China HSBC Flash PMI hits 3-month highs

Asian Market Update: China HSBC Flash PMI hits 3-month highs, though Output component slows; Kiwi falls 1% on slower CPI growth

Economic Data

- (CN) CHINA HSBC OCT FLASH MANUFACTURING PMI: 50.4 V 50.2E (3-month high)

- (JP) JAPAN OCT PRELIM MARKIT/JMMA MANUFACTURING PMI: 52.8 V 51.7E (5th straight month of expansion, highest since March)

- (AU) AUSTRALIA Q3 NAB BUSINESS CONFIDENCE: 6 V 6 PRIOR

- (NZ) NEW ZEALAND Q3 CPI Q/Q: 0.3% V 0.5%E; Y/Y: 1.0% (5-quarter low) V 1.2%E

Index Snapshot (as of 02:30 GMT)

- Nikkei225 -0.3%, S&P/ASX -0.1%, Kospi -0.3%, Shanghai Composite -0.4%, Hang Seng -0.4%, Dec S&P500 flat at 1,923

Commodities/Fixed Income

- Dec gold -0.2% at $1,243, Dec crude oil -0.1% at $80.11/brl, Dec copper +0.1% at $3.02/lb

- GLD: SPDR Gold Trust ETF daily holdings fall 2.1 tonnes to 749.9 tonnes; Lowest level since Nov 2008

- (CN) PBoC to drain CNY20B in 14-day repos (24th consecutive drain); Net zero position this week (2nd week of neutral position); Offered yield at 3.4% (in-line with previous yield)

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1459 (weakest Yuan setting since Oct 9th) v 6.1437 prior setting

- (JP) Japan investors sold net ¥1.17T in foreign bonds v bought ¥784.2B in prior week; Foreign investors sold net ¥412.6B in Japan stocks v sold ¥254.6B in prior week

Market Focal Points/Key Themes/FX

- The keenly awaited China Flash manufacturing PMI for October did not disappoint but also did not offer much to get excited about. Although the headline hit a 3-month high, remained above the expansion threshold, and also topped estimates, the Output index hit a 5-month low of 50.7 v 51.3 prior. Other notable components were also mixed - Employment deteriorated but at a slower rate, while Export Orders increased at a slower rate and Input Prices decreased at a faster rate. HSBC chief economist acknowledged the troubling price trends, noting "disinflationary pressures intensified", and adding the overall PMI picture "warrants further policy easing and we expect more easing measures on both the monetary as well as fiscal fronts in the months ahead." Shanghai Composite briefly popped into positive territory on the release but turned negative again going into midday break.

- Japan prelim manufacturing PMI painted a brighter picture with a 6-month high at a more than a point above consensus. Here, output component was also lower, but New Orders, Export backlog, and Employment all showed incremental progress. Markit economist did note that the political debate surrounding the next consumption tax increase over the next few months will be significant.

- Down under, Australia Q3 NAB confidence index was unchanged, as bank economists pointed to caution in consumption despite low interest rates balanced by robust residential construction. New Zealand Q3 CPI came in at more than a 1-year low and at the very bottom of RBNZ's 1-3% target range for inflation. Lower than expected CPI has also prompted several major banks to further push back expectation for the next RBNZ rate hike deeper into 2015, with fixed income markets now pricing in a more than 80% chance of cash rates remaining unchanged over the next 12-months. RBNZ Gov Wheeler, speaking before the data, hinted that housing loan limits have reduced inflation pressure.

- NZD/USD fell over 80pips to session low around 0.7830 in the wake of the soft CPI print. AUD/USD eased about 30pips from the highs below 0.8750 following the mixed China PMI. EUR/USD and USD/JPY were locked in 15- and 25-pip ranges above 1.2630 and 107.10 respectively, with little follow-through from USD strength in US hours.

Equities

US markets:

- CYTX: Receives FDA approval to resume ATHENA trial enrollment; +47.1% afterhours

- SCSS: Reports Q3 $0.44 v $0.40e, R$323.4M v $292Me; +13.3% afterhours

- TSCO: Reports Q3 $0.55 v $0.51e, R$1.36B v $1.32Be; +11.8% afterhours

- INFN: Reports Q3 $0.11 v $0.07e, R$173.6M v $171Me; Guides Q4 $0.11 +/- a couple pennies v $0.05e, R$175-185M v $160Me - conf call; +11.2% afterhours

- PH: Increases quarterly dividend 31% to $0.63/shr (implied yield 2.3%); Authorizes repurchase of up to 35M Shares (23.5% of outstanding); +4.5% afterhours

- ORLY: Reports Q3 $2.06 v $1.96e, R$1.88B v $1.85Be; +3.9% afterhours

- NXPI: Reports Q3 $1.35 v $1.31e, R$1.52B v $1.50Be

- V: Increases dividend 20% to 0.48 from $0.40 (implied yield 0.9%); +1.0% afterhours

- T: Reports Q3 $0.63 v $0.64e, R$33.0B v $33.3Be; -1.5% afterhours

- LRCX: Reports Q1 $0.96 v $0.93e, R$1.15B v $1.15Be, guides Q2 $1.05-1.19 v $1.20e, R$1.23B +/- $50M v $1.26Be; -3.3% afterhours

- VAR: Reports Q4 $1.02 v $1.21e, R$812.1M v $838Me; -4.3% afterhours

- CTXS: Reports Q3 $0.75 v $0.73e, R$759M v $772Me, guides FY14 $3.22-3.25 v $3.23e, Cuts Rev $3.12-3.14B v $3.19Be (prior $3.20-3.25, Rev +8.5-10%); -5.1% afterhours

- CAKE: Reports Q3 $0.48 v $0.57e, R$499.1M v $497Me; Guides initial FY15 $2.35-2.45 v $2.58e; -5.3% afterhours

- CLB: Reports Q3 $1.53 v $1.51e, R$276M v $285Me, guides lower Q4 $1.53-1.56 v $1.61e, R$275-280M v $293Me (prior $1.56-1.61, R$285-295M); -7.9% afterhours

- YELP: Reports Q3 $0.05 v $0.03e, R$102.5M v $98.7Me, guides Q4 adj EBITDA $24-25M, Rev $107-108M v $111Me; -13.1% afterhours

- AIRM: Guides Q3 $0.83-0.87 v $1.12e; -20.5% afterhours

- Financials: 8356.JP Juroku Bank Ltd. +6.3% (raises H1 guidance)

- Industrials: Takata Corp. 7312.JP -5.8% (US regulators expand air bag recall); IHI Corp. 7013.JP +1.0% (press reports on H1 results); Boart Longyear Ltd. BLY.AU +36.7% (Q3 results); Asciano Limited AIO.AU +2.3% (Q1 production results); Leighton Holdings LEI.AU % (9-month results); CSR Corp 601766.CN +6.2% (awarded orders)

- Consumer staples: Daio Paper Corp. 3880.JP +2.9% (press reports on H1 results)

- Materials: Atlas Iron AGO.AU +1.4% (raises FY15 production guidance)