Headlines/Economic Data
Asian equities markets trade mixed despite sharp gains seen in the US.
Gains in Japan and Korea capped amid North Korean missile and upcoming Bank of Korea policy meeting
Shanghai and Hong Kong markets trade generally lower
Asian steelmakers outperform
Semiconductor names continue to be pinned under Morgan Stanley note on the industry issued Monday
BTC/USD Continues its surge above $10,000 (fresh record high) and continues to extend gains
Japan
Nikkei 225 opened +0.6%; closed +0.5%
TOPIX Securities Index +1.7%; Nomura +1.7% (announced a new ¥100B principal investment fund, buyback)
Nomura: New principle business will provide funding for areas including corporate restructurings and MBOs; To inject up to ¥100B in the investment fund
Megabanks track earlier rise in US financials: Mitsubishi UFJ +2.5%, Mizuho +1.8%, Sumitomo Mitsui +1.5%
TOPIX Iron & Steel Index +2.7%; Steelmakers trade generally higher, JFE +4.5%, Nippon Steel +3.5% (broker commentary)
Some chip-related shares remain under pressure: Tokyo Electron -5.5%, SUMCO -0.7%
Yamaha Motor -3% (Yamaha Corp to lower stake)
Nikkei looks at BOJ’s vulnerability to a stock market downturn given the ¥20.3T worth of equity ETFs sitting on its balance sheet
OECD thinks BOJ should maintain easing
JAPAN OCT RETAIL SALES M/M: 0.0% V 0.2%E; RETAIL TRADE Y/Y: -0.2% V 0.2%E
According to Japan Business Federation (Keidanren): to ask for 3% wage increase – Japan press
(JP) Nikkei looks at BOJ’s vulnerability to a stockmarket downturn given the ¥20.3T worth of equity ETFs sitting on its balance sheet
Korea
KOSPI opened +0.1%, has since pared gains
Samsung Electronics -0.9%
North Korea: Confirmed fired new type of ICBM at HWASONG-15 that puts entire US in range; launch was successful
South Korea Pres Moon: South Korea will strengthen its capabilities against North Korean provocations
South Korea military conducts drills following earlier North Korea missile launch – South Korean Press
Bank of Korea (BOK) Deputy Gov Yoon: says North Korea impact on markets to be limited – South Korean Press (Note: The BoK is said to have held an unscheduled meeting earlier today amid the North Korean launch)
Looking ahead: The Bank of Korea is due to hold its regularly scheduled policy meeting tomorrow. The central bank is expected to raise rates by 25bps to 1.50%, according to one poll; Bank of Korea last raised rates in 2011
China/Hong Kong
Shanghai Composite opened +0.1%, Hang Seng -0.3%
Markets are currently in negative territory, as of the time of writing
Hang Seng Information Technology Index -1.1%; Semiconductor Manufacturing -2.4% (capital raise), Tencent -1%
Even still, Chinese steelmakers trading generally higher on supply constraints; Baosteel +2.6%
China property names, higher on Moody’s report, Rated China property developers’ sales rise strongly, amid slower national sales growth
(CN) China Banking Regulatory Commission (CBRC) official Yu Xuejun: China’s economy is still facing relatively large downward pressure; economic stimulus measures have been overly strong
(CN) Turkey imposes anti-dumping duty on some China flat sleet products
(CN) China CIRC (Insurance Regulator): Q3 solvency was generally adequate; 167 insurers avg solvency ratio 253%
(CN) NDRC: China to promote long-term coal contract implementation for 2018 – Chinese Press
(CN) PBoC OMO: Injects CNY240B in 7, 14-day, 63-day reverse repos v CNY250B injected in 7,14 and 63-day reverse repos prior; Net: Nil v nil prior (3rd consecutive net nil)
(HK) Hong Kong Dollar (HKD) 1-month HIBOR 1.18927%, up over 5bps (highest since 2008)
Alibaba planning to sell 5.5, 10, 20, 30 and 40 year US dollar denominated bonds
Yuan denominated bond issuance: Originwater Technology [300070.CN] said to cancel CNY1B bond offering on market volatility
Philippines now targeting planned issuance of yuan-denominated ‘Panda Bonds’ in Q1 (had targeted 2017)
(CN) PBoC sets yuan reference rate at 6.6011 v 6.5944 prior
Looking Ahead: China Nov Official Manufacturing and Non-Manufacturing due for release on Thursday
Australia/New Zealand
ASX200 opened -0.1%, pared losses as session progressed; closed +0.4%
ASX 200 Utilities Index +1.6%, Consumer Discretionary +1.2%, Financials +0.7%, Resources +0.7%, Energy +0.7%
(AU) Australia sells A$900M v A$900M indicated in 2.75% Nov 21 2028 Bonds, avg yield, bid to cover 3.4x
(NZ) RBNZ semi-annual Financial Stability Report: financial system remains sound and risks to the system have reduced over the past six months
(NZ) RBNZ Spencer comments following release of Financial Stability Report: Does not have target for house price inflation; Expects extra 5K houses/year from Kiwibuild
OECD expects RBA to tighten in 2018 due to robust economic growth
(NZ) Fitch: New Zealand banks housing risk unlikely to up on easing of curbs
IDX.AU Capitol Health preparing unsolicited takeover offer at A$2.46/shr; +23%
Looking Ahead: Australia Q3 Private New Capital Expenditure data due for release on Thursday
Other Asia
(PH) Philippines Finance Sec Dominguez: Will reset panda bond offering to Q1 (had targeted 2017)
North America
US markets closed higher as Senate Budget Committee advanced tax bill: Russell 2000 +1.5%, Dow +1.1%, S&P500 +1%, Nasdaq +0.5%
S&P 500 Financial Sector +2.6%, Industrials Sector +1.5%
Tax Reform: (US) Senate Budget Committee advanced the tax bill; All 12 Republicans vote ‘yes’ including Senators Johnson and Corker; the 11 Democrats vote ‘no’; The Budget Committee approval moved the bill to the full Senate, which could consider the bill later this week
Politics: (US) Congress unlikely to pass legislation this year to fund government agencies through Sept 30, 2018 – financial press; Therefore, Congress is likely to need a stop-gap, temporary funding legislation at least until late Jan to keep the federal government operating.
(US) Democratic leaders pull out of meeting with Trump on govt funding; will instead seek meeting with GOP leaders in Congress – press
Energy: Reportedly joint OPEC and non OPEC committee to support 9-month production cut extension (through 2018), with an option to review in June (as previously speculated)
(US) Weekly API Oil Inventories: Crude: +1.8M v -6.4M prior
Mexico Central Bank Chief: Board needs to take most recent information into account with decisions; board agrees on need to remain ‘vigilant’ and to be cautious on inflation outlook
After Market Movers: Marvell Technology [MRVL] +3% (Q3 results above ests, mid-point of Q4 guidance above ests); Autodesk [ADSK] -13% (reported financial results and guidance, announced restructuring measures)
Looking Ahead: Second reading of US Q3 GDP, Fed’s Yellen to testify before Congress, DOE weekly Crude Inventories
Europe
(UK) Reportedly UK and EU agree Brexit divorce bill with tab between €45-55B (vs. EU demands of €60B) – UK Telegraph
(UK) Govt official: do not recognize UK Telegraph newspaper account of Brexit negotiations
(UK) Brexit ministry spokesperson: we are exploring how to build on recent momentum in talks so that we can move negotiations to the next phase
M&A: Cineworld [CINE.UK]: Regal Entertainment confirms merger talks
Looking ahead: Spain and German Nov prelim CPI
Levels as of 01:00ET
Nikkei225 +0.4%, Hang Seng -0.2%; Shanghai Composite -0.5%; ASX200 +0.5%, Kospi -0.1%
Equity Futures: S&P500 -0.1%; Nasdaq100 -0.0%, Dax -0.0%; FTSE100 -0.0%
EUR 1.1856-1.1839; JPY 111.67-111.38; AUD 0.7608-0.7583;NZD 0.6904-0.6884
Dec Gold +0.0% at $1,295/oz; Jan Crude Oil -0.5% at $57.70/brl; Mar Copper +0.5% at $3.11/lb
