Economic Data
- (NZ) NEW ZEALAND SEPT PERFORMANCE SERVICES INDEX: 58.0 V 57.7 PRIOR
- (NZ) NEW ZEALAND OCT ANZ CONSUMER CONFIDENCE INDEX: 123.4 V 127.7 PRIOR (1-year low)
- (KR) SOUTH KOREA SEPT PPI Y/Y: -0.4% (2nd consecutive decline) V -0.2% PRIOR
- (UK) UK OCT RIGHTMOVE HOUSE PRICES M/M: 2.6% V 0.9% PRIOR (5-month high); Y/Y: 7.6% V 7.9% PRIOR
Index Snapshot (as of 02:30 GMT)
- Nikkei225 +3.3%, S&P/ASX +0.9%, Kospi +1.6%, Shanghai Composite +0.3%, Hang Seng +0.6%, Dec S&P500 +0.5% at 1,889
Commodities/Fixed Income
- Dec gold -0.2% at $1,236, Nov crude oil +0.5% at $83.13/brl, Dec copper -0.3% at $2.99/lb
- SLV: iShares Silver Trust ETF daily holdings fall to 10,681 tonnes from 10,717 tonnes prior (lowest since Sept 23rd)
- (JP) BOJ offers to buy ¥300B in 1-3yr JGB, ¥200B in 3-5yr JGB, ¥400B in 5-10yr JGB as well as ¥400B in CP
- (KR) South Korea sells KRW1.8T in 10-yr govt Bonds; avg yield of 2.782%; Bid-to-cover: 3.68x
Market Focal Points/Key Themes/FX
- After falling some 5% last week, the Nikkei225 is leading regional bourses to the upside with an over 3% jump. Along with an impressive rebound on Wall St on Friday and weaker JPY, traders are reacting to a Nikkei report speculating the pension fund GPIF will increase its portfolio allocation for domestic stocks to 25% (from current midpoint of 12%) in a move as early as this month. A note from ANZ suggests the report will help reverse the recent strength in JPY, and indeed the USD/JPY pair is up for the 3rd consecutive session with a 50pip rise above ¥107.30. Japan chief cabinet Sec Suga responded to press speculation, stating he does not have any facts regarding plans for GPIF reallocation. Separately, BOJ Gov Kuroda reiterated domestic economy continues to recover as a trend and the central bank will continue its easing policy until 2% inflation is stable, while also adding core CPI would hover just above 1% for some time.
- Over the weekend, situation in Hong Kong continued to deteriorate as clashes between students and police resulted in 70 people injured and dozens arrested. Subsequent reports indicate talks between the two camps will take place on Tuesday, though some 70% of protesters surveyed do not anticipate any compromise from the govt. Meanwhile, chief exec CY Leung put some of the blame for the crisis on "external forces."
- In China, CICC speculated the PBoC may inject another CNY400B into the banking system through Pledged Supplementary Lending facility. This follows reports of a CNY200B injection in 3-month standing liquidity facility (SLF) into the banking system, estimated as the equivalent of a 20bp cut in RRR rate.
- Outside of weaker JPY, other USD majors are generally "risk-on" with higher AUD and NZD against the greenback. AUD/USD was up some 40pips from Friday close above $0.8780, and NZD/USD also rallied about 40pips to session-high of $0.7960. EUR/USD is little changed in a 30pip range around $1.2750.
Equities
US markets:
- QEP: Announces sale of its midstream business to Tesoro Logistics for $2.5B; Tesoro to raise Q3 dividend by 4% to $0.6425 from $0.615
- IBM: Agrees to acquire chip making unit from Globalfoundries for $1.5B - financial press
Notable movers by sector:
- Consumer Discretionary: Guangzhou Automobile Group 2238.HK +3.2% (Guangzhou Auto-Toyota sales target); Daiken Corp 7905.JP -3.2% (lowers FY14/15 guidance)
- Materials: Resolute Mining RSG.AU -4.0% (Q1 production results)
- Energy: Energy Resources of Australia ERA.AU +2.9% (drilling update); Ausdrill ASL.AU -11.5% (FY15 guidance)
- Industrials: Transfield Services TSE.AU +27.0% (receives proposal)
- Technology: Moshi Moshi Hotline 4708.JP +8.1% (H1 guidance); NEC Corp 6701.JP +4.9% (press report on H1 results)
- Healthcare: Tonghua Golden-Horse Pharmaceutical Industry 000766.CN +3.6% (9M results)
- Telecom:Ten Network Holdings TEN.AU +5.9%, Fairfax Media FXJ.AU +1.9% (in discussion on merger)
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