Asian Market Update: BOJ yet to decide on extending asset buying program; RBNZ governor not concerned about high NZD in potential rate hike; Chinese press leaks Sept industrial production


ECONOMIC DATA

- (NZ) New Zealand Sept Visitor Arrivals: 3.8% v -0.8% prior

- (AU) Australia Aug Westpac Leading Index M/M: 1.1% v 1.1% prior

- (AU) Australia Sept New Motor Vehicle Sales M/M: 2.9% v 0.1% prior; Y/Y: -2.0% v -6.2% prior

- (NZ) New Zealand Sept Credit Card Spending Y/Y: -2.3% v 0.1% prior

- (TH) Thailand Sept Customs Exports Y/Y: -8.5% v -15.9%e (-18.4% prior); Trade Balance: $1.98B v $2.29Be


SPEAKERS/PRESS

- Asian equities are trading in step with a session's worth of caution in the US, where markets surrendered some of the recent gains following lukewarm housing data and a mixed set of Q3 results from several industrials. Entering the final hour, Nikkei225 is around unchanged, followed by 0.3% and 0.2% declines on the Kospi and S&P/ASX. Ahead of tomorrow's Q3 GDP in China, Shanghai Composite is the lone gainer, trading marginally higher by 0.1%. Aside from expectations for strong growth, Chinese markets are benefiting from a press report leaking September industrial production at 14% - the highest rate of growth in 14 months. With another busy morning full of Q3 earnings from names like Boeing, Freeport, Morgan Stanley, and Wells Fargo, front-month S&Ps pared their initial decline to trade unchanged at 1,089.

- A number of prominent central bankers single-handedly altered the landscape of monetary policy prospects and market perceptions throughout the Asian session. In Japan, Deputy central bank governor Nishimura said the BOJ would still decide on corporate debt buying steps expiry at the next rate meeting or later, urging policymakers to keep easy monetary conditions to help sustain economic recovery. Furthermore, Nishimura warned that downside risk for inflation exceeded estimates, with CPI rebound expected to be moderate. Recall in the most recent BOJ meeting, Governor Shirakawa offered little reason to expect the central bank extend its QE program at the end of December as forecasted previously. Over in New Zealand, Governor Bollard lifted the Kiwi dollar with a radio interview comments that high NZD would not necessarily be an obstacle to raising the cash rate. Up until a few months ago, RBNZ was still seen as possibly cutting rates further, with the latest NZD rally reflecting the sudden shift in central bank bias. Outside Asia, Bank of England King's op-ed in the Glasgow Herald suggested current interest rates were "extremely low", advising investors to account for higher rate levels.
On that same note in the UK, the NIESR urged BOE to pause its £175B bond purchase program, forecasting the economy to come out of recession with a 1.3% for 2010.

- In other notable Asian region speakers, South Korea Finance Minister Yoon said he was concerned about the state of Korean labor markets, with falling number of jobs in manufacturing and retails sectors. In Australia, Finance Minister Tanner saw greater challenges emerging on the inflation front, even as GDP growth rate prospects remained "anemic".
Outside Asia, Fed's Plosser called for US monetary authorities to shift their focus to price and inflation stability. Also in the US, White House Economic Advisor Romer saw unemployment rising further, potentially suggesting additional stimulus measures to keep economic recovery from stalling.


EQUITIES 

- In individual equities on Korea's Kospi, LG Display topped Q3 estimates, posting net profit KRW807B v KRW667Be on sales KRW7.9T v KRW7.9Te. LG also anticipated slight sales increase for mobile phones in Q4 over Q3, but warned that profitability may decline from Q3 levels. Elsewhere in Korea, KT&G reported Net KRW167.5B v KRW214Be on sales of KRW706B v KRW727Be, and Doosan signed a RW1.23T Power Plant project in Vietnam.

- In Japan, Canon Electronics reported 9-month Net ¥3.0B v ¥6.4B y/y on sales ¥67.1B v ¥91.4B y/y. Moody's cut Kirin Brewery credit rating 2 notches to A2, and Asahi Glass was rumored to beat its FY operating profit forecast. In the Tokyo auto sector, Honda said sales in North America may rise in the next fiscal year, Toyota estimated the cost of its recent recall at ¥40B, and Nissan said it could launch 4 electric car models in N American markets. In Australia, Qantas Chairman saw some positive signs amid improving conditions, and Fosters said Q1 performance was likely to be in line with expectations.


CURRENCIES/FIXED INCOME/COMMODITIES

- In European FX majors, EUR/USD pared initial decline to trade around 1.4940. Sterling was firmer across the board after the hawkish BOE King's comments, trading up to 1.6440. In commodity FX, Kiwi dollar retested 0.75 after RBNZ Bullard statements, while AUD/USD traded sideways in 0.92-9250 range. Japanese Yen was also relatively unchanged despite the fresh uncertainty over BOJ policy bias, with USD/JPY remaining constrained below 91.00

- Crude oil prices are lower in Asia and trading above $78.50/bbl as the commodity was weighed down by the weekly API petroleum inventories data, released after the US equity close (API PETROLEUM INVENTORIES: CRUDE: +3.85M V +1.5ME; GASOLINE:+560K V -1.2ME). Looking ahead, the US Department of Energy will release its weekly inventories data later today. Spot Gold prices are higher and trading above $1,055/oz.

- In corporate news, BHP Billiton provided its Q1 production update, in which it noted that quarterly iron ore production rose to a record 30.1M tons v 29.8M y/y. Additionally, BHP's Q1 copper production declined by 8%, zinc output rose by 11%, while coking coal production rose by 2%. In terms of the outlook for commodities, BHP said it believed that China was essentially finished with its restocking of resources, while noting signs of higher than normal stockpiles in the country.
Outside of China, BHP noted that there was evidence of restocking in the developed economies, with an emphasis on steel. BHP added that it has seen more positive economic news across most economies. However, the miner said real demand follow-through in developed countries may not be transparent until mid-2010. BHP's quarterly update was similar to the update provided by its competitor Rio Tinto on 10/13. Like BHP, Rio Tinto's quarterly iron ore production hit a record. Also, Rio Tinto similarly noted that it was seeing early signs of a recovery in some markets.