Equity Markets Trade Generally Higher, Shanghai Lags

Oct 19 20, 06:23 GMT

General Trend

Shanghai Composite ended the morning session lower by 0.3%; Decliners included Consumer firms
Early gainers in HK include Financial and Tech companies
Japanese markets trade broadly higher; Topix Marine Transportation, Iron/Steel, Insurance and Pharma indices are among the gainers
Financials outperform in Australia
RBA Oct Minutes due on Oct 20th (Tues), RBA Assist Gov (Financial Markets) Kent is also due to speak on the same day; RBA Deputy Gov Debelle is due to speak on Oct 22nd (Thursday)
China PBOC is expected to leave its loan prime rates (LPRs) unchanged on Tuesday (Oct 20th)

Headlines/Economic Data

Australia/New Zealand

ASX 200 +0.2%
Cimic [CIM.AU]: Follow Up: Reaches agreement to sell 50% of Thiess, transaction expected to generate A$1.7-1.9B in cash proceeds
(AU) Australia Melbourne has loosened its coronavirus restrictions [Victoria was expected to reconsider its restrictions on Oct 19th]; Easing to allow residents to go up to 25 Kilometers from their homes – FT
(AU) New South Wales (Australia) eases its coronavirus restrictions; To permit more people at restaurants and weddings
(NZ) New Zealand Ruling Labour Party wins election with large enough margins to rule without a coalition govt, as expected
(NZ) New Zealand Sept Performance of Services Index: 50.3 v 47.2 prior (first expansion or reading above 50 since July)
(NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$330M v NZ$230M prior in government bonds as part of QE v NZ$330M sought

China/Hong Kong

Hang Seng opened +0.7%, Shanghai Composite opened +0.4%
(CN) CHINA Q3 GDP Q/Q: 2.7% V 3.3%E; Y/Y: 4.9% V 5.5%E
(CN) CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 6.9% V 5.8%E; YTD Y/Y: 1.2% V 1.0%E
(CN) CHINA SEPT RETAIL SALES Y/Y: 3.3% V 1.6%E; YTD Y/Y: -7.2% V -7.4%E
(CN) China PBOC Gov Yi Gang said China GDP to expand by ~2% in 2020, noted the yuan currency (CNY) was appreciating against the US dollar ‘significantly’ in the past 3 months [cited interest rate differentials], said this development should be left to market forces – financial press
Ant Group: China Securities Regulator (CSRC) said to approve Ant Financial IPO in Hong Kong, co. to seek approval for Hong Kong Exchange listing on Monday from the Hong Kong Exchange
(CN) CHINA SEPT FIXED ASSETS INVESTMENT (EX-RURAL) YTD Y/Y: 0.8% V 0.9%E
(CN) CHINA SEPT PROPERTY INVESTMENT YTD Y/Y: 5.6% V 5.2%E
(CN) China Sept Surveyed Jobless Rate: 5.4% v 5.5%e
(CN) China top legislature passes a new export control law which could potentially ban exports of rare earth metals; the law takes effect on Dec 1st 2020; China also passed the biosecurity law aimed at preventing infectious diseases – Nikkei
(CN) China PBOC sets Yuan reference rate: 6.7010 v 6.7332 prior (Strongest fix since Apr 18th 2019)
(CN) China PBoC Open Market Operation (OMO): Injects CNY50B in 7-day reverse repos v Injects CNY50B in 7-day reverse repos prior; Net inject CNY50B v Net inject CNY50B prior

Japan

Nikkei 225 opened +0.6%
(JP) Bank of Japan (BOJ) Deputy Gov Wakatabe: Not ruling out the use of negative rates, but that should be judged against a backdrop of the Yield Curve Control program; changing the mid-point target for YCC is on the table if the BOJ sees a need to ease more; don’t target exchange rates but exchange rates of course are an extremely important component for the economy; Real question surrounding exchange rate movement is not really the movement but impact it has on inflation dynamics (from Oct 16th)
(JP) BoJ Gov Kuroda reiterated that the central bank has no plan to change inflation target nor forward guidance; reiterates will not hesitate to take additional measures to support the economy – financial press
(JP) Japan Sept Trade Balance: ¥675.0B v ¥975.6Be; Adjusted Trade Balance: ¥475.8B v ¥854.3Be; Exports Y/Y: -4.9% v -2.6%e (22nd straight decline); Imports Y/Y: -17.2% v -21.5%e

Korea

Other Asia

(TW) Follow Up: Taiwan said to strengthen regulation on Tech Transfer rules to China companies – press
Novatek Microelectronics [3034.TW]: Said to have raised IC design product prices by up to 15%, notes higher prices related to wafer foundries and rising demand for notebooks and TVs – Press

North America

(US) US House Speaker Pelosi (D) has given the Trump administration a deadline of Tuesday (Oct 20th) to reach a stimulus deal before the election – financial press
(US) President Trump: Wants bigger stimulus deal than Pelosi’s plan – Campaign Rally comments
(US) Fed Rosengren (hawk, non-voter) affirmed the need for a robust financial supervisory authority for times when low interest rates are used for a long time; Fed Kashkari (dove, FOMC dissenter) said there was a need for more strict regulation to prevent repeated market interventions by the Fed, does not know what the best policy solution is – FT
Cogeco [CGO.CA]: Receives increased takeover offer from Altice, rejects the revised takeover proposal

Europe

(UK) BoE Gov Bailey said he expected UK GDP would likely be 10% below pre-crisis level at the end of Q3 [said 7-10% lower than pre pandemic level on Sept 29th]; Negative interest rates work better in wholesale markets, and in a nascent upturn; Targeting exchange rates does not come up in BOE policy discussions. – financial press
(UK) Moody’s cuts United Kingdom (UK) sovereign rating one notch to Aa3 from Aa2; outlook revised to Stable from Negative (from Oct 16th)
(EU) ECB chief Lagarde said new coronavirus-related restrictions currently being introduced across Europe to add to uncertainty, clear that both fiscal and monetary support have to remain in place for as long as needed; reiterates ‘cliff effects’ must be avoided – financial press

Levels as of 1:20 ET

Nikkei 225, +1.2%, ASX 200 +0.9% , Hang Seng +0.6%; Shanghai Composite -0.3% ; Kospi +0.6%
Equity S&P500 Futures: +0.7%; Nasdaq100 +0.8%, Dax +0.6%; FTSE100 +0.4%
EUR 1.1725-1.1704 ; JPY 105.50-105.33 ; AUD 0.7109-0.7071 ;NZD 0.6630-0.6601
Gold flat at $1,905/oz; Crude Oil -0.3% at $41.00/brl; Copper +0.4% at $3.0725/lb