Equity Markets Track Weak US Session

Dec 18 18, 07:58 GMT

General Trend:

Equities markets follow the overnight New York lead which saw the worst start in December since the Great Depression
China and Japan reduce holdings of US treasuries in October
Australia RBA meeting minutes confirm credit and financial conditions have tightened. Notes uncertainty around China.
NZD/USD gains on Moody’s affirming sovereign rating and stronger business confidence to 0.6829, later in the session extended its gains to 0.6855
Japan starts to take measures to support economy ahead of next year’s sales tax increase; to lower purchasing tax on cars and extend housing loan tax exemptions
Japan cuts outlook for GDP and CPI for both current and next year
China President Xi speaks in Beijing at 40th anniversary of China’s reform failed to excite markets. He affirmed commitment to opening up and controlling risks to the economy.

Headlines/Economic Data

Japan

Nikkei 225 opened -1.1%
(JP) Japan Govt cuts outlooks for CPI and GDP: FY18/19 CPI at 1.0% from 1.1% prior, FY19/20 at 1.1% from 1.5% prior; FY18/19 GDP to 0.9% from 1.5% prior; FY19/20 1.3% from 1.5% prior
8053.JP Acquires 30% stake in a France offshore wind project – Nikkei
(JP) IMF Japan mission head: Side effects of BOJ’s ultra-easy policy is not large enough to outweigh the benefits
4502.JP Moody’s downgrades rating to Baa2 from A2, Outlook stable, due to high debt after Shire deal
(JP) Former BoJ Deputy Gov Nakaso: Increased labor force participation, improvement in labor productivity are key factors to keeping Japan underlying inflation seemingly low
(JP) Japan Fin Min Aso: To reduce purchasing tax on autos, to extend housing loan tax exemptions
(JP) Japan Finance Ministry’s Asakawa: With Abenomics yen fell against USD; export trade volume still hasn’t changed much
5019.JP Shareholders of Idemitsu and Showa Shell approve merger
(JP) Japan MoF sells ¥1.0T v ¥1.0T indicated in 0.70% (prior 0.70%) 20-yr bonds; avg yield 0.5430% v 0.6120% prior; bid to cover 3.44x v 3.91x prior

Korea

Kospi opened -0.7%
(KR) International Atomic Energy Agency (IAEA) Chief Amano: Making preparations to dispatch inspectors to North Korea in case it decides to accept them – Yonhap
005380.KR Forms JV with Algeria’s Global Group to produce commercial vehicles in Algeria; production is scheduled to begin in 2020 – Yonhap
(KR) South Korea Govt to provide KRW3.5T in financial support for auto suppliers; to expand subsidies for electric and hydrogen cars

China/Hong Kong

Hang Seng opened -0.7%, Shanghai Composite -0.6%
(CN) China President Xi: To make reform more systematic; China had avg annual GDP of 9.5% over the last 40-yrs – speaking at 40th anniversary of China’s reform and opening up
HUAWEI.CN Expect to meet 2018 phone shipment targets, guides FY19 to have growth
(CN) China authorities in Guangdong, China’s manufacturing powerhouse, told that all future PMIs will be created by National Bureau Stats, as China takes steps to control all data ahead of what is expected to be a rough 2019 – SCMP
(CN) China Govt advisers said to have suggested that 2019 GDP target should be lowered to 6.0-6.5% due to increasing headwinds – press
83.HK New project offering in Hong Kong is oversubscribed – local press
(CN) China PBoC Open Market Operation (OMO): Injects CNY180B in 7-day and 14-day Reverse Repos v injects CNY160B in 7-day prior; Net injects CNY180B v CNY160B prior
(CN) China PBoC sets yuan reference rate: 6.8854 v 6.8908 prior
(CN) China Research Institute for Fiscal Science under the Ministry of Finance Dir Liu Shangxi: China may announce major tax cuts, including income tax cuts and measures for small business; surpassing this year’s total of CNY1.3T – China Daily
USD/CNY According to analysts Neal Kimberley yuan may not weaken in 2019 despite China’s slowing economy and trade war with US – SCMP

Australia/New Zealand

ASX 200 opened -0.6%
(NZ) RBNZ Assistant Gov McDermott to step down in late Feb 2019
OBJ.AU Executes licensing term sheet with Procter & Gamble for package product, no terms disclosed
(NZ) Moody’s: New Zealand mid-year budget supports AAA sovereign rating, stable outlook
CTX.AU Guides FY18 RCOP adj Net A$533-553M v A$638M y/y, EBIT A$800-830M v A$959M y/y; HCOP Net A$530-550M v A$619M y/y
(NZ) New Zealand Dec ANZ Activity Outlook: 13.6 v 7.6 prior; Business Confidence: -24.1 v -37.1 prior
(AU) RESERVE BANK OF AUSTRALIA (RBA) DEC MEETING MINUTES: REITERATES BOARD AGREED THAT NEXT RATE MOVE LIKELY TO BE INCREASE; NO STRONG CASE FOR NEAR-TERM ADJUSTMENT IN POLICY
(AU) Australia Nov HIA New Home Sales m/m: +3.6% v -0.8% prior

North America

(US) President Trump said to be hesitant to sign a 1-2 week stop gap funding bill that would avert a Govt shutdown Friday – US press
(CA) Bank of Canada (BOC) Gov Poloz: Rates need to be more neutral with economy near capacity; not expecting recession in 2019, economic fundamentals are quite solid
(MX) Mexico Foreign Min to give details on investment plan with the US Tuesday
MRIN Entered into a three-year revenue sharing agreement with Google; guides Q4 Net -$2.9M to -$2.4M, Rev $14.6-15.1M v $17.7M y/y (+64% afterhours)
BA Increases share repurchase authorization to $20B (11% of market cap); Raises Quarterly dividend 20.2% to $2.055 from $1.71 (indicated yield 2.6%)
ORCL Reports Q2 $0.80 v $0.78e, Rev $9.56B v $9.53Be; Guides Q3 $0.86-0.88 (cc) v $0.85e, Rev (cc) +2-4% v +1%e
T-Mobile and Sprint Receive Approval from Both the Committee on Foreign Investment in the U.S. and Team Telecom on Merger Transaction

Europe

(UK) Prime Min office says it won’t allow time for a ‘no-confidence’ vote against the PM – press
(UK) Opposition Labour Party Corbyn to put forward no-confidence motion against PM May
(UK) Prime Min May reportedly to present three Brexit countdown choices for her cabinet – UK’s Times
(UK) Cabinet reportedly to order UK’s 6M businesses to start immediate preparations for a No Deal Brexit on Tuesday – UK’s The Sun
(UK) According to British Chamber of Commerce (BCC) 2018 GDP may be 1.8% (slowest growth since 2009) and 2019 GDP to be around 1.3% – US financial press

Levels as of 12:50ET

Hang Seng -1.2%; Shanghai Composite -1.0%; Kospi -0.5%; Nikkei225 -1.7%; ASX 200 -1.2%
Equity Futures: S&P500 -0.1%; Nasdaq100 +0.1%, Dax -0.2%; FTSE100 +0.0%
EUR 1.1340-1.1360; JPY 112.47-112.86 ; AUD 0.7169-0.7200;NZD 0.6801-0.6859
Feb Gold -0.0% at $1,251/oz; Feb Crude Oil -1.5% at $49.47/brl; Mar Copper -0.2% at $2.74/lb