Asian Market Update: New Zealand Fin Min downbeat on recovery, Australia Treasurer calls for RBA to stand pat as rate hike expectations rise on strong data


ECONOMIC DATA

- (AU) Australia Sep AiG Performance of Services Index: 49.3 v 48.0 prior (3-month high)

- (AU) Australia Sep ANZ Job Advertisements: 4.4% v 4.1% prior (sixth consecutive increase is the biggest improvement since Dec 2007)

- (NZ) New Zealand Sep Anz Commodity Prices: 6.8% v 4.3% prior

- (HK) Hong Kong Sept PMI: 51.8 v 52.8 prior (Second consecutive expansion after 14 months of contraction)

- (RU) Russia Sept Services PMI: 53.0 v 52.2 prior


SPEAKERS

- Asian equity markets are rolling over from the get-go in the wake of a worse than expected jobs report from the US. The Kospi is leading the decline, partially in a catch-up sell-off after missing another day of heavy regional selling on Friday.
The Nikkei and ASX are down about 0.5%, while Taiwan is marginally higher and Hong Kong is unchanged. Ahead of the Monday open, S&P's are up slightly at 1,022.

- With less than 24 hours to go to the Reserve Bank of Australia decision, conflicting opinions are tugging on sentiment regarding the Aussie interest rates prospects. Australia Financial Review has attributed session bounce in AUD to influential AFR economics writers Alan Mitchell and Ross Gittins calling for a 25bp hike to 3.25% being likely. On the flip side, Australia's Treasurer Swan says the employment picture and job posting are still well below year-ago levels. His comments followed the largest growth in Australia job postings since late 2007 as well as a 3-month high in Performance of Services Index. Similarly cautious forecast was also expressed by New Zealand Finance Minister English, who saw the recent bounce being underpinned by stimulus package with risks of another downleg in growth remaining high. In the private sector, HSBC CEO Geoghegan was even more pessimistic, warning that the bank is delaying expansion of the bank because of fears over another downturn in the economy while anticipating a W-shaped recovery. In Philippines, Central Bank's Tegangco noted monetary policy would err on the side of caution in terms of rate tightening, with other tools in place to absorb liquidity.


EQUITIES

- In Tokyo, consumer discretionary sector led the gainers with Fast Retailing rallying after posting 32% same store sales growth and Aeon rejecting press speculation that it may post a 6-month loss when it reports earnings next week. Tokyo Electron also saw some positive developments, announcing a boost in its chip equipment repair business due to customer cutbacks in purchases of new models. In the tech sector, Pioneer saw about 4% of its workforce accepting buyout offers, with restructuring costs said to have been included in the company's current budget plans. In industrials, Bridgestone and USW union ratified a 4-yr contract with Bridgestone North American Tire unit covering 4,500 workers.

- Outside the Nikkei, Sino Gold traded against the grain of ASX bearishness on rate hike prospects, gaining sharply after FIRB approved its acqusition by Eldorado Gold. Australian press also speculated that Rio Tinto and Ivanhoe Mines would sign an investment framework agreement with the Mongolian Government on Oyu Tolgoi location, and Telstra was said to put the govt request for restructuring into retail and wholesale divisions into shareholders' hands. In South Korea, Hana Bank was amid the worst performing names after confirming press speculation the company is considering a rights offering. In Hong Kong, Cathay Pacific airline said the last week's volumes were the best of the year.


CURRENCIES/COMMODITIES

- In currencies, Kiwi dollar was initially talked down by Finance Minister's dovish outlook, while AUD strengthened amid rising expectations for an RBA rate hike tomorrow. NZD/USD traded as low as 0.7130's, while AUD/USD gained over 1% toward 0.8750. USD was also weaker across the European majors despite the risk aversion in equities, with selling attributed to G7 statement giving little regard to either USD losses or JPY gains. The yen firmed at the open, but retreated toward its Friday lows around 89.80 in USD/JPY. In emerging Asian FX, South Korea FX authorities remained concerned over KRW strength, reportedly intervening below 1,170. In commodities, spot gold traded up nearly $3, with strength underpinned by gold Trust ETF holdings rising to 1,096.55 tons. Crude oil was also weaker at the open but rallied back above $70 on overall USD weakness.