RBA minutes show neutral policy stance

Asia Mid-Session Market Update: BOJ keeps Yield Curve Control targets intact, raises assessment; RBA minutes show neutral policy stance

 

US Session Highlights

- (DE) Several dead, at least 50 reportedly injured after truck drives into Christmas market in Berlin, Germany; local police spokesman points to terrorism as motive - press

- (TR) Russia Ambassador to Turkey has died from gunshot wound in Ankara after being shot by off-duty Turkish special operations police officer - Russia press

- (US) Fed Chair Yellen: economic gains are finally raising most living standards; productivity growth has been disappointing; US jobs market is strongest in nearly a decade; job creation continues at steady pace, layoffs low

- (US) DEC PRELIMINARY MARKIT SERVICES PMI: 53.4 V 55.2E (lowest since Sept)

 

US markets on close: Dow +0.2%, S&P500 +0.2%, Nasdaq +0.4%

- Best Sector in S&P500: Technology

- Worst Sector in S&P500: Healthcare

- Biggest gainers: NPG +4.5%, HCP +4.0%, O +3.4%, LM +2.6%, LRCX +2.4%

- Biggest losers: MOS -6.1%, ALXN -4.6%, CF -4.0%, BIIB -2.7%, HUM -2.5%

- At the close: VIX 11.7 (-0.5pts); Treasuries: 2-yr 1.22% (flat), 10-yr 2.54% (-6bps), 30-yr 3.12% (-6bps)

 

US movers afterhours

- CNAT: Announces exclusive worldwide option, collaboration and license agreement covering development and commercialization of Emricasan with Novartis; +124.5% afterhours

- AUPH: Announces up to 20 year Manufacturing Collaboration Agreement with Lonza for Clinical and Commercial Supply of Voclosporin; +5.0% afterhours

- SCMP: Announces $225M convertible Senior Note offering; -5.4% afterhours

- WOR: Reports Q2 $0.75 ex-items v $0.80e, R$727.8M v $725Me; -7.4% afterhours

- NPTN: To sell low speed transceiver business to APAT Optoelectronics for $26.4M; Cuts Q4 $0.03-0.11 v $0.17e (prior $0.13-0.21); Rev $109M v $113Me (prior $109-115M); -19.1% afterhours

 

Politics

- (US) President-elect Trump secures over 270 Electoral College votes needed to be inaugurated as President - press

- (US) President-elect Trump said to prepare a "infrastructure task-force" to carry out federal spending program - US press

 

Asia Key economic data:

- (JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; Maintains 10-yr JGB yield target around ~0%

- (NZ) New Zealand Nov Food Prices M/M: -0.1% v -0.8% prior (3rd straight decline)

- (KR) South Korea Nov PPI Y/Y: +0.7% v -0.1% prior (first increase in 28 months)

 

Asia Session Notable Observations, Speakers and Press

- Volatility across regional indices and FX majors is seasonably compressed despite the geopolitical jitters in Europe. Treasuries saw a pronounced bid in US hours after reports that a Russian ambassador was shot and killed by an off-duty policeman in Turkey in defiance of Russia's involvement in the Syria conflict. Later in the day, an armed man was also detained attempting to break into a US embassy. Separately, in an attack reminiscent of the Nice, France terror strike, a truck ploughed into a crowd of people at a holiday market in Berlin, killing 12 and injuring about 50.

- Bank of Japan policy decision was out exceptionally early today as the BOJ kept its yield control policy settings unchanged - short-term IOER was left at -0.1% while the target rate on the 10-year was kept at around 0% despite a minority view that it could be raised to reflect the recent jump in yields and lower rates. Also as speculated in Japan press, the BOJ raised its assessment for overall economy as well as the Exports component, noting continued moderate recovery trend (prior acknowledged sluggishness) and a pick-up in shipments. Inflation expectations are still deemed to be in "weakening phase", and the outlook for inflation remains to be slightly negative or about 0%due to effects of decline in energy prices. USD/JPY was up about 30pips on the BOJ release, rising above 117.50.

- RBA policy decision this month saw very few changes in the statement, and the meeting minutes reflected minimal shift in sentiment. Australia central bank is still widely viewed to have a neutral stance but with some optionality - members recognized domestic data (such as large Q3 GDP contraction) has not been encouraging, but also debated if the risks of even easier policy outweighed any benefit. RBA still expects inflation to remain low for some time, but also noted housing market conditions had strengthened while global inflation risks were diminished.

China

- (CN) Fitch: China housing sales to decline by 15% in 2017

- (CN) China may see tight interbank liquidity conditions persist until early Feb 2017 - Chinese press

Japan

- (JP) Japan govt confirms raising FY17/18 GDP to 1.5% from 1.2% July forecast - press

- (JP) Japan Fin Min Aso confirms that FY17 budget will total ¥97.5T; FY16 extra budget has ¥600B for disaster aid

- (JP) Japan govt (cabinet office) expected to raise its economic assessment in Dec (would be the first increase in more than a year) - Nikkei

Australia:

- (AU) Australia Finance Ministry (AOFM) FY16/17 bond issuance plan expected to be little changed around A$100B

- (AU) HSBC's Bloxham: More fiscal reform needed for Australia to preserve its AAA rating - NZ Herald

 

Asian Equity Indices/Futures (23:30ET)

- Nikkei +0.1%, Hang Seng -0.3%, Shanghai Composite -0.5%, ASX200 +0.5%, Kospi +0.2%

- Equity Futures: S&P500 +0.1%; Nasdaq +0.1%, Dax flat, FTSE100 flat

 

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

- EUR 1.0395-1.0415; JPY 117.00-117.55; AUD 0.7240-0.7260; NZD 0.6915-0.6930

- Feb Gold flat at 1,140/oz; Jan Crude Oil -0.2% at $52.95/brl; Mar Copper flat at $2.50/lb

- GLD: SPDR Gold Trust ETF daily holdings fall 8.9 tonnes to 828.1 tonnes; 22nd straight decline; lowest since May 4th

- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.9468 V 6.9312 PRIOR

- USD/CNY: SWIFT: CNY use in international transactions: 2.00% of total in Nov v 1.67% prior

 

Asia equities/Notables/movers by sector

- Financials: BT Investment Management BTT.AU -4.9% (Credit Suisse cuts to underperform); Wanda Commercial Properties Group Co 169.HK +3.0% (partnership)

- Industrials: Yamaha Motor 7272.JP -4.8% (Jefferies cuts to hold); Kawasaki Heavy Industries 7012.JP -3.3% (Macquarie initiates with underperform); Korea Aerospace Industries 047810.KR +2.4% (Nomura rates new buy)

- Technology: Toshiba Corporation 6502.JP -1.9% (TSE keeps it on watchlist); MediaTek Inc 2454.TW -2.5% (halves TSMC order); Sharp Corp 6753.JP +3.5% (to cut TV panel supplies); Asahi Glass Co 5201.JP -3.3% (acquisition); Sumco Corp 3436.JP -5.8% (Daiwa cuts to underperform)

- Materials: Newcrest Mining NCM.AU +4.6% (Raised at Macquarie)

- Energy: AGL Energy AGL.AU +2.4%, APA Group APA.AU +2.1% (APA contract with AGL)

- Healthcare: Capitol Health CAJ.AU +13.0% (raises guidance); Terumo Corp.4543.JP +1.7% (JPMorgan maintains neutral)

- Telecom: China Mobile 941.HK +1.4% (Nov result); TPG Telecom TPM.AU -1.2% (Shaw & Partners cuts to sell)