Japan officials hint at more fiscal stimulus

Asian Mid-session Update: Japan officials hint at more fiscal stimulus; RBA minutes show further concern over China

Economic Data

- (NZ) NEW ZEALAND Q4 2-YEAR INFLATION EXPECTATION: 1.85% V 1.94% PRIOR; 1-YEAR EXPECTATION: 1.51% (1-year high) V 1.46% PRIOR

- (JP) JAPAN Q3 HOUSING LOANS Y/Y: 2.4% V 2.4% PRIOR

- (A) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 115.9 v 116.6 prior

- (SG) SINGAPORE OCT ELECTRONIC EXPORTS Y/Y: -3.2% v -2.2%e; NON-OIL DOMESTIC EXPORTS M/M: +1.1% v -2.7%e; Y/Y: -0.5% v -3.0%e

Index Snapshot (as of 02:30 GMT)

- Nikkei  225 +1.5%, S&P/ASX +1.5%, Kospi +1.2%, Shanghai Composite +1.4%, Hang Seng +2.1%, Dec S&P500 +0.1% at 2,050

Commodities/Fixed Income

- Dec gold -0.2% at $1,081/oz, Dec crude oil flat at $41.73/brl, Dec copper -1.4% at $2.08/lb

- SLV: iShares Silver Trust ETF daily holdings rise to 9,867 tonnes from 9,801 tonnes; Highest since Oct 6th

- JJC: Dec Copper contract falls over 1.5% to $2.08; multi-year lows

- USD/CNY: (CN) PBoC sets yuan mid point at 6.3724 v 6.3750 prior; First firmer Yuan setting in 11 sessions

- JGB: (JP) Japan MoF sells ¥2.29T in 0.1% coupon 5-year JGB bonds; Avg yield: 0.037% v 0.053% prior; Bid-to-cover: 4.11x v 2.79x prior

Market Focal Points/FX

- Global equity markets have staged a rally just 24 hours after retreat on concerns over geopolitical risk following deadly attacks in Paris on Friday. Traders have attributed the rebound to clear signs of willingness to step up offensive against the militants and also the rising possibility of more easing by the ECB along with a potential delay to liftoff at the Fed. Hang Seng and Shanghai are among the strongest markets, with the PBoC reportedly announcing an additional targeted RRR cut of additional 50 bps for the Bank of Beijing to 14% so as to help lending to rural sector of the economy.

- In the wake of Japan returning to recession for the 2nd time in as many years, local press speculated the cabinet may be forced into a supplementary budget even though officials denied plans to take more fiscal steps in recent weeks. The latest report suggests a supplementary budget of over ¥3T to be announced next week. Econ Min Amari did acknowledge that an extra budget may now be called but added fiscal consolidation remains critical. Chief Cabinet Sec Suga also said there were no further details for budget size speculation. Going into the BOJ meeting this week, reports of fiscal stimulus in the pipeline will likely temper already slim expectations of an announcement of expansion of QE by Japan's central bank.

- RBA minutes largely reiterated the script from Nov 2nd when the central bank engineered a balancing act between lower inflation and mortgage hikes by lenders to remain on hold at 2.00%. In hindsight and with the added assurance of the latest strength in Australia jobs data, that decision now appears to be quite prudent. RBA minutes saw AUD continue to adjust to commodity price decline, expected spare capacity to remain for some time, inflation risks balanced to the downside, and outlook for China posing an uncertainty for Australia. Separately, BHP remains closely scrutinized in the markets following the Samarco disaster over a week ago, with some press speculation that the company could reconsider its dividend policy. Lastly, RBNZ put out its projections for inflation, GDP, and unemployment. 1-year CPI expectation rose to a 1-year high, but forecast for unemployment also rose to a 2-year high, and 90-day bill rate view was also reduced to a 2-year low of 2.79.

- Among USD majors, USD/JPY hit a 1-week high above 123.40, EUR/USD extended losses to 6-month lows of 1.0660, AUD/USD rallied on the minutes release above 0.71, while NZD/USD fell about 20pips on RBNZ expectations to a 6-week low below $0.6460.

Equities

US equities/ADRs:

- OCRX: Announces Positive Phase 1 Results for Oral OCR-002 in Development for the Prevention of Chronic Hepatic Encephalopathy; +22.8% afterhours

- NUAN: Reports Q4 $0.41 v $0.35e, R$504M v $504Me; +9.1% afterhours

- A: Reports Q4 $0.50 v $0.47e, R$1.03B v $1.04Be; -2.2% afterhours

- URBN: Reports Q3 $0.42 v $0.42e, R$825.3M v $871Me; -10.0% afterhours

Notable movers by sector:

- Consumer discretionary: Tingyi Cayman Islands Holding Corp 322.HK -0.3% (Q3 result); Tatts Group Ltd TTS.AU +2.5% (talks with Tabcorp)

- Consumer staples: Ruralco Holdings RHL.AU -2.2% (FY15 result); A2 Corp. ATM.NZ +6.6% (raises guidance)

- Financials: PICC Group 1339.HK +2.2% (YTD result); QBE Insurance Group QBE.AU -3.8% (Q3 result); KB Financial Group Inc 105560.KR +1.2% (9-month result); Woori Bank 000030.KR +2.3% (Q3 result); Select ISU.AU -1.4% (guidance)

- Industrials: CRRC 1766.HK +2.4% (enters into contracts); China Airlines 2610.TW +1.4% (Q3 result); Monadelphous Group MND.AU +2.9% (revises guidance)

- Technology: Hon Hai Precision Industries 2317.TW +2.7% (Q3 result); Brambles Limited BXB.AU +1.5% (reaffirms guidance); ZTE 763.HK +3.2% (awarded contracts)

- Energy: China Shenhua Energy Co 1088.HK +2.6% (Oct result); China Coal Energy 1898.HK +2.7% (Oct result)

- Utilities: AusNet Services AST.AU +5.0%(H1 result)