Brazil central bank cuts rates for the first time in 4 years

Asia Mid-Session Market Update: AUD falls after disappointing jobs data; Brazil central bank cuts rates for the first time in 4 years

 

US Session Highlights

- (US) SEPT HOUSING STARTS: 1.047M V 1.18ME; BUILDING PERMITS: 1.225M V 1.17ME

- (US) DOE CRUDE: -5.2M V +2ME; GASOLINE: +2.5M V -1ME; DISTILLATE: -1.2M V -1.5ME

- (CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED

- (US) FEDERAL RESERVE RELEASES BEIGE BOOK: 11 of 12 districts see modest to moderate growth; labor markets remained tight with modest employment and wage growth

 

US markets on close: Dow +0.2%, S&P500 +0.2%, Nasdaq +0.1%

- Best Sector in S&P500: Basic Materials

- Worst Sector in S&P500: Healthcare

- Biggest gainers: FSLR +5.9%, RIG +5.6%, KORS +5.5%, HAL +4.3%, MUR +4.0%

- Biggest losers: AGO -8.4%, INTC -5.9%, ISRG -5.6%, GPC -4.2%, STX -2.9%

- At the close: VIX 14.41 (-0.9pts); Treasuries: 2-yr 0.80% (-1bp), 10-yr 1.74% (-1bp), 30-yr 2.51% (flat)

 

US movers afterhours

- DRWI +53.9%: Dragonwave equipment has been selected for Sprint's Network Densification and Optimization Strategy

- MAT +6.0%: Reports Q3 $0.70 v $0.70e, R$1.80B v $1.77Be

- AXP +5.5%: Reports Q3 $1.24 (adj) v $0.96e, R$7.77B v $7.67Be; Raises FY16 $5.90-6.00 v $5.51e

- CTXS +5.4%: Reports Q3 $1.32 v $1.19e, R$841M v $825Me; Raises FY16 $5.18-5.20 v $5.06e

- URI +5.2%: Reports Q3 $2.58 v $2.45e, R$1.51B v $1.52Be

- LSTR +4.9%: Reports Q3 $0.90 v $0.81e, R$788M v $773Me

- LRCX +2.3%: Reports Q1 $1.81 v $1.77e, R$1.63B v $1.64Be

- FMSA -2.9%: Reports prelim Q3 -$0.11 to -$0.13 v $0.13e; Rev $133-135M v $127Me

- BJRI -7.5%: Reports Q3 $0.30 v $0.32e, R$233.7M v $239Me

- EBAY -8.0%: Reports Q3 $0.45 v $0.44e, R$2.22B v $2.18Be, Guides Q4 $0.52-0.54 v $0.54e

- MTW -10.1%: Reports prelim Q3 R$350M v $339Me; weak orders trend continuing into Q4

- ONVO -11.5%: Announces secondary offering of indeterminate amount through Jefferies and Evercore ISI

- DXPE -15.8%: Reports prelim Q3 R$228-231M v $254Me, EBITDA $11-13M v $11.3M y/y

- SCSS -17.3%: Reports Q3 $0.56 v $0.57e, R$368M v $393Me; Cuts FY16 Rev "high single digit sales growth"

 

Asia Session Notable Observations, Speakers and Press

- Australia employment whiffed with 2nd straight month of decline and the biggest since Apr 2015; Unemployment rate remains at a 3-year low, but participation rate also falls to 23-month lows. AUD/USD fell over 60pips in the course of the session, 3-year yield came in 7bps on expectation of easier RBA policy, and NZD benefited as alternative carry currency.

- Australia miners Rio Tinto and Fortescue also posted quarterly production metrics; Rio iron ore output rose 2% and FMG rose 3%; Woodside Petroleum energy output was down 0.4% at 25.2MMBOE.

- In China, S&P warned Q4 would see bank credit growth slowing after a recent surge as more non-performing loans weaken financial sector stability; NBS also tempered expectation after strong retail data overnight about sustaining consumption growth, while MIIT remarked industrial output target for 2015 would be met despite disappointing production in Sept.

- Nikkei speculated BOJ would not be very aggressive on further policy stimulus with -0.3% as the lower bound; One BOJ source said "next time we cut rates will likely be when the economy experiences a significant shock".

- UK PM May expected to speak at a dinner in Brussels tomorrow where she will outline her Brexit process plans.

- New York Fed's Dudley (voter) hinted that a 25bp rate hike this year would not be a "big deal", but there is no great urgency to tighten rates aggressively; Dudley added every meeting is Live and the Fed is close to achieving its twin mandate.

- Brazil central bank cut rates in unanimous decision intended to support growth as economy is deemed nearing inflation target.

- Mexican Peso rises to 6-week highs at the conclusion of 3rd US presidential debate.

 

Asia Key economic data:

- (AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: -9.8K (2nd straight decline, biggest decline since Apr 2015) V +15.0KE; UNEMPLOYMENT RATE: 5.6% (3-year low) V 5.7%E

- (AU) AUSTRALIA Q3 NAB BUSINESS CONFIDENCE: 5 V 3 PRIOR

- (BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC RATE BY 25BPS TO 14.00%; AS EXPECTED; first rate cut in 4 years

 

Asian Equity Markets (23:30ET)

- Nikkei +1.0%, Hang Seng +0.8%, Shanghai Composite -0.1%, ASX200 +0.2%, Kospi flat

 

FX ranges/Commodities/Futures/Fixed Income (23:30ET):

- EUR 1.0965-1.0980; JPY 103.35-103.65; AUD 0.7685-0.7735; NZD 0.7225-0.7265

- Dec Gold +0.3% at 1,273/oz; Crude Oil -0.3% at $51.69/brl; Copper +0.4% at $2.11/lb

- SLV: iShares Silver Trust ETF daily holdings rise to 11,294 tonnes from 11,268 tonnes prior; Highest since Sept 27th

- Equity Futures: S&P e-mini +0.3%, Dax +0.3%, FTSE100 +0.3%

- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7311 V 6.7326 PRIOR

- (NZ) New Zealand sells NZ$150M in 2.75% 2025 bonds; avg yield 2.5225%

- (JP) Japan investors bought net ¥317.7B in foreign bonds v sold ¥733.8B in prior week; Foreign investors bought net ¥72.0B in Japan stocks v bought ¥432.4B in Japan stocks in prior week

 

Asia movers

- Consumer discretionary: Veeko International Holdings 1173.HK -2.0% (guidance); Luk Fook Holdings 590.HK +0.4% (Q2 result); Li Ning Co 2331.HK +3.6% (Q3 result); Murray Goulburn MGC.AU +4.4% (guidance); Tatts Group TTS.AU +0.6% (Credit Suisse raised to outperform)

- Financials: Investa Office Fund IOF.AU +0.5% (affirms guidance)

- Industrials: Mitsubishi Motors 7211.JP +1.2% (guidance/chairman appointment); CIMIC Group CIM.AU +6.0% (Deutsche Bank raised to Hold); Asahi Kasei Corp 3407.JP -0.9% (H1 result speculation)

- Technology: Brambles BXB.AU -0.3% (Q1 result); Nikon Corp 7731.JP -1.1% (JPMorgan Chase cuts to underweight); Toshiba Corporation 6502.JP +2.2% (JPMorgan raised PT)

- Materials: South32 S32.AU +0.8% (Q1 result, cuts target); Resolute Mining RSG.AU +5.0%, Evolution Mining EVN.AU +6.0%, St Barbara SBM.AU +4.7% (gold hits two-week high); Fortescue Metals Group FMG.AU -1.5% (Q1 result); Rio Tinto RIO.AU +0.7% (Q3 result)

- Energy: China Shenhua Energy Co 1088.HK +2.1% (Sept result); WorleyParsons WOR.AU +4.6% (oil trades near 15-month high); Woodside Petroleum WPL.AU +1.1% (Q3 result)

- Healthcare: LifeHealthcare Group LHC.AU +7.8% (Bell Potter raised to Buy); UMN Pharma 4585.JP +0.7% (Nomura cuts to neutral); Taisho Pharmaceutical Holdings Co 4581.JP -1.5% (raises guidance)

- Telecom: Ten Network TEN.AU -18.0% (FY16 result)