Australia monthly employment change hits record high

Asian Market Update: China CPI slows to 4-month lows; RBNZ holds cash rate; Australia monthly employment change hits record high

Economic Data

- (CN) CHINA AUG CPI Y/Y: 2.0% V 2.2%E (4-month low)

- (CN) CHINA AUG PPI Y/Y: -1.2% V -1.1%E (30th consecutive y/y decline; first sequential decline in 5 months)

- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE AT 3.50%, AS EXPECTED; raises Q1 GDP forecast 3.2% from 2.7%

- (AU) AUSTRALIA AUG EMPLOYMENT CHANGE: +121.0K V +15.0KE (36-year record high); UNEMPLOYMENT RATE: 6.1% V 6.3%E (first decline in 4 months)

- (AU) AUSTRALIA SEPT CONSUMER INFLATION EXPECTATION: 3.5% V 3.1% PRIOR (first rise in 4 months)

- (JP) JAPAN Q3 BUSINESS SURVEY INDEX (BSI) LARGE ALL INDUSTRY Q/Q: +11.1 V -14.6 PRIOR; BSI LARGE MANUFACTURING Q/Q: +12.7 (1-year high) V -13.9 PRIOR

- (JP) JAPAN AUG TOKYO AVERAGE OFFICE VACANCIES: 6.0% V 6.2% PRIOR

- (KR) South Korea Aug Bank Lending to Household (KRW): 497.0T v 492.0T prior

- (UK) UK AUG RICS HOUSE PRICE BALANCE: 40% V 47%E (1-year low)

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.4%, S&P/ASX -0.2%, Kospi -0.2%, Shanghai Composite +0.4%, Hang Seng -0.1%, Sept S&P500 -0.1% at 1,992

Commodities/Fixed Income/Currencies

- Dec gold +0.3% at $1,248, Oct crude oil +0.2% at $91.85/brl, Dec copper flat at $3.11/lb

- GLD: SPDR Gold Trust ETF daily holdings rise 3.0 tonnes to 788.7 tonnes (first rise since Aug 20th)

- JGB: (JP) Japan's MoF sells ¥2.46T in 0.2% (0.2% prior) 5-yr notes; Avg yield: 0.179% v 0.147% prior; Bid to cover: 3.69x v 4.87x prior

- (KR) South Korea sells 5-yr bonds, avg yield 2.755%

- (CN) PBoC to drain CNY10B in 14-day repos (14th consecutive drain); Drains net CNY5B this week v injected CNY7B prior (1st drain in 5 weeks)

- (JP) Japan investors bought net ¥763.6B in foreign bonds v bought net ¥511.4B in prior week; Foreign Investors bought net ¥187.9B in Japan stocks v sold net ¥110.7B in prior week

Market Focal Points/Key Themes

- RBNZ held its cash rate on hold at 3.50% after 4 consecutive increases, just as forecasted by a unanimous survey of analysts. The accompanying policy statement was mixed - RBNZ affirmed 2014 GDP, raised Q1 2015 GDP, and cut its projections for 90-day bill rates to imply a pause until Q1 of 2015. NZD/USD fell about 40pips to new 7-month lows below $0.82 after RBNZ said NZD level is unjustified, unsustainable, and will likely fall significantly further. RBNZ Gov Wheeler did note that this is just a pause, and that the current rate of 3.5% is still below the "neutral level" of 4.5%.

- BOJ Gov Kuroda and Japan PM Abe are reported to hold their first direct talks in 5 months amid chatter that Abe will push for more monetary easing to help offset the next round of sales tax hikes. Japan MoF put out its quarterly Business Survey Index hitting a 1-year high for large manufacturing, while also increasing its projections for FY14/15 corporate capex to 5.7% from 4.5%.

- China inflation figures were generally soft, with CPI hitting a 4-month low and PPI coming in negative for the 30th straight month. China Stats Bureau cited the decline in material prices and warned the outlook for industrial demand is not optimistic, in addition to gradual slowdown in the economy translating into lower price growth. Consumer inflation was once again heavily tilted toward food prices, which rose 3% y/y compared to 0.2% for non-food items.

- Australia employment saw a record high 121K net change - almost 9x consensus levels and the highest in the data series going back over 30 years. Unemployment rate fell for the first time in 4 months while labor participation rate hit a 16-month high. AUD/USD spiked up about 60pips on the data, rising above $0.9210, even as economists with UBS said the figures reflect "sample error" and would equate to 1.5M new jobs in the US. - President Obama delivered a statement to the nation on expanding the US air campaign against ISIS that will also target its militants in Syria. Obama further announced he is sending 475 more troops to Iraq, but continued to insist the personnel are for training/intelligence and will not have a combat mission.

Equities

US markets:

- JDSU: To separate into two separate public companies; Reaffirms Q1 $0.08-0.12 v $0.10e, R$405-425M v $416Me- filing; +12.7% afterhours

- GOGO: Gogo and T-Mobile Team Up to Deliver Free In-flight Texting and Voicemail to T-Mobile Customers; +5.1% afterhours

- MW: Reports Q2 $1.10 v $1.06e, R$803.1M v $933Me; +2.2% afterhours

- OREX: Orexigen receives FDA approval for weight loss pill Contrave; +0.7% afterhours

- TMUS: CEO: Gross adds in August amounted to 2.75M, branded gross subscriber additions amounted to 2M; +0.6% afterhours

- TWTR: To offer $1.3B (4% of market cap) in convertible notes - filing; -1.4% afterhours

- RH: Reports Q2 $0.67 v $0.64e, R$433.8M v $454Me; Raises FY14 EPS guidance, cuts FY14 Rev guidance; -5.1% afterhours

Notable movers by sector:

- Consumer Discretionary: Myer Holdings MYR.AU -7.9% (FY14 results; cuts final dividend)

- Industrials: Worley Parsons WOR.AU +1.9% (guides margin to improve)

- Technology: Hisense Electric 600060.CN +8.1% (unveils 100-inch laser TV); Dainippon Screen Manufacturing 7735.JP +2.5% (press on LCD business); Sharp Corp 6753.JP +1.5% (new products in China)

- Healthcare: Sigma Pharmaceuticals SIP.AU -3.4% (H1 results; no div)

- Utilities: Kyushu Electric Power 9508.JP +5.9%, Kansai Electric Power 9503.JP +3.0% (Japan aims to restart Sendai nuclear facility); Oki Electric Industry 6703.JP +1.1% (raises H1 guidance)