Risk appetite returns with bond yields lower

Asia Mid-Session Update: Risk appetite returns with bond yields lower, currencies muted and equities higher

Headlines/Economic Data

Japan

-Nikkei 225 opened +0.9%;

-Automakers track Monday’s gains in US auto sector; Toyota +1.6%

-Steelmakers track recent gains in shares of US Steel; JFE +1%

-Mega Banks and Topix Securities Brokers index gain (rebound from prior session’s losses)

-Toshiba +4% (closed -5.8% on Monday), Softbank +1.3%, Fast Retailing +0.8%

- (JP) Japan Finance Min Aso: Tax changes need to consider work reform and an aging society; one time depreciation is a big encouraging investment

- (JP) Japan Defense Min Onodera unable to rule out more North Korea ‘provocations’ - Japanese Press

Korea

-Kospi opened +0.2%

-LG Display +4% (South Korea to decide on planned investment in China), Hynix +1.5% (Micron +3.2%); Hanwha Life -3% (stake sale)

- (KR) South Korea Nov (20 days) Exports Y/Y: 9.7% v 6.9% prior; Imports Y/Y: 14.0% v 3.1% prior

- Won reversed yesterday’s losses as risk appetite returns

- (KR) Local South Korea think tank: Expect the won to remain strong in 2018

- (US) Pres Trump: US to designate North Korea as a state sponsor of terrorism

- 034220.KR South Korea said to hold meeting related to planned investment in China - South Korean Press; +5.7%

China/Hong Kong

-Shanghai Composite opened -0.3%, Hang Seng +0.4%

-Hang Seng Information Technology Index +3.5% (Tencent +3.9%, market cap moves above Facebook’s)

-Hang Seng Financials Index +1%; Insurers gain amid rise in China 10-year bond yield

-Hang Seng Consumer Goods Index +0.8% (L’Occitane +2.5% after reporting final Q3 earnings); Property Index -0.5%

- (CN) China Energy Investment Group and China National Coal Group will keep their 2018 coal contract prices at CNY535/t, flat y/y - financial press

- (CN) China NDRC Vice Chairman Lian Weiliang says coal prices are currently relatively high and should be guided downward – Chinese Press

- USD/CNY (CN) PBoC sets yuan reference rate at 6.6356 v 6.6271 prior

- (CN) PBoC OMO: Injects CNY180B v CNY100B injected in 7,14 and 63-day reverse repos prior; Net injects CNY10B v CNY20B prior

Australia/New Zealand

-ASX 200 opened +0.2%;

-Graincorp -5% (FY17 profits below ests; CEO sees challenging year ahead)

- AUD trades at 5-month low: Morgan Stanley (MS) said to forecast the Aussie to trade at $0.65 (timing uncertain)

-The pass-through to inflation could be delayed by many factoring including retail competition, consumption growth likely to be lower in Q3 versus Q2, says the Reserve Bank of Australia (RBA) Nov Meeting Minutes.

- (AU) Australia banking regulator, APRA, Chairman Byres: Have concerns over housing and lending standards

- (AU) Australia PM Turnbull: considering tax cuts for low and middle income earner, in addition to lowering the corporate rate to 25% from 30% - speaking to Business Council of Australia

-RBA Gov Lowe to speak during European morning

- Australia Q3 Construction work done to be released on Wednesday’s session

- ATM.NZ Reports FY18 first 4-months EBITDA NZ$78.4M; Rev NZ$262.2M – AGM; +4.3%

Other Asia

- (TW) Taiwan Gov sells NT$25B in 30-yr bonds, avg yield 1.667% v 1.7%e; bid-to-cover 1.54x

North America

-US equity indices ended Monday broadly higher: Dow +0.3%, S&P 500 +0.1%, Nasdaq +0.1%, Russell 2000 +0.7%; Financials and Industrials outperformed

-After Market Movers: Intuit (INTU) Reports Q1 $0.11 adj v $0.05e, Rev $886M v $855Me; -2.4% afterhours Palo Alto Networks (PANW) Reports Q1 $0.74 v $0.68e, Rev $505.5M v $489Me; Promotes Bonanno as CFO; +7.3% afterhours; Urban Outfitters (URBN) Reports Q3 $0.41 v $0.33e, Rev $893M v $857Me; +3.1% afterhours
M&A: US DoJ seeking to block merger between Time Warner Inc and AT&T; Nestle said to show bidding interest in Hain Celestial (press report); CVS may reportedly come to definitive agreement to acquire Aetna by end of Nov (press report)

-Debt Issuance: Weight Watchers International priced $300M in high yield 2025 senior notes (offering downsized from $500M)

-Little news seen regarding US tax reform.

-(US) Janet Yellen to resign from Fed Board of Governors, effective upon the swearing in of her successor as Chair

- BABA Muddy Waters in a report calls Alibaba's Singles Day numbers "obviously fake"

Europe

-(DE) German Chancellor Merkel: new elections would be better than a minority govt; goal is still to form a stable govt - TV interview

-(DE) CDU Parliamentary Leader Kauder: we seem to be on the course for new elections in Germany

-(EU) Reportedly ECB expected to make small, incremental changes next year in discussing QE exit - press

-(UK) UK panel reportedly considering move to £40B (€45B) Brexit offer - UK press

-(UK) Unnamed source in PM May's office says nothing is agreed upon in the Brexit until everything is agreed - financial press
(UK) EU Chief Brexit Negotiator Barnier reportedly informs EU27 that more clarity is needed on the Brexit bill; believes bill cannot be tied to trade agreement

-(UK) BOE's Dep Gov Ramsden: UK economy in a weaker growth period for some time to come; domestic CPI is below the rate consistent with 2% goal

Levels as of 00:00ET

- Nikkei +1.0%, Hang Seng +1.22%; Shanghai Composite +0.4%; ASX200 +0.4%, Kospi +0.1%

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

- EUR 1.1745-1.1730; JPY 112.70-112.51; AUD 0.7558-0.7532;NZD 0.6819-0.6789

- Dec Gold +0.4% at $1,280/oz; Dec Crude Oil +0.1% at $56.45/brl; Dec Copper +0.1% at $3.09/lb