Headlines/Economic Data
General Notes/Themes: US equity futures open higher amid weekend Senate passage of tax reform bill
Asian equities gains capped despite US tax vote
Shares of Tencent rebound after dropping over 3% on Friday
Japan
Nikkei 225 opened +0.1%, later pared gains; closed -0.5%
Softbank -0.8%; Fast Retailing +0.9%
USD/JPY opened +0.5%: US Senate passes tax bill on Saturday, ABC News retracts story related to former NSA Michael Flynn
Japan PM Abe: Want to put together policy package this week
BoJ Gov Kuroda: Will continue current easing framework, YCC program has been quite successful, will continue until 2% inflation is reached
Japan Nov Monetary Base y/y: 13.2% v 14.5% prior; At End of Period: ¥471.5T v ¥476.6T prior
Japan may cut corporate tax rate to 20% through incentives – Japanese Press
7733.JP Cuts H2 domestic production by 15% to 510-520K (prior 590-610K) due to slower production while faulty inspection process is fixed
Korea
Kospi opened +0.5%
Samsung Electronics +0.3% (pared earlier losses)
Korean Won -0.5% (US dollar trades broadly firmer)
South Korea and US start air combat exercises amid North Korea threats
Bank of Korea (BOK) sells KRW400B in 6-month monetary stabilization bonds; avg yield 1.66%
South Korea sells 5-year government bonds; avg yield 2.38%
090430.KR Reports Nov cosmetics exports +34.2% y/y
China/Hong Kong
Markets opened lower: Hang Seng -0.4%, Shanghai -0.2%
Markets later pare losses: Hang Seng Information Technology Index +1.7% (Tencent +2%, declined over 3% on Friday)
(CN) China President Xi: China will not close its door to the global internet, but that cyber sovereignty is key in its vision of internet development
(CN) China PBoC and China Banking Regulatory Commission (CBRC) announces several key principles for new regulations on micro lending, banning unlicensed firms or individuals from carrying out lending business
(CN) China’s LexinFintech to delay Nasdaq listing timeframe as it plans to conduct more due diligence for IPO – financial press
(RU) Russia planning to sell yuan denominated sovereign bonds for the first time – financial press
Chinese metals rise: Dalian Iron Ore up over 6%, Shanghai Rebar Steel gains over 2%
(CN) China Gov Research Body sees 2017 crude steel output at 832Mt, +3% y/y; Sees 2017 Iron ore demand seen at 1.122Bt, +1.3% y/y; Sees 2018 iron ore demand 1.12B 1.12Bt, -0.2% y/y
(CN) China NDRC to hold meeting on how to help stabilize gas prices – Chinese press
(CN) Bank of Communications expects China inflation will drop mildly in November and remain tame until the end of the year due to stable food prices and a weakening carry-over effect – Xinhua
(CN) PBoC skips open market operation (OMO) for second straight session as it reiterates liquidity is at a ‘high level’; net drain CNY90B
(CN) PBOC said to have simplified open market demand gauging system
(CN) PBoC sets yuan reference rate at 6.6105 v 6.6067 prior
(CN) China Ministry of Commerce (MOFCOM) expressed “strong dissatisfaction and firm opposition” to a statement by the US to the WTO that it opposes granting China market economy status
(CN) China Ministry of Land and Resources research: China will step up exploration for oil and gas and develop unconventional resources to ease the country’s reliance on imports
Looking Ahead: China Caixin Nov Services PMI due on Tuesday
Australia/New Zealand
ASX 200 opened +0.1%; closed +0.1%
ASX 200 Financials Index -0.6%; Resources Index +0.8%
Rio Tinto [RIO.AU] +1.2% (Guided mid-point of FY18 iron ore shipments up y/y; named new board Chairman)
MTS.AU Reports H1 (A$) underlying Net 99.0M v 87Me; EBIT 152M v 136Me; Rev 7.06B v 7.0Be; +8%
GEM.AU Cuts FY17 (A$) underlying EBIT ~160M (prior 170-180M); Avg like-for-like occupancy 77% v 79.7% y/y; cites slowing occupancy growth; -21%
NTC.AU Secures order for network connection device from NBN; +16%
(AU) AUSTRALIA Q3 BUSINESS INVENTORIES Q/Q: 0.2% V 0.0%E; CORPORATE OP PROFIT Q/Q: -0.2% V 0.1%E -(AU) Australia sells
A$400M v A$400M indicated in 3.25% April 2029 Bonds, avg yield 2.6438%, bid to cover 3.8x -(AU) Australia re-elects deputy Gov Barnaby Joyce after losing his job for having dual citizenship
(AU) Australia buys back A$400M in Oct 2018 and March 2019 bonds; avg yield 1.7250%; bid-to-cover 4.255x
(AU) Australia sells A$400M v A$400M indicated in 3.25% April 2029 Bonds, avg yield 2.6438%, bid to cover 3.8x
Looking ahead: Australia RBA decision, Q3 Current Account and Net Exports Contribution and Oct Retail Sales due to be released on Tuesday. RBNZ Gov Spencer also expected to deliver speech on ‘low inflation’
North America
S&P 500 and Nasdaq Futures opened +0.5%
(US) On Saturday, Dec 2nd the US Senate passed the tax reform bill with a final vote of 51 vs 49 (Senator Corker was the only Republican to vote ‘no’)
(US) On Saturday, ABC News suspended reporter Brian Ross for ‘erroneous’ story related to Michael Flynn (**Note: On Friday, US equities declined amid an ABC News report that Flynn was said to be willing to testify against President Trump)
M&A: Aetna [AET]: Confirmed to be acquired by CVS for $207/shr ($145/shr cash and 0.8378 in CVS shr) for ~$69B
Disney has restarted talks to acquire 21st Century Fox assets; Comcast also talking with Fox – press
Broadcom expected to on Monday disclose its slate to replace Qualcomm’s board – financial press
(US) Thomas Barkin could be named Richmond Fed President as soon as Monday
Europe
(UK) UK Govt: Plenty of discussions still to go on Brexit; meeting between PM May and EU Commission President Juncker is a ‘staging post’ (**Note: The comments from the UK government come ahead of a meeting between PM May and EU’s Juncker which is expected to be held on Monday.)
(EU) ECB’s Villeroy (France): Reiterates recovery in euro area is gaining momentum, current favorable economic winds are ‘strong’
(EU) DBRS affirmed EU rating at AAA; stable trend (from Dec 1st)
Levels as of 01:00ET
Nikkei225 -0.4%, Hang Seng +0.5%; Shanghai Composite -0.1%; ASX200 -0.1%, Kospi +0.7%
Equity Futures: S&P500 +0.6%; Nasdaq100 +0.5%, Dax +0.6%; FTSE100 +0.2%
EUR 1.1885-1.1851; JPY 112.98-112.13; AUD 0.7612-0.7587;NZD 0.6890-0.6848
Feb Gold -0.4% at $1,277/oz; Jan Crude Oil -0.7% at $57.97/brl; Mar Copper +0.7% at $3.11/lb
