Commodity Currencies Gain Amid Stimulus Speculation Related To China

General Trend:

• Nikkei 225 underperforms
• Japanese telecoms decline after major telecoms indicate they will cut mobile pricing (under pressure from Govt)
• Docomo drops over 9% after confirming intention to cut prices for its phone plans
• Nomura declines by over 5%, reported H1 net loss
• Panasonic down after Q2 Op profit missed ests
• BHP rises over 4%, to return $10.4B to shareholders
• Australia’s Woolworth’s rises after Q1 sales rise y/y
• ASM Pacific notes in the short-term, trade dispute is casting uncertainties in the market
• British Pound (GBP) rises over 0.5%, PM May said to reach Brexit deal with the EU related to financial services
• Commodity currencies gain amid stimulus speculation related to China, NZD/USD +0.9%
• China Oct business outlook for output hits 11-month low amid trade concerns (Caixin PMI Manufacturing Survey)
• China to maintain the stamp duty on securities at 0.1%
• BoJ plans to purchase 1-3 and 3-5 yr JGBs four times per month (vs 5 times prior)
• Australian housing prices decline for the 13th straight month (CoreLogic)
• South Korea President Moon seeks a larger role for fiscal policy
• There is press speculation that South Korea’s Finance Minister could be replaced
• Japanese companies expected to report earnings include Suzuki and KDDI.
• Apple expected to report Q4 earnings after Thursday’s US close

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.3%
• (NZ) New Zealand Oct ANZ Job Advertisements M/M: +1.4 v -0.2% prior
• NAB.AU Reports FY18 (A$) Cash profit 5.70B v 6.64B y/y; Net Op 17.9B v 17.9B y/y
• BHP.AU Plans to return $10.4B to shareholders through $5.2B off market buyback and $10.2B special dividend
• (AU) Australia government has granted 7 new offshore petroleum exploration permits
• (AU) Australia Oct CoreLogic House Prices m/m: -0.6% v -0.6% prior (13th consecutive month of decline)
• (AU) Australia Q3 Exports Price Index q/q: 3.7% v 2.2%e; Import Price Index q/q: 1.9% v 1.0%e
• (NZ) New Zealand sells NZ$100M v NZ$100M indicated in 2.5% 2040 bonds, avg yield 1.6952%, bid to cover 2.67x
• (AU) AustralianSuper’s Ridout: The economy shoud get stronger before it gets weaker; Will be hard for Australia to avoid next global downturn

Japan

• Nikkei 225 opened -0.1%
• (JP) Japan Investors Weekly Net Buying of Foreign Bonds: -¥1.08T v +¥27.2B prior; Foreign Buying of Japan Stocks: -¥349.0T v +¥223.7B prior
• (JP) Bank of Japan (BOJ) announces Bond purchases for month of Nov (3rd straight month of tweaks) (after the close yesterday)
• NTT Docomo, [-11%], 9437.JP Reports H1 Net ¥407.1B v ¥392.1B y/y, Op ¥610.5B v ¥559.9B, Rev ¥2.4T v ¥2.30T y/y; Raises Q2 dividend, to buyback 600B, to reduce plan prices
• (JP) Japan Oct Final PMI Manufacturing: 52.9 v 53.1 prelim
• (JP) Japan MoF sells ¥2.2T v ¥2.2T indicated in 0.10% 10-yr JGBs, avg yield 0.135% v 0.141% prior, bid to cover 4.33x v 4.21x prior

Korea

• Kospi opened +0.3%
• (KR) South Korea said to be planning to replace Fin Min Kim and chief of policy Cheong Wa Dae; may not happen until early 2019 – Korean press
• (KR) US denies talk of sanctions on South Korea banks – Korean press
• (KR) SOUTH KOREA OCT CPI M/M: -0.2% V -0.2%E; Y/Y: 2.0% V 2.0%E
• (KR) South Korea Oct Trade Balance: $6.6B v $7.4Be
• (KR) South Korea Oct PMI Manufacturing: 51.0 v 51.3 prior
• (KR) South Korea President Moon: Expect 2% GDP level growth for awhile; markets volatility rises, thorough monitoring needed; time that fiscal policy plays more of a role – speaking to parliament

China/Hong Kong

• Hang Seng opened +1%, Shanghai Composite +0.6%
• (CN) CHINA OCT CAIXIN PMI MANUFACTURING: 50.1 V 50.0E
• (CN) China Politburo: China will take timelier measures to address increasing challenges facing the economy; external environment has changed profoundly – Caixing
• (CN) China PBoC Open Market Operation (OMO): skips v skips prior in 7-day reverse repos prior: Net: CNY100B drain v CNY150B injection prior (5th consecutive skip)
• (CN) China PBOC Vice Gov: Will step up monetary policy support for rural areas; to continue to maintain low RRR for rural financial institutions
• (CN) Some listed companies in China said to be borrowing from shareholders for liquidity – Securities Times
• (CN) China PBOC sets Yuan Midpoint Rate at 6.9670 v 6.9646 prior
• (HK) Hong Kong SFC CEO: To issue new rules for cryptocurrency exchanges later today
• (CN) China seeks feedback on draft stamp duty law related to CDRs
• (CN) China PBoc Deputy Gov Pan: Reiterates China capital markets to be more open to foreigners; China stocks at low level
• (CN) Moody’s Report: China plan to cut the personal income tax is Credit Negative for regional and local governments
• 3308.HK CEO: May consider take private bid on share decline, no time line for any potential deal
• (HK) Macau Oct Gaming Revenue MOP27.3B v MOP22.0B m/m, y/y: +2.6% v 3.5%e

North America

• US equity markets ended higher: Dow +1%, S&P500 +1.1%, Nasdaq +2.0%, Russell 2000 +0.3%
• (BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
• (IE) Ireland Foreign Min Coveney: it’s possible to reach Brexit deal in Nov; its up to the UK side in particular to intensify negotiations
• (US) President Trump: There is sufficient supply of petroleum and related products from countries other than Iran to permit a significant reduction in purchases from Iran
• PPC Reports Q3 $0.12 adj v $0.93 y/y, Rev $2.70B v $2.8B y/y
• ALL Reports Q3 $1.93 v $2.17e, Rev $10.5B v $8.56Be; approves new $3B share repurchase (9% of market cap)
• ESRX Reports Q3 $2.43 v $2.42e, Rev $25.6B v $25.0Be; positive 2019 outlook

Europe

• (UK) Brexit Dept spokesperson: there is no fixed date for Brexit talks with the EU to conclude
• (UK) UK PM May said to reach Brexit deal with the EU related to financial services – UK Press; GBP rose 0.2% on the news
• Levels as of 01:30ET
• Hang Seng +2.0%; Shanghai Composite +1.1%; Kospi +0.3%; Nikkei225 -1.0%; ASX 200 +0.2%
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 -0.4%
• EUR 1.1302-1.1416; JPY 112.72-113.05 ; AUD 0.7072-0.7134;NZD 0.6514-0.6584
• Dec Gold +0.4% at $1,219/oz; Dec Crude Oil -0.6% at $64.91/brl; Dec Copper -0.2% at $2.66/lb