Asia Market Update: Indices rise amid trade headline; Data weighs on Aussie, NZD and AU banks rise on RBNZ capital rules; Upcoming Mnuchin comments in focus; China may announce MLF operation on Friday, MOFCOM may speak later today

 

General Trend:

- Australian equities outperform as Energy, Consumer Discretionary and Financial companies rise

- Gainers in Japan include Iron/Steel, Securities and Marine/Transportation companies

- Nissan plans to furlough US workers as part of cost cutting measures

- Markets in Hong Kong and Shanghai rise less than 0.5% in early trading

- South Korea Kospi underperforms amid weakness in Won

- New Zealand bond yields rise as analysts examine implications of RBNZ’s final bank capital rules; RBNZ Gov said impact on monetary policy is ‘very limited’

- Japan’s stimulus measures in line with press speculation

- US Treasury Sec Mnuchin to appear at US House committee hearing on Dec 5th (Thursday) at 10 AM EST; The hearing relates to financial stability

- China Commerce Ministry (MOFCOM) sometimes holds weekly press conference on Thursdays (comments generally seen during early European morning)

- Reserve Bank of India (RBI) expected to cut rates later today

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened 0.6%

- (AU) AUSTRALIA OCT RETAIL SALES M/M: 0.0% V 0.3%E

- FCG.NZ Reports prelim Q1 (NZ$) normalized EBIT 171M v 26M y/y, gross margin 740M v 646M y/y

- (NZ) NEW ZEALAND Q3 VOLUME OF ALL BUILDINGS Q/Q: 0.4% V 1.0%E

- CTX.AU Guides FY19 RCOP Net A$320-360M; RCOP EBIT 580-620M; expect to sell 25 retail locations for A$136M; annonces 300-500M A$ hybrid capital securities offering - investor day slides

- (NZ) New Zealand Commerce Commission releases final report into the retail fuel market: many fuel companies have been making persistently higher profits over the past decade than would expect in a workably competitive market

- (NZ) Reserve Bank of New Zealand (RBNZ) raises bank capital levels as planned, banks are given 7-years from July 2020 to meet requirements

- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Bank capital plans hit 'sweet spot' for NZ system; banks can reach capital level from retained profits

- (AU) Australia Oct Trade Balance (A$): 4.5B v 6.5Be; Exports M/M: -5.0% v +3.0% prior; Imports M/M: 0.0% v +3.0% prior

Japan

- Nikkei 225 opened +0.7%

- 7974.JP Nintendo reports 830K Nintendo Switch units sold in the US over Thanksgiving week (best week of sales ever in the U.S. for Nintendo Switch)

- (JP) Japan PM Abe: To compile economic stimulus package worth about ¥13T ($119B) in fiscal spending (as speculated), total spending ¥26T

- (JP) Bank of Japan Member of Policy Board Harada (dissenter): Bold stimulus has helped improve Japan's finance; bold easing as improved economy; a rate hike now would bring back deflationary expectation

- 7201.JP As part of cost cutting measures, ordered 2 day unpaid furlough January 2nd and 3rd for the entire US organization, and cut employee travel expenses by 50%, effective immediately

- (JP) Japan MoF sells ¥700B v ¥700B indicated in 0.4% coupon 30-year JGBs, avg yield: 0.43% v 0.4580% prior, bid to cover 3.69x v 3.66x prior

Korea

- Kospi opened +0.5%

- (NK) North Korea army’s general staff Pak Jong Un: US and North Korea can turn into an all out armed conflict any moment even by any accidental case - NK financial press

- (JP) Japan Trade Min: Japan and South Korea have agreed to working level talks on Dec 16 in Tokyo related to export controls

- (KR) South Korea President Moon: Will expand South Korea's global networks of free trade to boost its economic growth and fend off protectionism

- (KR) South Korea and US ended 4th round of defense cost share talks apart on a final figure

- (US) Pentagon official Heino Klinck: US has never taken military options off the table when dealing with North Korea - Yonhap

China/Hong Kong

- Hang Seng opened +0.9%; Shanghai Composite opened +0.3%

- (CN) China PBoC Open Market Operation (OMO): Skips for 12th consecutive session; Net drains CNY0B v CNY0B prior

- (CN) China PBOC speculated to conduct Medium Term Lending Facility (MLF) operation on Friday to roll over maturing loans - China Press

- (CN) US and China said to be moving closer to a Phase 1 trade agreement despite recent rhetoric over Hong Kong and Xinjiang tensions; US expects Phase 1 deal to be completed before Dec 15th – press [released during European morning on Wed]

- (CN) China PBOC sets Yuan Reference Rate: 7.0521 v 7.0382 prior

- (CN) Online rumors have led to runs on certain smaller banks in China, including Yingkou Coastal Bank in early Nov and Yichuan Rural Commercial Bank in late Oct – Nikkei

- (CN) China Foreign Min Wang Yi: China and South Korea should jointly uphold multilateralism, advocate free trade and strive to build an open world economy

- 200.HK CEO Ho: Yokohama is the main and only focus for Japan resort; resort to cost at least $10B; US China trade dispute bigger impact on Macau than HK protests

Other Asia

- (PH) Philippines Nov CPI Y/Y: 1.3% v 1.2%e

North America

- (US) Sen Warren (D-MA) drafting legislation to reverse mega mergers - US press

- (US) US Trade Rep: Expects Pres Trump to implement Japan trade deal next week, will go into effect Jan 1st (in line with original expected timing)

- (US) Ag Sec Perdue: trade talks with China going well - CNBC interview

- (US) President Trump: China talks going very well; cease fire is holding in Syria - NATO Summit press conference with Chancellor Merkel

Europe

- (UK) Comres / Telegraph election poll: Tories 42 (-1); Labour 32 (-1); Lib Dems 12%, Brexit Party 3%

 

Levels as of 12:15ET

- Hang Seng +0.2%; Shanghai Composite +0.3%; Kospi -0.4%; Nikkei225 +0.7%; ASX 200 +1.2%

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

- EUR 1.1087-1.1078; JPY 108.94-108.80; AUD 0.6855-0.6834; NZD 0.6562-0.6523

- Commodity Futures: Gold +0.1% at $1,481/oz; Crude Oil -0.3% at $58.23/brl; Copper -0.3% at $2.65/lb

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