Thu, Dec 01, 2022 @ 14:31 GMT
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Market Update – Asian Session: Another North Korea Missile Test Raises The Stakes For Trump-Xi Meeting

US Session Highlights

(US) FEB TRADE BALANCE: -$43.6B V -$44.6BE: China: -$23.0B v -$31.3B prior

(US) Mar ISM New York: 56.5 v 51.3 prior

(US) FEB FINAL DURABLE GOODS ORDERS: 1.8% V 1.7%E; DURABLES EX-TRANSPORTATION : 0.5% V 0.4% PRELIM

(US) President Trump: going to do a “very major haircut” on Dodd-Frank regulations

Equities spent the day mostly flat, managing to close slightly higher on the day with little change from yesterday’s close. Investors remained on the sidelines as they wait to see how the Supreme Court nomination and healthcare revival play out. With Easter break around the corner and reduced hope of Congress moving forward on economic policy, risk attractiveness has been decreasing.

US markets on close: Dow +0.2%, S&P500 +0.1%, Nasdaq +0.1%

Best Sector in S&P500: Energy

Worst Sector in S&P500: Real Estate

Biggest gainers: SPLS +9.8%; SWN +8.9%; CHK +6.8%; VRTX +4.5%; RRC +4.2%

Biggest losers: AYI -14.8%; NVDA -7.0%; JWN -5.5%; RL -4.5%; LB -4.4%

At the close: VIX 11.8 (-0.6pts); Treasuries: 2-yr 1.25% (flat), 10-yr 2.35% (flat), 30-yr 2.99% (flat)

US movers afterhours

INNL: Gurnet Point Capital said to be near agreement to acquire Innocoll – press; +62.1% afterhours

PNRA: JAB Holding reportedly in advanced talks to acquire Panera – press; +12.3% afterhours

LNDC: Reports Q3 $0.13 v $0.18e, R$136.6M v $136Me; +6.0% afterhours

SHLM: Reports Q2 $0.31 v $0.30e, R$568.7M v $574Me; Affirms FY17 EPS $2.08-2.18 v $2.11e, sales $2.5-2.6B v $2.44Be; +5.7% afterhours

TASR: CEO to hold a live broadcast at 12pmET on Apr 5th to "announce biggest news in company history" – press; +3.5% afterhours

Key economic data

(AU) AUSTRALIA MAR AIG PERF OF SERVICES INDEX: 51.7 V 49.0 PRIOR

(JP) JAPAN FEB SERVICES PMI: 52.9 (Highest reading since Aug 2015) V 51.3 PRIOR; COMPOSITE PMI: 52.9 V 52.2 PRIOR

(SG) SINGAPORE MAR PMI COMPOSITE: 52.2 V 51.4 PRIOR; Highest reading since Nov 2016

(KR) SOUTH KOREA MAR CURRENT ACCOUNT BALANCE: $8.4B V $5.3B PRIOR; GOODS BALANCE: $10.5B V $7.8B PRIOR

(NZ) NEW ZEALAND MAR ANZ JOB ADVERTISEMENTS M/M: 1.6% V 0.4% PRIOR

(NZ) New Zealand Mar QV House Prices Y/Y: 12.9% v 13.5% prior

(NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +1.6% v +1.7% prior; 2nd straight increase

Asia Session Notable Observations, Speakers and Press

Asian equity markets are mixed in the wake of a modest gain on Wall St, as US stocks shook off two days of losses. The Energy sector was the best performer as oil rallied thanks in part to reports of a North Sea oil-field shutdown, adding to gain in electronic trade after API inventories data showed a surprise draw in crude. Real Estate and Financials lagged, even though US interest rates were little changed across the curve. High-end retail names were also sold after downgrades and a Ralph Lauren announcement it was shutting its flagship Fifth Avenue store.

Shanghai Composite is the best performing index in Asia, returning after two days of holidays on strong footing. Reports of a new special economic zone in at Xiongan New area in Hebei Province helped lift local property and industrials names. The rally comes even as PBoC continued to pull liquidity with no reverse repo ops for 8th straight day, draining estimated CNY90B.

High-profile meeting between Pres Trump and China counterpart Xi has been layered with added significance. North Korea continued to defy US warnings to suspend its nuclear program with another missile test as projectile flew 60km and fell into the East Sea.. Recall Trump said US would be prepared to take unilateral action if he cannot get China to apply more pressure on Pyongyang. Japan has also convened a NSC meeting to discuss North Korean threat, while US State Sec Tillerson remarked that US has spoken enough about North Korea, declining to comment further.

Economic data were centered around Services PMI figures that saw Japan hit mid-2015 highs, Singapore late-2016 highs, and Australia return from contraction into expansion.

China

(CN) China govt announced new special economic zone at Xiongan New area in Hebei Province – financial press

(CN) BoCom Chief economist Lian Ping: China Q1 CPI may come below expectations – China Daily

Korea

(KR) North Korea said to have fired a projectile missile – Korean press citing military officials

(KR) US Sec of State Tillerson: North Korea launched yet another intermediate range ballistic missile; the US has spoken enough about North Korea, no further comment

(KR) Estimates by global investment banks expect South Korea Q1 GDP to accelerate from Q4 levels – Korean press

(KR) South Korea Fin Min Yoo: Economy showing signs of recovery – press

(KR) Bank of Korea (BOK) Gov Lee: Seeing signs of a recovery in sentiment; Policy efforts needed to boost domestic consumer sentiment

Asian Equity Indices/Futures (00:30ET)

Nikkei -0.1%, Hang Seng -0.2%, Shanghai Composite +1.1%, ASX200 flat, Kospi -0.6%

Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.2%, FTSE100 -0.3%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.0670-1.0685; JPY 110.55-90; AUD 0.7560-0.7575; NZD 0.6970-0.6985

June Gold -0.1% at 1,257/oz; May Crude Oil +0.6% at $51.32/brl; May Copper +1.0% at $2.65/lb

(US) Weekly API Oil Inventories: Crude: -1.8M v +1.9M prior; first draw in 3 weeks

iShares Silver Trust ETF daily holdings fall to 10,242 tonnes from 10,274 tonnes prior; 4th straight decline

(CN) PBoC skips open market operations for 8th straight session; Drains CNY90B

(CN) PBOC SETS YUAN MID POINT AT 6.8906 V 6.8993 PRIOR

(CN) China MoF sells 1-yr bonds at 2.9463%; bid-to-cover 1.5x; Sells 10-yr bonds at 3.2733%; bid-to-cover 1.64x

(JP) Japan MoF sells ¥2.66T in 6-month bills; avg yield -0.149%; bid-to-cover ratio 4.49x

(KR) Bank of Korea (BOK) sells KRW2.7T v KRW2.7T indicated in 2-yr 1.6% monetary stabilization bonds

(AU) Australia MoF sells A$800M in 2.75% 2028 bonds; avg yield 2.7480%; bid-to-cover 3.03x

Asia equities notable movers

Australia

SBM.AU St. Barbara +3.2% (Q3 result)

BPT.AU Beach Energy +3.9%, WPL.AU Woodside Petroleum +1.5% (oil gains)

WES.AU Wesfarmers -1.8% (JPMorgan downgrades)

IAG.AU Insurance Australia -1.8% (adjusts outlook)

Japan

6502.JP Toshiba Corporation +1.9% (possible buyer for Westinghouse)

2670.JP ABC-MART +0.3% (earnings speculation)

Hong Kong

322.HK Tingyi Cayman Islands Holding +3.2%

2038.HK FIH Mobile -12.8% (Credit Suisse downgrades)

China

600340.CN China Fortune Land Development +10.0%, 000401.CN Tangshan Jidong Cement Co +10.0%, 601992.CN BBMG +10.0%, 600717.CN Tianjin Port Development Holdings +10.0% (China new special economic zone)

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