Tue, Dec 06, 2022 @ 16:41 GMT
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Asian Market Update: RBA On Hold With An Upbeat View Of Inflation

RBA on hold with an upbeat view of inflation

Asia Mid-Session Market Update: RBA on hold with an upbeat view of inflation; RBNZ's forecasts rising CPI and lowest unemployment since 2008

US Session Highlights

(EU) ECB’s Draghi: Economic situation improving but risks to outlook remain on the downside; reiterates underlying inflation pressures remain very subdued, Euro Zone recovery is firming up

(US) Fed Q4 senior loan officer survey: about a quarter of banks tightened credits standards for commercial real estate loans in Q4

(US) Fed’s Harker (hawk, voter): March FOMC should be on the table for rate decision – Q&A with reporters

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

Best Sector in S&P500: Healthcare

Worst Sector in S&P500: Materials

Biggest gainers: HAS +14.1%, CBT +10.7%, NEM +3.2%, FAST +2.8%, MNK +2.7%

Biggest losers: LH -5.7%, NWL -5.7%, XYL -4.2%, FTI -4.1%, MRO -4.1%

At the close: VIX 11.4 (+0.4pts); Treasuries: 2-yr 1.15% (-5bps), 10-yr 2.41% (-8bps), 30-yr 3.05% (-7bps)

US movers afterhours

JLL: Reports Q4 $3.95 v $3.92e, R$2.16B v $2.04Be; Guides initial FY17 fee rev +8-11% y/y; Adj EBITDA margin 10-12%; +7.8% afterhours

ALSN: Reports Q4 $0.36 v $0.27e, R$469M v $430Me; Guides Q1 Rev net sales ~flat y/y; +5.1% afterhours

FN: Reports Q2 $0.91 v $0.79e, R$351M v $336Me; Announces initiation of CEO succession plan; +3.9% afterhours

GPS: Reports Jan SSS +1.0% v +2.1%e; Raises FY16 adj eps $2.01-2.02 v $1.96e ; +2.3% afterhours

FMC: Reports Q4 $0.88 v $0.89e, R$866M v $926Me; -4.4% afterhours

YRCW: Reports Q4 -$0.23 v -$0.09e, R$1.15B v $1.14Be- Tonnage per day up (freight), flat (regional); Adj EBITDA $57.7M v $66.0M y/y; -4.8% afterhours

FXCM: To withdraw its CFTC registration to settle allegations that it concealed from clients that firm had relationship with its “ most important ” market maker; to pay $7.0M fine; -19.7% afterhours

Politics

(US) 9th Circuit Court of Appeals to hear challenge to Trump’s ban tomorrow evening – US press

(UK) UK PM May wins commons vote on amendment to Brexit bill – financial press

Asia Key economic data:

(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED

(AU) AUSTRALIA JAN AIG PERFORMANCE OF CONSTRUCTION INDEX: 47.7 V 47.0 PRIOR (4th straight month of contraction, 4-month high)

(NZ) NEW ZEALAND Q1 INFLATION EXPECTATION SURVEY: 2-YEAR INFLATION EXPECTATION 1.92% V 1.68% PRIOR

(SL) Sri Lanka Central Bank (CBSL) leaves key rates unchanged (as expected); 6th straight pause in current itghtening cycle

(PH) PHILIPPINES JAN CPI M/M: 0.3% V 0.4%E; Y/Y: 2.7% V 2.8%E; CORE CPI Y/Y: 2.5% V 2.8%E

(UK) JAN BRC LFL SALES VALUE Y/Y: -0.6% V +0.9%E (first decline in 5 months)

Asia Session Notable Observations, Speakers and Press

Asia indices little changed, tracking mixed sentiment in US session, where investor flows sought the safety of US treasuries; After market close, Fed’s Harker (voter) said March rate hike possibility is still on the table, reiterating commitment to raise rates 3 times this year.

US Circuit Court of Appeals to hear arguments for reversing Washington State federal judge who halted Pres Trump’s immigration executive order.

AUD/USD volatile with initial decline after S&P said the first step in Australia sovereign downgrade would only affect AAA states, as investors interpreted comments as a warning shot; Later in the day, RBA left rates unchanged but was more hawkish on inflation, forecasting headline CPI to pick up in 2017 above 2%. RBA also added more positive tones on the economy, stating consumption and non-mining investment are expected to pick up this year.

RBNZ’s inflation/GDP/employment outlook over next 2 years saw improved conditions across the board. GDP seen at its highest level in 2.5 years, while unemployment the lowest since Q3 2008.

PBOC has once again skipped reverse repo operations after a 10bp increases in offer rates on Friday, claiming liquidity is ample.

China:

(CN) China economic downward pressures are large currently, will give priority to employment amid the downward pressure – press

(CN) China Jan new Yuan loans said to top the prior monthly record of CNY2.5T – press

(CN) China Securities Journal: PBoC’s suspension of open market operations suggests current economic fundamentals do not support a tightening of monetary policy

(CN) China State Council plans to create more than 50M new jobs by 2020 while keeping the urban unemployment rate below 5%

(CN) PBoC urging China banks to curb lending – The Paper

Japan:

(JP) Japan Fin Min Aso and Foreign Min Kishida and Trade Min Seko said to travel with PM Abe to US for meetings – financial press

(JP) Japan Fin Min Aso: FX stability is important; Improving economic links with US in both countries’ benefit

Australia/New Zealand:

(AU) S&P: First step in Australia sovereign downgrade would only affect AAA states – press

(AU) S&P/ASX200 falls below 5,600, 6-week low

(NZ) RBNZ Wheeler will not seek second term; Dep Gov Spencer to be acting Gov starting Sept 27th

(NZ) Fixed income markets have started to price in some chance of RBNZ rate hike this year, but consensus among New Zealand economists is that it is unlikely – NZ press

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.1%, Hang Seng flat, Shanghai Composite -0.4%, ASX200 flat, Kospi -0.1%

Equity Futures: S&P500 flat; Nasdaq +0.1%; Dax flat; FTSE100 +0.1%

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

EUR 1.0705-1.0750; JPY 111.60-111.95; AUD 0.7630-0.7680; NZD 0.7300-0.7375

Apr Gold +0.2% at $1,235/oz; Mar Crude Oil +0.3% at $53.16/brl; Mar Copper -0.5% at $2.64/lb

SPDR Gold Trust ETF daily holdings rise 4.2 tonnes to 818.7 tonnes; 4th straight increase; Highest since Dec 30th

(CN) PBOC SETS YUAN MID POINT AT 6.8604 V 6.8606 PRIOR

(CN) PBOC skips reverse repo operations (3rd consecutive halt)

(JP) Japan MoF sells 10-yr 0.1% inflation linked bonds; bid-to-cover 2.61x v 2.85x prior

(KR) South Korea sells 30-yr Govt bonds; Avg yield 2.19%

Asia equities/Notables/movers by sector

Consumer discretionary: NEC.AU Nine Entertainment -1.5%, SWM.AU Seven West -2.3% (Deutsche Bank cuts rating); HUB.AU Hub24 +4.3% (Q2 result); 2914.JP Japan Tobacco -1.8% (FY16 result)

Financials: 993.HK Huarong International Financial +5.2% (profit alert); SCP.AU SCA Property +2.8% (H1 result); MQG.AU Macquarie Group -1.7% (Q3 trading statement); 8053.JP Sumitomo Corp +1.4% (writedown speculation); 8031.JP Mitsui & Co +0.6% (earnings speculation)

Industrials: 2333.HK Great Wall Motor -1.9% (FY16 result); 175.HK Geely Automobile -2.7% (Jan result); 1777.HK Fantasia Holdings +2.1% (Jan result); GNC.AU Graincorp +3.2% (Goldman Sachs raises rating); RWH.AU Royal Wolf Holdings -6.7% (H1 result); 7203.JP Toyota -2.2% (9-month result); 010140.KR Samsung Heavy Industries -3.8% (concerns on drill ship delivery)

Technology: 1063.HK Suncorp Technologies -1.8% (profit warning); 6146.JP Disco Corp +13.6% (Macquarie raises rating, 9-month result)

Materials: 1332.HK Qualipak International -10.6% (profit warning); RSG.AU Resolute Mining +5.5%, NST.AU Northern Star +3.3%, NCM.AU Newcrest +3.0%, EVN.AU Evolution +4.4% (gold rises); 5938.JP LIXIL Group +2.0% (9-month result); 5302.JP Nippon Carbon Co +7.8% (adjusts guidance)

Energy: 3303.HK Jutal Offshore Oil Services -1.5% (profit warning)

Utilities: TCL.AU Transurban +5.8% (H1 result)

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