Asian Market Update: Australia retail sales rise to 3-month high; IMF to raise global growth estimates; Toyota to recall 3.8M vehicles in US; Yen rallies on speculation BOJ to allow QE expiry


ECONOMIC DATA

- (UK) UK Sep GfK Consumer Confidence Survey: -16 v -24e

- (JP) Japan Sep Nomura/JMMA Manufacturing: 54.5 v 53.6 prior

- (JP) Japan Aug Prelim Industrial Production M/M: 1.8% v 1.8%e; Y/Y: -18.7% v -18.8%e

- (AU) Australia Jul Conference Board Leading Index: 0.7% v 0.9% prior

- (AU) Australia Aug Retail Sales M/M: 0.9% v 0.5%e

- (JP) Japan Aug Labor Cash Earnings Y/Y: -3.1% v -4.0%e

- (AU) Australia Aug Private Sector Credit M/M: 0.1% v 0.2%e; Y/Y: 2.5% v 2.7%e

- (AU) Australia Aug Building Approvals M/M: -0.1% v 2.5%e; Y/Y: 0.0% v 1.5%e

- (SI) Singapore Aug M1 Money Supply Y/Y: 21.4% v 20.4% prior; M2: 12.6% v 11.9% prior; Bank Loans & Advances: 2.5% v 2.3% prior

- (SI) Singapore Aug Credit Card Billings (SGD): 2.17B v 2.14Be; Credit Card Bad Debts: 16.9M v 16.2Me

- (NZ) New Zealand Sep NBNZ Business Confidence: 49.1 v 34.2 prior

- (CH) China Sep HSBC Manufacturing PMI: 55.0 v 55.1 prior

- (JP) Japan Aug Vehicle Production: -25.9% v -31.9% prior

- (MA) Malaysia Q2 unemployment rate: 3.6% v 4.0% prior

- (KS) S Korea Aug Service Industry Output Y/Y: 1.1% v 0.8% prior

- (KS) S Korea Industrial Production M/M: -1.3% v 0.6%e; Y/Y: 1.2% v 3.1%e; Industrial Production Mfg: 1.2% v 0.8% prior

- (KS) S Korea Aug Leading Index: 9.0% v 7.9% prior

- (JP) Japan Aug Housing Starts Y/Y: -38.3% v -31.7%e; Annualized Housing Starts: 0.68M v 0.76Me ; Construction Orders: -25.2% v -42.8% prior


SPEAKERS/FIXED INCOME/FX

- Asian equity markets are trading mixed on conflicting trends of falling US markets and an otherwise cautious sentiment seen for much of this week against some of the more positive developments in Asian economies' internal fundamentals. In the final hour of trading, Nikkei225 is around unchanged levels, S&P/ASX is off by 0.3% and Korea's Kospi is down nearly 1%. China and related markets are among the winners however, with Shanghai Composite and Taiwan's Taiex trading up over 1%. Ahead of the Wednesday US session, Dec. S&Ps are slightly lower at $1,056, as traders look ahead to ADP employment change data.

- A number of economic reports within the rich session calendar boosted risk appetite. UK posted a 13-month high in GfK consumer confidence at -16 v -24 expected. In Australia, monthly retail sales rose at a three-month high rate of 0.9% v 0.5% expected, while Y/Y building approvals saw its first non-negative print in 14 months. German press speculated on IMF raising its global growth forecast to 3.1% v 2.5%. Recall back on Sept 4th, unnamed sources suggested the IMF may raise its 2010 forecast to 2.9% from 2.5% prior. China's administration reiterated its concerns regarding overcapacity in steel, cement, and wind power industries, warning that a rise in bad bank loans possible if overcapacity is not curbed. Separately, Chinese press cited domestic economists forecasting CPI and PPI figures for September approaching positive levels after months of decline. China will report its inflation data on October 21st, and is currently looking at 7 consecutive months of CPI contraction and 9 months of PPI declines.

- Elsewhere in Asia, Australian Trade Minister said details on investment from China may be a part the free trade agreement, and the highly profiled detainment of Rio Tinto executive was not detrimental to China trade relations. The trade minister also referred to the recent strength in AUD hitting fresh multi-month highs against the dollar as making conditions difficult for exporters. Over in Taiwan, central bankers expressed their comfort with asset prices, noting there was no overheating in stocks or housing. South Korea President said it was too early to consider a fiscal stimulus exit, while Malaysia's leader promised to continue injecting MYR1B every month until mid-2010 to stimulate the economy.

- Comments from Fed's Plosser showed an overall hawkish stance. Philadelphia Fed president said that over the medium-long term, his biggest concern was inflation, with economy unlikely to face a double-dip recession as recovery gained some traction. In terms of growth prospects, Plosser saw 3% GDP in 2010 and 2.7% in 2011, but also acknowledged uncertain outlook for consumer spending as reason for caution.


EQUITIES

- In equity specific developments, Japanese auto sector saw mixed reports from Toyota and Nissan. The former issued a 3.8M vehicle recall in the US - the biggest in history - after reports that a defect can cause the accelerator pedal to jam.
Subsequently, Japanese press said some of the Toyota models may also be recalled domestically. Nissan raised its production target for China JV to 500K units in 2009 from prior 388K, noting that it has already sold 320.5K units as part of its China partnership with Dongfeng Motor. In the banking news, Nomura CEO Watanabe looked to appease investors after a 20% 4-session slide in share price on the heels of a ¥257B capital raise announcement. In the tech sector, Japanese press said Toshiba may expand production of its LED lamps, investing billions of Yen in the industry.

- Outside the Nikkei, Korea's Kospi pared all of its initial gains after press speculation that shipyards are facing order cancellations. In Sydney, Commonwealth Bank CEO said there was some evidence of economic recovery, but conditions could remain challenging for some time. In terms of credit, CBA's Norris said he would be surprised if banks were to raise rates more than the RBA. In the commodities sector, Fortescue Metals confirmed press speculation that it would not meet Sept 30 deadline for China funding talks, noting that August deal with CISA had lapsed but also remaining open to expansion plans and alternative capital raise. Nufarm CEO saw China being able to make a good FIRB case for acquisition ahead of the regulator discussion of the Sinochem bid.


CURRENCIES/COMMODITIES

- In currencies, Japanese Yen reversed some of the recent declines, rallying sharply across the board after speculation that BOJ may decide in October to allow corporate bond purchase programs to expire as scheduled in December. USD/JPY retreated below 90.00, while EUR/JPY fell from 132 to 131. In European FX, the dollar was generally weaker, with EUR rising above 1.4640 and GBP gaining above 1.6060. In commodity currencies, AUD rose to 13-month highs following strong retail sales in Australia, while NZD extended its gains after a strong business confidence report. In emerging markets FX, both Taiwan and South Korea authorities had reportedly intervened in the markets with USD purchases to curb the rally of their respective currencies. Crude oil shrugged some of the more bearish API inventories of crude at +2.76M v +500Ke reported afterhours in the US. Risk appetite helped front month crude rally as high as $67.40 following the upgrade in the IMF outlook.