RBNZ also stands pat with a dovish outlook

Asia Mid-Session Market Update: Equity rally restored as investors digest FOMC hold and BOJ regime change; RBNZ also stands pat with a dovish outlook

 

Top US session headlines

- FOMC HOLDS TARGET RATE RANGE AT 0.25-0.50%: AS EXPECTED; NEAR-TERM RISKS APPEAR ROUGHLY BALANCED; STRONGER CASE FOR HIKE BUT WAITING FOR MORE EVIDENCE; Vote 7-3: 3 dissents in favor of hike (George, Mester, Rosengren)

- OECD cuts 2017 global outlook, cuts 2017 global GDP from 3.3% to 3.2%; slow progress to open global markets to trade has added to slowdown

- DOE CRUDE: -6.2M V +3.5ME; GASOLINE: -3.2M V -0.5ME; DISTILLATE: +2.2M V 0ME

 

Asia Notes/Observations

- New Zealand central bank stands pat and reiterates further easing down the line despite more neutral expectations in the wake of higher dairy prices and better exports; Notes sustained weakness in headline inflation despite stable expectations; Reiterates call for decline in exchange rate; NZD most active decliner on the comments among FX majors.

- Oil price and energy sector rises on large draw in DOE inventories, post-FOMC dollar weakness. Gold and miners spike.

- Japan markets closed; USD/JPY remains under pressure just above ¥100 handle; Bernanke says BOJ has retained commitment to reach inflation target but muddled the message by maintaining JGB purchase target.

- Incoming RBA Gov Lowe speaks to House Economics Committee; maintains policy flexibility even as the headwinds from mining investment decline continue to ebb.

 

US markets on close: Dow +0.9%, S&P500 +1.1%, Nasdaq +1.0%

- Best Sector in S&P500: Basic Materials

- Worst Sector in S&P500: Healthcare

- Biggest gainers: NEM +7.6%, ADBE +7.1%, FDX +6.9%, FCX +5.9%, APA +5.9%

- Biggest losers: NAVI -3.7%, NFLX -3.4%, KMX -2.0%, FTR -1.9%, WFC -1.6%

 

VIX 13.30 (-2.6pts); Treasuries: 2-yr 0.78% (flat), 10-yr 1.67% (-2bp), 30-yr 2.40% (-3bp)

US movers afterhours

- RHT +6.6%; Reports Q2 $0.55 v $0.54e, R$600M v $591Me; Raises FY17 $2.23-2.25 v $2.22e, R$2.42-2.44B v $2.40Be (prior $2.19-2.23, R$2.38-2.42B)

- BBBY +0.4%; Reports Q2 $1.11 v $1.17e, R$2.99B v $3.06Be

- JBL -4.8%; Reports Q4 $0.20 v $0.24e, R$4.43B v $4.38Be; to realign global capacity and administrative support infrastructure

- ALOG -5.0%; Reports Q4 $1.02 v $1.28 y/y, R$138.1M v $154.5M y/y

- MLHR -9.8%; Reports Q1 $0.60 v $0.62e, R$598.6M v $614Me; Guides Q2 $0.52-0.56 v $0.59e, R$580-600M v $601Me

 

After extended session

- MSFT: Exec: Sees huge potential in China rising cloud market - China Daily

 

Equity Futures (00:00ET): S&P e-mini flat, Dax flat, FTSE100 +0.2%

FX/Commodities ranges (00:00ET):

- EUR 1.1185-1.12; JPY 100.10-100.50; AUD 0.7610-0.7650, NZD 0.7325-0.7370

- Gold +0.4% at 1,337; Oil +0.9% at $45.75 / brl; Copper +0.4% at $2.17/lb

 

Asian Equity Markets (00:00ET)

- Nikkei closed, Hang Seng +1.2%, ASX +0.8%, Shanghai +0.8%, Kospi +1.2%

 

Key economic data:

- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT 2.00%; AS EXPECTED

- (TW) Taiwan Aug Unemployment Rate: 4.0% v 4.0%e

 

Speakers/Press / Key Themes

China:

- Shanghai Composite extending gains above 3,050; near 2-week high

- PBOC SETS YUAN MID POINT AT 6.6513 V 6.6738 PRIOR (strongest Yuan setting since Aug 26th)

- Property Consultancy DTZ/Cushman & Wakefield: Shanghai real estate investment market likely to maintain double-digit growth in transaction value this year - Chinese press

Japan:

- Former Fed Chairman Bernanke: While BOJ did not take new measures, the new policy framework is good news since it includes commitment to ending deflation

Australia/New Zealand:

- RBA Gov Lowe: inflation to remain low for some time; Economy continue to be supported by low rates; Drag from the fall in mining investment will come to an end; Mining investment still has some way to fall, about 75% done; Increase in established home prices has stabilized; Business conditions have improved; Pockets of spare capacity in China economy, but do not want to overstate the problems.

- RBA Assistant Gov Kent: China is trying to balance growth with deleveraging; concern in China is on the quality of debt

- ANZ and ASB economists see RBNZ cutting rates again to 1.75% in November - NZ press

 

Asia movers

- Financials: Jinke Properties Group Co 000656.CN +10.0% (Sunac's subscription of shares); Premier Investments PMV.AU -3.9% (FY16 result); OzForex Group OFX.AU -5.4% (Macquarie cuts to Neutral); Vanke 000002.CN +5.6% (China property market sentiment)

- Industrials: Hanjin Shipping Co 117930.KR +29.6% (Korean Air approves financial aid); Nufarm NUF.AU +2.6% (acquisition speculation)

- Materials: Saracen Mineral SAR.AU +9.3%, Resolute Mining RSG.AU +6.1%, Newcrest Mining NCM.AU +6.6%; Northern Star NST.AU +6.1%, Evolution Mining EVN.AU +5.8% (gold rises)

- Energy: China Shenhua Energy Co 1088.HK +3.1% (to increase output)