Headlines/Economic Data
General Trend: Equities trade mostly lower and there continues to be subdued price action ahead of Wed’s US FOMC statement /forecasts
Energy shares outperform
Brent Crude trades above $65/bbl (for the first time since June 2015) amid shutdown related to the North Sea Forties pipeline system
Japan
Nikkei 225 opened flat; closed -0.3%
TOPIX Information/Communications Index -0.5%; KDDI -1%
Financials trade higher: TOPIX Securities index +1.3%; Sumitomo Mitsui Financial +1.9%, Mitsubishi UFJ +1.5%, Mizuho Financial +1.2%
Toshiba +1.2%: Confirms settlement talks with Western Digital, but said has not yet reached an agreement
JAPAN NOV PPI (CGPI) M/M: 0.4% V 0.2%E; Y/Y: 3.5% V 3.3%E
(JP) Japan Oct Tertiary Industry Index m/m: 0.3% v 0.2%e
Bank of Japan (BOJ): Benchmark ratio for macro add-on balance kept unchanged; The Benchmark Ratio during the December 2017, January, and February 2018 reserve maintenance periods is 21.5%; The Policy-Rate Balance in financial institutions’ current account balances at the Bank, to which a negative interest rate is applied, will be about 10 trillion yen on average during the above three reserve maintenance periods.
Japan MoF sells ¥2.2T v ¥2.2T indicated in 0.1% 5-yr JGBs; avg yield -0.104%; bid to cover 4.38x
Looking Ahead: Japan Oct Core Machinery Orders due for release on Wed
Korea
Kospi opened flat
Cosmetics and tourism firms trade lower amid concerns related to tourism: Amorepacific -3.5%, Lotte Tour -4%
Hynix Semi -1.3%
South Korea Nov Export Price Index M/M: -1.8% v +0.5% prior; Y/Y: 2.3% v 8.0% prior
South Korea has asked US to delay joint military drills on Olympics; **Note: The 2018 Winter Olympics are due to be held in South Korea. The start is expected on Feb 9th.
(KR) South Korea FSC Choi: South Korea will not allow cryptocurrency futures trading; considering measures to curb speculation
003550.KR Guides FY18 new investment spending KRW19T, to hire 10K new workers
China/Hong Kong
Markets opened mixed: Hang Seng flat, Shanghai -0.1%
Indices later trade lower
Hang Seng Information Technology Index -1.4%
There has been some weakness in China’s insurance sector: New China Life Insurance -2.3%, Ping An -2%
(CN) China insurance regulator, CIRC, plans to revise certain guarantee fund rules for insurance industry – Chinese Press
(CN) China monetary policy to be neutral with a tight bias; may raise open market rates next year – China Securities Journal; May cut RRR for some banks;**Note: The PBoC currently has a ‘prudent and neutral’ policy stance
(CN) China reportedly working on a plan to react to US tax reforms and rate hikes; considering higher interest rates and tighter capital controls – press
(CN) Yuan may fluctuate at 6.4-6.8 in 2018; has potential appreciation in long term – China Daily
(CN) China to hold Central Economic Conference Dec 18-20th
(CN) PBOC Open Market Operations (OMO): injects CNY150B v CNY80B prior in 7 and 28-day reverse repos v skips prior; Net injections CNY40B v CNY20B prior
USD/CNY (CN) PBoC sets yuan reference rate at 6.6162 v 6.6152 prior
(CN) Reportedly US, EU and Japan plan to step up trade pressure on China to address "severe excess capacity" in sectors like steel – FT
(CN) CHINA NOV NEW YUAN LOANS (CNY): 1.12T V 800BE
(CN) CHINA NOV AGGREGATE FINANCING (CNY) 1.600T V 1.225TE
(CN) CHINA NOV M2 MONEY SUPPLY Y/Y: 9.1% V 8.9%E; M1 MONEY SUPPLY Y/Y: 12.7% V 12.9%E
Australia/New Zealand
ASX 200 opened flat; closed +0.2%
ASX 200 Energy Index +1%; Utilities -0.8%
Tabcorp and Tatts Group each trade higher by over 2% ahead of merger vote
(AU) Australia Nov NAB Business Conditions: 12 v 21 prior; Confidence: 6 v 8 prior
(AU) AUSTRALIA Q3 HOUSE PRICE INDEX Q/Q: -0.2% V 0.5%E; Y/Y: 8.3% V 8.8%E
(AU) Australia sells A$150M v A$150M indicated in Aug 2040 indexed bond, avg yield 0.9236%, bid to cover 2.45x
AHY.AU Guides FY17 (A$) underlying Net 59-60M (prior low single digit growth); EBITDA 124-125M (prior low single digit growth); -7%
Looking Ahead: Comments expected on Wed from RBA Gov Lowe and Assist Gov Kent, along with the Westpac Dec Consumer Sentiment
Other Asia
(IN) India 10-year bond yield at 7.23%, +6bps amid rise in oil prices
(MY) Malaysia Oct Industrial Production y/y: 3.4% v 4.1%e (smallest rise since Sept 2016); Manufacturing Sales Value y/y: 11.0% v 10.6% prior
(SG) SINGAPORE OCT RETAIL SALES M/M: 1.5% V 2.0%E; Y/Y: -0.1% V 1.0%E; EX-AUTO Y/Y: 0.8% V 2.2%E
North America
US equities closed mostly higher: Dow Jones +0.2%, S&P500 +0.3%, Nasdaq +0.5%, Russell 2000 -0.1%
S&P 500 Technology Sector +0.9%, Energy +0.8%
SEMI: Forecasts 2017 global new semiconductor manufacturing equipment sales to $55.9B, +35.6% y/y (record high), 2018 sales seen at $60.1B, +7.5% y/y
(US) TREASURY’S $20B 10-YEAR NOTE REOPENING DRAWS 2.384%; BID-TO-COVER RATIO: 2.37 V 2.54 PRIOR AND 2.49 OVER THE LAST 8
(US) TREASURY’S $24B 3-YEAR NOTE AUCTION DRAWS: 1.932%; BID-TO-COVER RATIO: 3.15 V 2.76 PRIOR AND 2.82 OVER THE LAST 12 AUCTIONS
Tax Reform: (US) Joint Committee on Taxation study of House GOP tax plan with dynamic scoring: bill would add $1.0T to US debt over 10 years
(US) Treasury Dept: GOP tax plan would pay for itself due to increase in long-run growth rate – press; Treasury says GOP plan would boost long-run growth rate to 2.9% from 2.2% (assumptions that are in contrast to official congressional estimates)
M&A: 21st Century Fox: Comcast confirms "no longer engaged" in review
Looking Ahead: US Weekly API Crude Inventories due on Tuesday.
Europe
(UK) Germany Chancellor Merkel reportedly informs party members that a Brexit mandate is not likely until Feb – press
M&A: Gemalto [GTO.NL]: Atos proposes to acquire Gemalto at €46/shr in €4.3B all-cash deal
Akzo Nobel [AKZA.NL]: Lanxess reportedly partnering with Apollo on bid for Akzo chemicals division; talks said to be in early stages – press
Vallourec [VK.FR]: Considering divesting its Drilling Products business to National Oilwell Varco after getting binding offer of $63M
Energy: North Sea Forties pipeline system could be shut for weeks – FT; **NOTE: earlier report said that the Forties pipeline was being shut for immediate repairs after a crack worsened. The crack had been causing the pipeline to run at reduced capacity.
Looking Ahead: UK Nov CPI and German Dec ZEW survey due for release on Tuesday
Levels as of 01:00ET
Nikkei225 -0.3%, Hang Seng -0.4%; Shanghai Composite -0.8%; ASX200 +0.3%, Kospi -0.5%
Equity Futures: S&P500 +0.0%; Nasdaq100 +0.1%, Dax -0.0%; FTSE100 +0.1%
EUR 1.1779-1.1765; JPY 113.58-113.44; AUD 0.7537-0.7519;NZD 0.6937-0.6902
Feb Gold -0.0% at $1,246/oz; Jan Crude Oil +0.8% at $58.44/brl; Mar Copper -0.3% at $3.01/lb