General Trend:
- Equities opened higher on US Fed Chair comments, before losing some momentum by mid-day as focus shifts to G20 and US/China trade talks
- Australia Q3 private capex falls unexpectedly, AUD only slightly weaker on the news
- China and Japan car makers stronger despite US and China comments on auto tariffs
- PBOC skipped open market operations for the 25th consecutive day
- Little fresh news on Brexit ahead of Dec 11th vote in Parliament
- USD/JPY falls 0.4% to 113.35, broad dollar weakness general theme after Fed says rates are near neutral
- Several prominent figures in China are using the trade war with the US to pressure China to reform and further open up the economy – SCMP
Headlines/Economic Data
Japan
- Nikkei 225 opened +0.8%
- (JP) Bank of Japan (BOJ) Masai: BOJ must closely look at cost and benefits of its policy from various perspectives; Must maintain current extremely easy policy to ensure positive momentum for prices is not disrupted
- (JP) Japan Business Federation (Keidanren): to plan for wage boosts next year – Japanese press
- (JP) IMF on Japan: Forecasts 2018 GDP growth at 1.1% (unchanged from prior forecast)
- (JP) Japan Investors Weekly Net Buying of Foreign Bonds: -¥736.4B v -¥140.5B prior; Foreign Buying of Japan Stocks: -¥195.0B v -¥186.1B prior
- (JP) Japan Oct Department Store, Supermarket Sales y/y: -0.8% v +0.8%e
- (JP) JAPAN OCT RETAIL SALES M/M: 1.2% V 0.4%E; RETAIL TRADE Y/Y: 3.5% V 2.7%E
- 8031.JP To acquire additional 16% stake in IHH Healthcare Berhad for ¥230B (Asia’s Largest Private Hospital Group); to raise stake to ~32.9%
- 9984.JP Hit ¥2.0T retail sales target for telecom IPO, priced at ¥1,500/shr
- 4502.JP CFO: Sees up to $10B in asset disposal after Shire deal – Nikkei
- (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.10% 2-yr JGBs, avg yield: -0.134% v -0.117% prior, bid to cover 4.66x v 5.31x prior
- Looking ahead: Japan to release Oct Industrial production and Nov Tokyo CPI
Korea
- Kospi opened +1.2%
- (KR) Sec of State Pompeo: “very hopeful” for a new meeting with North Korean officials to discuss the denuclearization of the regime
- (KR) South Korea President Moon approval rating falls below 50% for the first time – Yonhap
- (KR) South Korea Oct Department Store Sales y/y: 1.2% v 4.7% prior; Discount Store Sales y/y: -14.3% v 8.1% prior
- Looking ahead: In tomorrow’s session Bank of Korea (BOK) will hold its rate decision, where it is expected that they may raise rates to 1.75% from the long held 1.5%
China/Hong Kong
- Hang Seng opened +0.8%, Shanghai Composite +0.5%
- (CN) US Trade Rep Lighthizer: China has yet to offer meaningful proposals; Chinese policies on auto tariffs are egregious
- (CN) According to Chen Zhao: Deleveraging is the wrong way to fix China’s economy, when it doesn’t have a debt problem – SCMP
- (HK) Hong Kong micro flats are priced high given cool down in property market – HK press
- (CN) China President Xi expected to offer greater market access and fewer subsidies to state firms when he speaks with President Trump this weekend – SCMP
- 763.HK Senators Marco Rubio and Chris Van Hollen tell Trump administration that ZTE used Dell hardware for Venezuela Govt surveillance system; circumventing sanctions – press (-4%)
- (CN) China mills considering using lower grade iron ore as steel decline – press
- (CN) China Oct Swift Global Payments (CNY): 1.70% v 1.89% prior
- (CN) China PBoC Open Market Operation (OMO): Skips open market operation v skipped prior (25th straight skip)
- (CN) China PBoC sets yuan reference rate: 6.9353 v 6.9500 prior
- 590.HK Reports H1 (HK$) Net 665M v 520M y/y; Rev 7.9B v 6.3B y/y (-8% to near 20-month low)
- Looking ahead: China releases official Manufacturing and Non-manufacturing PMI to be released
Australia/New Zealand
- ASX 200 opened +0.5%
- RIO.AU Approves $2.6B investment in Koodaideri iron ore mine
- (NZ) New Zealand Nov Activity Outlook: 7.6 v 7.4 prior; Business Confidence: -37.1 v -37.1 prior
- (AU) AUSTRALIA Q3 PRIVATE CAPITAL EXPENDITURE: -0.5% V +1.0%E
- (NZ) New Zealand sells NZ$250M v NZ$250M indicated in 3.00% April 2029 bonds, avg yield 2.5990% v 2.8179% prior, bid to cover 2.89x v 2.20x prior
Other
- World Semiconductor Trade Statistics (WSTS) may have cut its outlook for global chip sales to $490.1B, +2.6% (prior in Aug +5.2%) – Yonhap
North America
- (US) FED’S POWELL: POLICY RATE IS ‘JUST BELOW’ ESTIMATES OF NEUTRAL; GREAT DEAL TO LIKE ABOUT THE US ECONOMY – PREPARED REMARKS AT NY ECONOMIC CLUB
- (US) Fed’s Powell: estimates of neutral rate and maximum employment rate are highly uncertain – Q&A at NY Economic Club
- DGX Cuts FY18 to ‘over $6.30’ v $6.56e, Rev ~$7.57B v $7.70Be (prior FY18 $6.53-6.60, Rev ~$7.62B); Raises Quarterly dividend 6% to $0.53 from $0.50 (indicated yield 2.19%)
- (US) DOE CRUDE: +3.6M V +0.5ME; GASOLINE: -0.8M V 0ME; DISTILLATE: +2.6M V -0.5ME
Europe
- (UK) UK PM May said to delay announcement related to NHS funding, cites ‘Brexit’ rebellion forces – UK Press
- (UK) Bank of England (BOE) on Brexit Scenarios: GBP could fall 15% in disruptive and 25% in disorderly Brexit; Response to any form of Brexit takes won’t be automatic, could be in either direction
Levels as of 12:50ET
- Hang Seng -0.6%; Shanghai Composite -0.3%; Kospi +0.1%; Nikkei225 +0.4%; ASX 200 +0.7%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.3%, Dax -0.3%; FTSE100 -0.4%
- EUR 1.1267-1.1392; JPY 113.23-113.69 ; AUD 0.7295-0.7318;NZD 0.6838-0.6874
- Feb Gold +0.3% at $1,231/oz; Jan Crude Oil +0.4% at $50.52/brl; Feb Copper -0.3% at $2.80/lb
