General Trend:
- Aussie equities under perform as Consumer Staples and Financial firms decline
- Technology shares and financials are among the decliners in Hong Kong
- Shanghai Composite drops in early trading, decliners include Telecom Services and Property firms
- Chinese financials decline despite speculation about a RRR cut
- Decliners in Japan include Securities firms; Nomura drops over 2% after recent CEO change announcement
- Nikkei-weighted Fast Retailing drops over 5% on decline in monthly sales
- Nintendo pares gains after JD.com and Tencent disclosed their Switch launch plans for China
- Japanese utilities rise amid speculation about tax changes
- Swap markets see higher probability of Feb Reserve Bank of Australia (RBA) rate cut after Q3 GDP data, probability of rate cut rises above 55% vs 50% prior – US financial press
- US House passed China Human Rights bill related to Xinjiang, vote was 407 to 1; The measure still needs to be approved by the US Senate and President Trump
- US Treasury Sec Mnuchin to appear at US House committee hearing on Dec 5th (Thursday)
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.3%
- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: New Zealand is doing relatively well compared to the rest of the world; RBNZ’s Bascand: sees interest rates being low for some time – speaking in parliament
- (AU) Australia Nov Final PMI Services: 49.7 v 49.5 prelim; PMI Composite: 49.7 v 49.5 prelim
- (AU) Australia sells A$800M v A$800M indicated in April 2029 bonds, avg yield 1.0867%, bid to cover 2.71x
Japan
- Nikkei 225 opened -0.8%
- (JP) 65 listed Japan companies have reported accounting irregularities so far this year (all time high) – Nikkei
- (JP) Japan Nov Final PMI Services: 50.3 v 50.4 prelim; both employment and new order components rise
- (JP) Japan Nov Car sales to South Korea y/y: -56.4% v -58% prior
- (JP) Japan Parliament approves trade agreement with the US
- Nintendo stronger on news that JD will start to sell the Switch in China Dec 10th, also expecting similar announcement from Tencent
Korea
- Kospi opened -0.6%
- (KR) UN Security Council will hold an official meeting on North Korea missile launch – Korean press
- 005380.KR Affirms 2020 Op margin 5%; 2022 Op margin target 7%; 2025 Op margin 8%; announces KRW259.6B in shares; To invest KRW61T in core mobility business by 2025
- (KR) South Korea to double the size of key food industries by 2030 to serve as a new growth engine – Yonhap
- (KR) North Korea to hold party plenary session in late December to decide on “crucial issues” – state media
- (KR) South Korean Defense Min Jeong Kyeong-doo calls for maintaining a staunch defense posture as North Korea and US trade threats – Yonhap
China/Hong Kong
- Hang Seng opened -1.2%; Shanghai Composite opened -0.3%
- (CN) CHINA NOV CAIXIN PMI SERVICES: 53.5 V 51.2E (highest since April)
- (CN) US said to plan to still go forward with implementation of Dec 15th China tariffs – Fox News
- (US) Pres Trump: China called US yesterday and today about trade, but a deal may not happen until after 2020 elections
- (CN) China PBOC expected to cut RRR in Q1 – China Securities Journal Op Ed
- (HK) Hong Kong Nov PMI: 38.5 v 39.3 prior (lowest since April 2003)
- (CN) China Agriculture Ministry said increasing pork production is the top priority – China Daily
- (CN) China Top Diplomat Yang Jiechi: China and US must increase strategic communications; must work together in accordance with consensus reached by the two heads of state
- (CN) China Ministry of Foreign Affairs: Urges US to stop wrongdoing related to Xinjiang bill; reiterates US should not interfere with China matters, vows to further respond to the human rights bill
- (CN) China PBoC Open Market Operation (OMO): Skips for 11th consecutive session; Net drains CNY0B v CNY0B prior
- (CN) China PBOC sets Yuan Reference Rate: 7.0382 v 7.0223 prior
- (HK) IMF: Sees Hong Kong economy to begin recovering in 2020 – Article IV Consultation
- (HK) Hong Kong to announce new relief measures as soon as Wednesday (Dec 4th), measures could include waiving brokerage fees – Hong Kong Press
Other
- (IQ) Iraq Oil Min: additional 400K bpd cut for OPEC+ is in circulation but is not final; additional OPEC cut is required because of slowing demand; rollover of 1.2M bpd OPEC+ cut is not enough – press
- (SG) Singapore Nov PMI: 50.4 v 47.4 prior (highest since July)
North America
- (US) Weekly API Oil Inventories: Crude: -3.7M v +3.6M v prior
- GOOGL CEO Larry Page to step down from Alphabet; Sundar Pichai will be the CEO of both Google and Alphabet going forward
- (US) VP Pence: Pres Trump is willing to use tariffs and access to US markets as he negotiates a range of trade deals – Fox Business interview
- (US) Commerce Sec Ross: Several things still needed to close trade deal with China, including details on products and quantities to be bought by China
- (US) House passes China human rights bill that will sanction China officials over human rights violations
- T CFO Stephens Affirms FY20-22 Rev +1-2% CAGR; EBITDA margin +200bp by 2022; considering 100M share accelerated stock buyback in Q1 2020
Europe
- (UK) YouGov/Sky News general election poll: Tories 42% (-1), Labour 33% (-1), Lib Dems 12% (-1), Brexit 4% (+2)
Levels as of 12:15ET
- Hang Seng -1.3%; Shanghai Composite -0.4%; Kospi -0.7%; Nikkei225 -1.1%; ASX 200 -1.6%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax -0.0%; FTSE100 -0.3%
- EUR 1.1085-1.1074; JPY 108.67-108.48; AUD 0.6854-0.6822; NZD 0.6530-0.6511
- Commodity Futures: Gold 0.0% at $1,484/oz; Crude Oil +0.7% at $56.48/brl; Copper 0.0% at $2.63/lb
