China PMIs remain in expansion with SME-focused official prints outperforming

Asia Mid-Session Market Update: China PMIs remain in expansion with SME-focused official prints outperforming; Soft Aussie Capex implies potential growth undershoot

 

US Session Highlights

- (US) NOV ADP EMPLOYMENT CHANGE: +216K V +170KE; Oct revised sharply lower

- (US) OCT PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.7% V 1.7%E

- (US) OCT PERSONAL INCOME: 0.6% V 0.4%E; PERSONAL SPENDING: 0.3% V 0.5%E; savings rate jumps to 6.0% from 5.7%

- (US) NOV CHICAGO PURCHASING MANAGER: 57.6 V 52.5E (highest since Jan 2015); new orders and inventories both surge

- (US) OCT PENDING HOME SALES M/M: 0.1% V 0.1%E; Y/Y: 0.2% V 2.0% PRIOR

- (US) Atlanta Fed GDPNow: cuts Q4 GDP forecast to 2.4% from 3.6% on Nov 23rd

 

US markets on close: Dow flat, S&P500 -0.3%, Nasdaq -1.1%

- Best Sector in S&P500: Basic Materials

- Worst Sector in S&P500: Utilities

- Biggest gainers: MRO +20.8%, RIG +17.1%, NFX +15.7%, MUR +15.3%, DO +15.0%

- Biggest losers: VRTX -4.7%, AWK -4.6%, COTY -4.4%, EFX -4.0%, ES -3.9%

- At the close: VIX 13.3 (+0.4pts); Treasuries: 2-yr 1.12% (+1bp), 10-yr 2.37% (+7bps), 30-yr 3.02% (+7bps)

 

US movers afterhours

- LZB: Reports Q2 $0.42 v $0.38e, R$377M v $376Me; raises dividend 10% to $0.11/share (prior $0.10/share); +5.4% afterhours

- SMTC: Reports Q3 $0.37 v $0.36e, R$141M v $139Me; +4.1% afterhours

- SNPS: Reports Q4 $0.77 v $0.77e, R$633.7M v $628Me; -1.9% afterhours

- GES: Reports Q3 $0.11 v $0.14e, R$536.3M v $551Me; -14.0% afterhours

 

Politics

- (DE) Germany Chancellor Merkel: will seek a compromise with President-elect Trump on the Paris Accord - press

 

Asia Session Notable Observations, Speakers and Press

- Nikkei225 and S&P/ASX200 indices outperform amid respective weakness in JPY and post-OPEC surge in energy space; USD/JPY since paring some gains with retreat to ¥114 amid overall USD weakness.

- Feb WTI contract adds another 1% to gains, testing $50/brl for the first time in a month.

- China PMI data mixed; Official (large SME-focused) manufacturing and non-manufacturing prints at highest level since mid-2014, with notable flip to expansion in New Export Orders and sharp rise in Input prices juxtaposed against multi-month lows in inventories; Conversely, Caixin PMI retreats to 50.9 from 50.2, albeit in expansion for 5th straight month; Caixin economist notes ongoing staff reductions containing costs while input price inflation intensifies at sharpest rate since early 2011.

- Australia Q3 private capex undershoot expectations, adding to growth concerns already building from disappointing Construction and Building Permits data in recent days, as more analysts anticipate RBA policy easing next year. Japan Q3 Capex also misses estimates, though corporate profits and sales in Q3 improve as Yen rally subsides; Recall Japan's CAPEX component in the latest prelim GDP data was flat for its first non-negative print in 3 quarters.

Energy

- Goldman Sachs: Oil market to move into deficit in 2017; WTI to rise to $55/brl - press

- (ID) Indonesia confirms OPEC membership temporarily suspended; Claims can only cut output by 5.0K bpd v requested 37K bpd

China

- (CN) PBoC adviser Huang Yiping calls for 2017 GDP target to be set at 6-7% range - Chinese press

- (CN) UBS China economist chief Wang: Do not see room for China to cut interest rate next year - conf call comments

- (CN) PBOC has told some local banks to cut short term borrowing - Chinese press

Japan

- (JP) BOJ Sakurai: BOJ to continue purchasing large amounts of JGBs to control interest rates; no change in stance

- (JP) Japan Abe Adviser Honda: JPY currency (Yen) could weaken to test the 120 level during 2017 under Trump stimulus plan

- (JP) Japan Chief Cabinet Sec Suga: Closely watching the effect of higher oil prices on markets and Japan economy

Australia

- (AU) Credit Suisse analyst sees material downside to RBA and consensus Australia GDP forecasts; Expect a rate cut next year and a downward revision of GDP targets.

 

Asia Key economic data:

- (CN) CHINA NOV MANUFACTURING PMI (Gov't official): 51.7 V 51.0E (4th consecutive expansion and highest since July 2014)

- (CN) CHINA NOV CAIXIN PMI MANUFACTURING: 50.9 V 51.0E; 5th consecutive expansion

- (HK) Macau Nov Casino Rev 18.8B Patacas v 18.4B m/m, +14.4% y/y (4th consecutive increase, largest gain since Feb 2014) v 8.8% prior

- (JP) JAPAN Q3 CAPITAL SPENDING Y/Y: -1.3% V -0.4%E; EX-SOFTWARE Y/Y: -1.4% V -0.6%E

- (JP) JAPAN NOV FINAL PMI MANUFACTURING: 51.3 V 51.1 PRELIM

- (AU) AUSTRALIA Q3 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -4.0% V -3.0%E

- (AU) AUSTRALIA NOV AIG MANUFACTURING INDEX: 54.2 V 50.9 PRIOR (2nd straight expansion, 4-month high)

- (KR) SOUTH KOREA NOV PMI MANUFACTURING: 48.0 V 48.0 PRIOR

- (KR) SOUTH KOREA NOV TRADE BALANCE: $8.0B V $8.6BE

- (KR) SOUTH KOREA NOV CPI M/M: -0.1% V 0.1%E; Y/Y: 1.3% V 1.4%E; CPI CORE Y/Y: 1.4% V 1.6%E

- (KR) SOUTH KOREA OCT CURRENT ACCOUNT BALANCE: $8.7B V $8.3B PRIOR; GOODS BALANCE: $9.8B V $10.8B PRIOR

- (NZ) NEW ZEALAND NOV QV HOUSE PRICES Y/Y: 12.4% V 12.7% PRIOR

- (NZ) NEW ZEALAND Q3 TERMS OF TRADE INDEX Q/Q: -1.8% V 0.0%E (2nd straight decline)

 

Asian Equity Indices/Futures (00:00ET)

- Nikkei +1.9%, Hang Seng +0.6%, Shanghai Composite +0.5%, ASX200 +1.1%, Kospi +0.2%

- Equity Futures: S&P e-mini +0.1%, Dax +0.2%, FTSE100 +0.3%

 

FX ranges/Commodities/Fixed Income (00:00ET):

- EUR 1.0585-1.0610; JPY 114.10-114.80; AUD 0.7380-0.7410; NZD 0.7070-0.7100

- Dec Gold +0.1% at 1,174/oz; Jan Crude Oil +1.0% at $49.91/brl; Mar Copper +0.2% at $2.64/lb

- GLD: SPDR Gold Trust ETF daily holdings fall 1.1 tonnes to 883.9 tonnes; 12th straight decline; lowest since June 8th

- (CN) China said to have tightened gold import quota - FT

- JGB: (JP) Japan MoF sells ¥2.20T in 10-yr 0.1% JGBs; Avg yield: +0.032% (first positive yield since Feb) v -0.056% prior; bid to cover: 3.78x v 4.35x prior

- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.8958 V 6.8865 PRIOR; first weaker setting in 4 sessions

 

Asia equities/Notables/movers by sector

- Consumer discretionary: Ajinomoto Co 2802.JP +2.9% (Nomura raises to buy); Recruit Holdings Co 6098.JP +3.1% (Credit Suisse raises to outperform)

- Industrials: Nufarm NUF.AU +5.4% (guidance); Bridgestone Corp 5108.JP -0.9% (Goldman Sachs cuts to neutral)

- Technology: Gree Electric Appliances 000651.CN +8.3% (discloses large shareholder); Renesas Electronics Corp 6723.JP +2.2% (Morgan Stanley raises PT)

- Materials: Newcrest Mining NCM.AU -2.5%, Regis Resources RRL.AU -2.3% (gold declines)

- Energy: CNOOC 883.HK +6.3% (China raises fuel prices); Santos STO.AU +12.6%, Beach Energy BPT.AU +10.3%, WorleyParsons WOR.AU +9.3%, Oil Search OSH.AU +9.9%; Origin Energy ORG.AU +8.5%; Woodside Petroleum WPL.AU +6.7% (OPEC deal)

- Healthcare: Askul Corp.2678.JP -1.0% (H1 result)

- Utilities: China Water Affairs Group 855.HK -1.1% (H1 result); Transurban Group TCL.AU -3.8% (Morgan Stanley cuts to equalweight)