sectors (Nippon Steel +0.8%, JFE Steel +2%, tracks 1.1% gain in shares of US Steel).
Financials add on to Tuesday’s gains: Mega Banks (MUFJ +1.9%, Mizuho +0.6%, SMFG +1%)
Nippon Paint halted following merger speculation related to Axalta Coating Systems.
(JP) Japan plans to reduce its annual float of 30-yr and 40-yr bonds for the first time ever FY18 due to low rates sapping demand – Nikkei; The possible reduction may be discussed at the Finance Ministry’s meeting of bond market participants which is expected to be held later today.
Bank of Japan (BOJ) said to be hinting that it could move away from crisis mode stimulus earlier than expect through a future hike in its yield target – financial press
(JP) Japan govt said to plan FY17/18 extra budget of ¥2.0-2.5T – Japanese press
(JP) Japan govt said to be again leaning towards cutting CPI and GDP estimates in next mid-term report – financial press
Looking Ahead: Tokyo Stock Exchange to close on Thursday in observance of Labour Thanksgiving Day
Korea
Kospi opened +0.6%; Samsung Electronics +1%, Hynix +2% (tracks US chip sector gains)
Brokerage firms track gains in equity market
Lotte Shopping -4% (share placement)
USD/KRW (KR) South Korea FX Official: KRW gain pace faster than other currencies; KRW hit 2.5 year high in the session, analyst expect this downward trend to continue for the time being but the pace will probably be controlled
(KR) UN Command: North Korea violated Korean War armistice last week when it fired on defecting soldier at demilitarized zone
South Korea FX Official: KRW gain pace faster than other currencies
South Korea Q3 Household Credit (KRW): 1.42T v 1.39T prior; Household Debt y/y: 9.5% v 10.4% prior
China/Hong Kong
Shanghai Composite opened +0.2%, Hang Seng +0.9% (hit 10-year high above 30,0000)
Hang Seng Materials Index +2.4%, Energy Index +1.5%, Financials Index +1.2%
Hang Seng Property/Construction Index +1%; China to give priority to reducing property bubble – Xinhua
China offshore yuan (CNH) +0.2%
(CN) China PBOC Gov Zhou: Will reduce currency intervention to advance yuan internationalization; to strengthen policy coordination between central and local financial regulators. Reiterates calls for preventing systemic financial risks
(CN) China Ministry of Housing and Urban-Rural Development, the Ministry of Land Resources and PBOC in a joint meeting stressed regulations to curb property sector risks must not be relaxed
(CN) China National Development and Reform Commission (NDRC) target to cut coal capacity by 500Mt in 2016 within 3-5 years will most likely be met ahead of schedule
-China Q3 overseas real estate investments $2.5B, -51% y/y (lowest level since Q4 2013)
-Chinese airlines trade generally higher: Air China +11.5%, China Southern Airlines +10.5%, China Eastern Airlines +9.5%
China Southern Airlines President the company is planning to use American Airlines ties to ‘beef up’ US routes
China Securities Regulatory Commission (CSRC) Chairman Liu Shiyu: creating a new committee to oversee a powerful panel that reviews stock-issuance applications
Weichai Power +4% (fuel cell agreement with Robert Bosch; Chow Tai Fook Jewellery Group +5.5% (H1 profits +44% y/y)
Geopolitics: US Treasury sanctions 4 China companies and 1 citizen for North Korea ties
Air China says to suspend flights to Beijing from Pyongyang, North Korea as the operation is ‘unsatisfying.’
Fixed Income: Chinese corporates continue to tap USD bond market (Shenzhen International, Times Property Holdings, China State Construction)
(CN) PBoC OMO: Injects CNY190B v CNY180B injected in 7,14 and 63-day reverse repos prior; Net injects CNY0B v CNY10B prior
USD/CNY (CN) PBoC sets yuan reference rate at 6.6290 v 6.6356 prior
(CN) China to sell CNY7B in ‘Dim Sum’ Bond in Hong Kong during week of Nov 27th
China MoF sells 3-year bonds: avg yield 3.7365% v 3.74%e
(HK) Offshore yuan 1-day HIBOR +3.4ppts to 5.97968%; 1-week +1.76ppts to 4.99478%; 1-month +64bps to 4.50467%
Australia/New Zealand
ASX 200 opened +0.3%; ASX 200 Energy index +1.1% (oil prices +1.8% on Tuesday), Resources Index +1.1% (copper prices +1.2% on Tuesday)
ASX 200 Financials Index +0.1%: (AU) Australia PM Turnbull said to be planning to discuss reversing opposition to an inquiry into misconduct in banking sector – UK press
ASX 200 Utilities -0.5%, tracks underperformance in S&P 500 Utilities Sector
AUD trades higher then pares gains, amid recent comments from RBA Gov Lowe and better than expected Q3 construction work done data.
AUSTRALIA Q3 CONSTRUCTION WORK DONE Q/Q: 15.7% V -2.3%E; -Building construction work done -0.4% q/q, Engineering construction work done +33.0% q/q
Australia 10-year bond yield -2bps (US Treasury yield ended down on Tuesday)
WebJet -10% (FY18 outlook, restructuring measures)
(NZ) Reserve Bank of New Zealand (RBNZ): Developing strategic plans for future currency issues, to consider feasibility of alternative digital currency
(AU) Australia sells A$900M vs A$900M indicated in 2.25% May 2028 bonds, avg yield 2.5746%
(NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: -3.4% v -3.5% prior; Avg winning auction price: $2,970 vs. $3,105 prior
Looking Ahead: New Zealand Q3 retail sales due on Thursday
Other Asia
Malaysia:
Ringgit (MYR) gains over 0.3% amid equity flows and higher oil prices
Malaysia’s Government postpones today’s release of Oct CPI data to Nov 24th (no reason initially cited)
Malaysia sells MYR2.0B in 2033 Bonds: avg yield 4.55%, bid to cover 3.81x
Taiwan
Taiex opened +0.3%
UMC +3.5%: 2018 silicon wafer prices may increase by 25-35% amid higher demand, says Taiwanese press report
Taiwan Dollar (TWD) trades at strongest level since early Sept
North America
Fed Speak: Fed Chair Yellen: Must keep an open mind and not be trapped by forecast; Some hint inflation expectations may be drifting down; Don’t think expectations have drifted down very much – speaking in New York
US equities ended broadly higher: Nasdaq +1.1%, Russell 2000 +1%, S&P 500 +0.7%, Dow Jones +0.7%
Outperforming sectors on S&P 500: Technology +1.1%,Healthcare +0.9%
(US) Weekly API Oil Inventories: Crude: -6.4M v +6.5M prior
After Market Movers: Gamestop(GME) Reports Q3 $0.54 v $0.43e, Rev $1.99B v $1.96Be; +8.8% afterhours ; Guess (GES) Reports Q3 $0.12 v $0.11e, Rev $554M v $566Me; -11.1% afterhours, Hewlett Packard Enterprise (HPE) Reports Q4 $0.29 v $0.28e, Rev $7.70B v $7.71Be; Antonio Neri to succeed Meg Whitman as CEO; -7.2% afterhours; HP Inc (HPQ) Reports Q4 $0.44 v $0.44e, Rev $13.9B v $13.2Be; -5.8% afterhours , Salesforce.com (CRM) Reports Q3 $0.39 v $0.37e, Rev $2.68B v $2.65Be; -1.4% afterhours
M&A: Japan’s Nippon Paint declined comment on speculation that it could bid for Axalta Coating Systems.
Key Safety Systems to pay $1.59B to acquire substantially all of Japan Takata’s assets
Shares of Pepsi rose during NY session on speculation of possible interest from Kraft Heinz
Politics: US Special Prosecutor Mueller said to be investigating Kushner contact with foreign leaders before President Trump’s inauguration – financial press
Tax Reform: (US) Sen Murkowski (R-AK): To support Obamacare mandate repeal in tax bill – press
Trade: (US) USTR Lighthizer: Remains concerned about the lack of headway made at the NAFTA talks; Seeks meaningful progress before end of the year; Says seen no evidence Canada and Mexico are willing to seriously engage on US demands.
Mexico Econ Min Guajardo: Mexico is seriously committed to NAFTA negotiation; Can consider trade rebalance only via expansion.
NAFTA round six discussions in Montreal scheduled for Jan 23-28 – press
Europe
(EU) ECB’s Coeure (France): Expects change in monetary policy outlook soon, expected to occur by Sept of 2018 – Handelsblatt
(DE) Supporters of Chancellor Merkel reportedly anticipate grand coalition with SPD to end political impasse – press
(DE) Germany Free Democratic Party (FDP) spokesperson: we won’t re-enter coalition govt talks – press
(UK) British and EU negotiators reportedly are targeting Brexit divorce deal within three weeks – FT
(EU) Smaller companies in the UK plan to cut use of euro for settling international payments by 7.8% in the next 6 months – East & Partners Pty Study
(EU) Some EU countries reportedly are balking at plans to boost taxes on tech multinationals – press
Dutch Telecom Altice SA said to have held talks with banks over tower sale plans (press)
AkzoNobel ends merger talks with Axalta Coating Systems.
Looking ahead: Upcoming UK Autumn Budget Statement in focus
Levels as of 01:00ET
Nikkei +0.5%, Hang Seng +0.6%; Shanghai Composite +0.1%; ASX200 +0.4%, Kospi +0.3%
Equity Futures: S&P500 +0.0%; Nasdaq100 +0.0%, Dax +0.1%; FTSE100 +0.1%
EUR 1.1748-1.1733; JPY 112.50-112.16; AUD 0.7595-0.7562;NZD 0.6854-0.6825
Dec Gold +0.0% at $1,281/oz; Jan Crude Oil +1.5% at $57.70/brl; Dec Copper -0.0% at $3.13/lb
