RBA Leaves Rate And Notes Tighter Conditions In Housing Market

Dec 04 18, 08:17 GMT

General Trend:

Markets open generally weaker across the region with little follow through after weekend truce between US and China on trade was reached. Energy names in Hong Kong lower after oil prices rose overnight.
China PBoC Gov Yi Gang reiterates flexible monetary policy in China magazine interview
USD/JPY falls 0.5% testing 113.08; Nikkei notes that it expects Q3 GDP to fall in Japan after weaker business CAPEX came in yesterday
Focus remains on whether China will list tariffs on US autos, China automakers fell on the news
Chip names Samsung, Hynix and Micron lower on expectations of oversupply of NAND and DRAM
PBOC skips OMO for the 28th consecutive trading session and sets yuan firmer after SCJ again speculates PBOC will not allow yuan to get to 7 level
China 10-yr Govt bond yield falls to 3.35% (19-month low)
Markets will now look ahead to US non-farm payroll on Friday and OPEC+ meeting on Dec 6th

Headlines/Economic Data

Japan

Nikkei 225 opened -0.2%
(JP) Japan govt said to consider extending home loan tax breaks by 3 years – Nikkei
(JP) Japan public-private consortium to scrap nuclear power project in Turkey – Nikkei
(JP) Japan Nov Monetary Base y/y: 6.1% v 5.9% prior; Monetary Base End of Period: ¥501.6T v ¥506.9T prior
(JP) Fitch: Japan insurers will maintain exposure to domestic equities in 2019; investment still the greatest risk for Japan insurers
6753.JP Sharp cuts 3,000 foreign workers in Japan as it shifts production of iPhone sensors to a plant in China owned by parent Foxconn – Nikkei
HMC Reports Nov Total US Sales 120.5K, -9.5% y/y
7203.JP Toyota reports Nov US vehicle sales 190.4K units v 193.5Ke, -0.6% y/y
4010.JP Raises FY20 target of Net profit ¥220B (prior ¥180B); Op profit ¥410B (prior ¥380B) – medium term plan
(JP) Japan Q3 GDP may fall further after corporate capex survey results – Nikkei
(JP) Japan MoF sells ¥2.2T v ¥2.2T indicated in 0.10% 10-yr JGBs, avg yield 0.074% v 0.135% prior, bid to cover 3.82x v 4.33x prior

Korea

Kospi opened -0.1%
(KR) SOUTH KOREA Q3 FINAL GDP Q/Q: 0.6% V 0.6%E (second reading below 1% target); Y/Y: 2.0% V 2.0%E (slowest y/y growth since Q3 2009)
(KR) SOUTH KOREA NOV CPI M/M: -0.7% V -0.6%E; Y/Y: 2.0% V 2.0%E; Core CPI y/y: 1.3% v 1.1% prior
(KR) Total of 54 listed firms in South Korea paid a combined KRW9.1T in interim or quarterly dividends this year v KRW4.6T y/y – Yonhap
(KR) US Defense Sec Mattis: North Korea is the most urgent threat to US – Yonhap
(KR) South Korea Fin Min Nominee Hong: Economy is in a difficult situation; more concerned about falling sentiment indexes; to take preemptive steps against internal and external risks amid concerns over an economic downturn – speaking at parliament

China/Hong Kong

Hang Seng opened -0.2%, Shanghai Composite -0.1%
(CN) China Securities Journal reiterates, China yuan is unlikely to weaken to 7 this year
(CN) China PBoC Gov Yi Gang: To keep monetary policy flexible; will be adjusted appropriately according to changes in the economic situation – China Finance
(CN) China considering lowering US auto tariffs – China Daily
(CN) China exports slightly relieved on China/US trade truce but know that relations are still strained; most say 25% tariffs would kill their business – SCMP
(CN) China PBoC Open Market Operation (OMO): Skips open market operation v skipped prior (28th straight skip)
(CN) China PBoC sets yuan reference rate: 6.8939 v 6.9431 prior (strengthens by 0.7%, most since June 2017)
(CN) Follow Up: China Officials are in talks about the possibility of reducing tariffs on US autos, no details yet but expected to go back to original levels – China Securities Daily

Australia/New Zealand

ASX 200 opened -0.1%
(AU) RBA LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED; Low rates support the economy
(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: 119.5 v 118.6 prior
(AU) AUSTRALIA Q3 BOP CURRENT ACCOUNT BALANCE (A$): -10.7B V -10.2BE; NET EXPORTS OF GDP: 0.4% V 0.3%E
RVA.AU Announces First Implant of the Fantom Encore Bioresorbable Scaffold in Italy
YAL.AU Completes institutional part of entitlement offering; shares to resume trading (+7%)
TLS.AU Speculation is growing that Telstra will put data centers up for sale; Superloop, NextDC, and private equity likely to be interested – The Australian (SLC +5%)
BDR.AU Due to budget constraints and changes in management, have undertaken insufficient drilling to add to its mineral resources and ore reserves estimates in 2018

Other Asia

North America

(US) CME raises NYMEX Crude Oil Futures maintenance margins by 17.1% to 4,275/contract (effective for Jan)
(US) Fed Chair Powell: Affirms call for patience on further rate hikes, economy could shift mid-2019; Productivity picked up but not clear if trend is sustained – unscheduled comments from Yellen award
White House Econ Adviser Kudlow: Cannot legally end subsidies only for GM; sees subsidies for electric cars ending in 2020 or 2021
(CN) White House econ adviser Kudlow: cautiously optimistic about reaching US-China deal; Clarifies 90-day timetable for completing US-China trade talks begins Jan 1st (implies deadline for trade deal will be Apr 1st)
CRON Confirms Discussions Regarding Potential Investment by Altria Group

Europe

(UK) Parliamentary Speaker: there is arguable case that UK govt committed contempt of parliament over motion for Brexit legal advice; Contempt debate will postpone UK govt Brexit deal debate
(UK) Nov BRC Sales LFL y/y: -0.5% v +0.3%e; Total Retail Sales y/y: +0.5% v 1.3% prior (slowest increase since Oct 2017)

Levels as of 12:50ET

Hang Seng -0.6%; Shanghai Composite -0.2%; Kospi -1.2%; Nikkei225 -2.2%; ASX 200 -0.9%
Equity Futures: S&P500 -0.8%; Nasdaq100 -1.0%, Dax -0.8%; FTSE100 -0.7%
EUR 1.1319-1.1382; JPY 113.06-113.67 ; AUD 0.7349-0.7379;NZD 0.6924-0.6963
Feb Gold +0.3% at $1,243/oz; Jan Crude Oil +0.8% at $53.38/brl; Feb Copper +0.6% at $2.81/lb