Asia Summary
Following the negative leads from the US session, Asian equity markets opened generally lower. The Nikkei 225 has remained volatile on the session, following the trading action seen on Thursday. November options for the index settled at 22,531.
Large banks in Japan are generally weaker, ahead of their earnings reports which are expected starting next week. The TOPIX Securities brokers index has dropped over 1%.
There has been some weakness in Japanese tech names, after the S&P 500 Technology sector declined by over 0.7% on Thursday.
Shares of Toshiba have declined by over 4%, following reports that the company is considering raising capital. Also, in the tech sector Softbank has declined by over 1.5%. Bucking the trend, semiconductor firm Sumco has gained over 8%, after reporting its financial results and outlook. In Hong Kong, the Hang Seng Information Technology index is higher by over 0.5%.
At the same time, the Hang Seng Energy index has declined by over 0.4%, while Australia’s ASX 200 Energy index has dropped over 1%. In the materials space, BHP has declined by over 2% and the overall ASX 200 Resources index is lower by more than 1.3%.
Key economic data
(AU) RESERVE BANK OF AUSTRALIA (RBA) QUARTERLY STATEMENT ON MONETARY POLICY (SOMP): LOWERS INFLATION FORECASTS THROUGH 2019: GDP GROWTH FORECASTS LITTLE CHANGED; Sees sub 2% core inflation until mid-2019 (**Note: RBA has a 2-3% target range for inflation)
Speakers and Press
China
(CN) China Finance Ministry: To expand corporate tax rate cuts for high tech services firms nationwide
Ford: To export ~$10B in vehicles and auto parts from North America to China
(CN) China to remove foreign ownership limit in domestic banks; raises the foreign stake ceiling in brokerages to 51%; To raise foreign stake ceiling in life insurance companies to 51%; o also, raise the foreign stake ceiling in fund management and futures companies
Other
(JP) Nikkei 225 Nov options settle at 22,531
(NZ) New Zealand Finance Min Robertson: Dual RBNZ mandate may see looser policy in some instances, central bank has role to play in maximizing employment; Expanded RBNZ monetary policy committee won’t be a ‘circus’; Government committed to 1-3% inflation band; RBNZ’s 2% inflation focus could be up for discussion.
(US) Joint Tax Committee: US Senate Tax Proposal is within $1.5T ceiling on deficit expansion
(US) The Senate tax plan is said to just meet the $1.5T budget limit and the plan is expected to cost $1.496T over 10 years, according to a financial press report.; The report adds that the plan would repeal the interest deduction on home equity loans and eliminate deductions for personal exemptions.
Asian Equity Indices/Futures (00:30ET)
Nikkei -0.9%, Hang Seng +0.2%, Shanghai Composite flat, ASX200 -0.3%, Kospi -0.3%
Equity Futures: S&P500 flat ; Nasdaq -0.1% , Dax +0.1% , FTSE100 +0.1%%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1642-1.1654; JPY 113.26-113.51; AUD 0.7664-0.7689; NZD 0.6920-0.6957
Aug Gold -0.2% at 1,285/oz; Aug Crude Oil -0.2% at $57.05/brl; Sept Copper -0.2% at $3.085/lb
GLD SPDR Gold Trust ETF daily holdings flat at 843.1 metric tons
(CN) PBOC sets yuan reference rate at 6.6282 v 6.6325 prior(CN) PBoC OMO: CNY80B v CNY40B injected in 7, 14 and 63-day reverse repos prior; Net injection CNY50B
(AU) Australia sells A$900M in 2.75% Nov 2027 bonds, avg yield 2.6201%, bid to cover 3.46x
(NZ) New Zealand sells NZ$100M in Sept 2040 inflation-indexed bonds, avg yield 2.1550%, implied bid to cover 3.01x
US markets on close: Dow -0.4%, S&P500 -0.4%, Nasdaq -0.6%, Russell -0.5%
Best Sector in S&P500: Energy +0.3%
Worst Sector in S&P500: Industrials -1.3%
At the close: VIX 10.50 (+0.72pts); Treasuries: 2-yr 1.637% (-1bp), 10-yr 2.338% (flat), 30-yr 2.814% (+2bps)
US Market Summary
US stocks opened under notable pressure as a variety of asset classes exhibited signs of modest liquidation. The VIX bumped up ~15% and bond yields rose as equity markets moved lower. Consternation surrounding Brexit negotiations and a delay in corporate tax cut implementation in the Senate tax bill appeared to be the underlying current, along with an onslaught of corporate debt/equity issuance announcements ahead of year end. The Dollar index fell as the Senate tax bill details circulated, but as the day wore on, markets pared losses a bit following comments from some senators that the final bill could still include an immediate corporate tax cut.
US Afterhours Movers
HTZ Reports Q3 $1.42 v $1.47e, Rev $2.60B v $2.58Be; International car rental rev $728M, +7% y/y; +11.4% afterhours
JWN Reports Q3 $0.67 v $0.63e, Rev $3.63B v $3.60Be; Narrows FY17 $2.85-2.95 v $2.95e, Rev +4%, SSS approx ~0% (prior FY17 $2.85-3.00, Rev +4%, SSS ~0%); -3.2% afterhours
