New Zealand and German election results rattle the fx market

TradeTheNews.com Asia Mid-Session Market Update: New Zealand and German election results rattle the fx market; Japan said to eye ­¥2T supplementary budget

Asia Summary

- Asian equity markets opened mixed, solar names in China and South Korea weighed on indexes after ITC ruled imported solar panels are crippling American manufacturers. Election results in New Zealand saw ruling National Party with 46.6% and Labour with 35.5%. With neither party winning enough seats to have a majority in parliament, will have to use nationalist New Zealand First Party to form a coalition. This uncertainty sent NZD/USD into a tail spin, falling over 1% to 0.7252. The kiwi is expected to remain volatile until all votes are tallied by Oct 7th and a govt is formed.

- In Germany similar results happened with the election, Chancellor Merkel's party finishes 1st (32.8%) with opposition SPD with (20.4%). So she will again need to form a coalition. Notably, like elections around the world, the nationalist party took a notable part of the vote (13%) which will see the AFD Party enter parliament for first time. EUR/USD was slightly weaker, 1.1898.

- Japan PM Abe to hold press conference at 09:00GMT, no topic given but widely expected to announce a snap election, though a recent poll shows public is not in favor of one.

- Indonesia 10-yr yield fell 15bps to 6.27%, the lowest level since June 2013 after central bank cut rates Friday. Onshore yuan fell to lowest intraday level in September after PBOC cut the fixing to the weakest since Aug. 31. The Hong Kong dollar overnight interbank rate fell 21bps (the most in three week) to 0.19464%.

Key economic data

- (JP) Japan Sept Prelim PMI Manufacturing: 52.6 v 52.2 prior (4-month high)

 

Speakers and Press

China/Hong Kong

- (CN) Eight China cities, including Shijiazhuang, Chongqing, Nanchang, Nanning and Guiyang imposed curbs on home resales as part of campaign to cool home prices

- (CN) China Tangshang City to cut steel capacity by 50% in order to lower pollution levels; effective Monday – US financial press

- (CN) China Academy of Fiscal Sciences chief Liu Shangxi: China will push fiscal reforms that could boost revenues for local governments after next month’s key party congress

Korea

- (KR) North Korea Foreign Minister Ri Yong Ho: Pres Trump has made our rockets' visit to the entire U.S. mainland inevitable by nicknaming Kim Jong Un "rocketman" - UN speech

Japan

- (JP) Japan PM Abe said to seek ¥2.0T economic package plan; Package is meant to be in effect from FY18/19 - Japan press

- (JP) Support for ruling LDP Party at 44%, ahead of opposition; Abe cabinet support up 4 pct points to 50% – Nikkei Poll

- (JP) According to Kyodo poll nearly Two-thirds of Japan voters oppose PM Abe calling snap election - financial press

New Zealand

- (NZ) New Zealand Election Results: Ruling National Party 46.6%; Labour 35.5%; neither party wins enough seats to have a majority in parliament, will have to use nationalist New Zealand First Party to form a coalition

- (AU) Australia PM Turnbull: To impose extra controls unless LNG exporters set up domestic supply

- (AU) Australia Energy Market Operator: Expect east coast gas supply shortfall to intensify next year, expects the shortfall to be as much as 107 petajoules - Australian

Europe

- (DE) Germany exit polls suggest Merkel's party finishes 1st in German election; anti-migrant party to enter parliament; AFD Party to enter parliament for first time - tweet by financial press

 

Asian Equity Indices/Futures (00:00ET)

- Nikkei +0.4%, Hang Seng -1.2%; Shanghai Composite -0.3%, ASX200 +0.2%, Kospi -0.6%

- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.0%, Dax -0.2%, FTSE100 -0.1%

 

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

- EUR 1.1960-1.1898; JPY 112.53-111.93; AUD 0.7973-0.7942;NZD 0.7362-0.7252

- Dec Gold -0.0% at $1,297/oz; Nov Crude Oil -0.3% at $50.52/brl; Dec Copper -0.3% at $2.95/lb

- (PH) Philippines to issue PHP500B in treasury bills in 2018 v PHP327B in 2017 - local press

- (CN) PBOC OMO: To inject CNY200B in 14 and 28-day reverse repos v injected CNY120B in 7 and 28-day reverse repo prio

- USD/CNY (CN) China PBOC sets yuan reference rate at 6.5945 v 6.5861 prior (weakest setting since Aug 31st)

- (KR) Bank of Korea (BOK) sells KRW0.7T v KRW0.7T indicated in 1-yr monetary stabilization bonds; avg yield 1.54% v 1.50% prior

 

Equities notable movers

Australia/New Zealand

- FCG.NZ Reports FY17 (NZ$) Net 745M v 834M y/y; EBIT 1.12B v 1.43B y/y; Rev 19.2B v 17.2B y/y; +0.2%

- PEP.AU Gets improved and final proposal form KKR at A$3.70/shr for cash and special dividend; +4.6%

- BLY.AU Third day of losses, -26%

Japan

- 7211.JP Planning to launch electric SUVs in Japan, US and Europe in early 2020s – Japanese Press; +4%