China Flash manufacturing PMI dips to 6-month lows

Economic Data

- (CN) CHINA HSBC NOV FLASH MANUFACTURING PMI: 50.0 V 50.2E (6-month low)

- (CN) China ANZ Roy Morgan Nov Consumer Confidence Index: 157.1 v 155.1 prior (21-month high)

- (JP) JAPAN OCT MERCHANDISE TRADE BALANCE: -¥710B V -¥1.03TE; ADJ TRADE BALANCE: -¥978B V -¥1.1TE

- (JP) JAPAN NOV PRELIM MARKIT/JMMA MANUFACTURING PMI: 52.1 V 52.7E (6th consecutive expansion)

- (NZ) NEW ZEALAND Q3 PPI OUTPUT Q/Q: -1.1% V -0.5% PRIOR; PPI INPUT Q/Q: -1.5% V -1.0% PRIOR; Largest decline in 5 years on both measures

- (NZ) NEW ZEALAND OCT ANZ JOB ADS M/M: -0.3% V 2.3% PRIOR; first decline in 3 months

Index Snapshot (as of 02:30 GMT)

- Nikkei225 flat, S&P/ASX -0.5%, Kospi -0.6%, Shanghai Composite -0.1%, Hang Seng +0.2%, Dec S&P500 -0.1% at 2,045

Commodities/Fixed Income

- Dec gold -1.0% at $1,181, Jan crude oil -0.2% at $74.43/brl, Dec copper flat $3.03/lb

- GLD: SPDR Gold Trust ETF daily holdings fall 2.1 tonnes to 720.9 tonnes

- (CN) PBoC to drain CNY10B in 14-day repos (32nd consecutive drain); Injects net CNY10B this week vs Net zero position prior (first injection after 5 consecutive weeks of neutral position)

- (JP) BOJ offers to buy ¥110B in JGB less than 1-yr, ¥550B in 1-3 yr JGB and ¥550B in 3-5yr JGB

- (JP) Japan investors bought net ¥212.5B in foreign bonds v ¥1.12T in prior week; Foreign investors bought net ¥909.8B in Japan stocks v ¥1.06T in prior week

Market Focal Points/Key Themes/FX

- The minutes from the critical FOMC meeting in late October, when the Fed formally ended QE3, only served to reinforce market expectations for the beginning of normalization of policy sometime in the middle of 2015. Treasury yields were lifted higher, USD gained, and gold cracked going into the US close as Fed members remained cognizant of improving labor conditions and stronger economic growth. Fed members were concerned that "measures of inflation compensation had declined somewhat" but also added "longer-term inflation expectations had remained stable." Analysts noted there was little in the minutes deterring the latest projections for interest rates despite the uncertain inflation outlook, with the focus also shifting to Thursday's release of US CPI figures.

- The leading assessment of China economy in November via the HSBC flash manufacturing PMI was not particularly impressive as the index missed estimates to hit a 6-month low of 50.0 - the very threshold of expansion/contraction divide. Among the most notable components, Employment deteriorated at a faster rate, Output turned to expansion from contraction, Export orders increase slowed, while Input price decline receded. HSBC economist noted that disinflationary pressures remain strong, capacity utilization point to insufficient demand in the economy, and more monetary and fiscal easing measures are justified given the "significant downward pressures" on growth. Hong Kong and Shanghai opened lower after the release but reversed initial losses to trade little changed by the time of their afternoon breaks. Shanghai-Hong Kong trading link uptake remained underwhelming, with only 2.4% of the Hong Kong quota taken up by mainland investors on Wednesday.

- Japan manufacturing PMI also slowed, though it remained in expansion for the 6th consecutive month. Markit reported Employment increasing at the same rate and input price increasing at a faster rate - potentially a respite to slowing progress on inflation. Japan trade data were also encouraging, as export growth of 9.6% hit its highest pace in 8 months and imports finally slowing, helped by 8.8% y/y decline in shipments of crude oil. Cabinet Sec Suga maintained that Japan will still be able to meet the FY20 fiscal target even with the tax hike delay constraining govt revenues.

- USD strength retained its momentum in the wake of steady QE-exit sentiment from the Fed minutes, particularly against the vulnerable Japanese yen. 10-year US treasury yields approached 2.35%, helping USD/JPY test 118.50 in the Asian session. AUD/USD marked its lows after the China PMI release, falling over 30pips respectively from session highs below $0.8590.

Equities

US markets:

- CZR: Said to be considering adjusting its largest operating unit into a REIT - financial press; +18.1% afterhours

- WSM: Reports Q3 $0.68 v $0.63e, R$1.14B v $1.12Be; +7.5% afterhours

- YHOO: Yahoo and Mozilla Form Strategic Partnership; 5-year deal makes Yahoo the default search on Firefox browser; +1.0% afterhours

- LB: Reports Q3 $0.44 v $0.40e, R$2.32B v $2.32Be; -0.6% afterhours

- GMCR: Reports Q4 $0.90 v $0.78e, R$1.19B v $1.16Be; increases dividend 15% to $1.15 from $1.00; -0.8% afterhours

- CRM: Reports Q3 $0.14 v $0.13e, R$1.38B v $1.37Be; -4.8% afterhours

- JMEI: Reports Q3 $0.14 v $0.14e, R$154.4M v $152Me; -11.8% afterhours

- GPRO: Prices 10.4M shares of common stock at $75.00/shr (approx 7.5% of market cap)

Notable movers by sector:

- Consumer Discretionary: China Southern Airlines 1055.HK +1.0% (invests in general aviation); Huabao International 336.HK +3.9% (H1 results)

- Materials: OZ Minerals OZL.AU +1.3% (reserve update)

- Industrials: McAleese MCD.AU -1.4% (FY15 guidance)

- Healthcare: Sonic Healthcare SHL.AU -5.6% (cuts FY15 guidance)

- Utilities: TEPCO 9501.JP -2.8% (minor earthquake near Fukushima)