Economic Data
(BR) BRAZIL CENTRAL BANK (COPOM) CUTS SELIC TARGET RATE BY 25 BPS TO 7.25% (record low), NOT EXPECTED
(KR) BANK OF KOREA (BOK) CUTS 7-DAY REPO RATE 25BPS TO 2.75%, AS EXPECTED
(AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: +14.5K V +5.0KE (4-month high); UNEMPLOYMENT RATE: 5.4% V 5.3%E (highest since Oct 2010)
(AU) AUSTRALIA OCT CONSUMER INFLATION EXPECTATION: 2.6% V 2.4% PRIOR (3-month high)
(NZ) NEW ZEALAND OCT ANZ CONSUMER CONFIDENCE INDEX Y/Y: -1.3% V -1.9% PRIOR (2nd consecutive decline); ANZ CONSUMER CONFIDENCE: 110.5 V 111.9 PRIOR
(NZ) NEW ZEALAND SEPT FOOD PRICES M/M: -0.9% V +0.1% PRIOR (largest decline in 6 months)
(NZ) NEW ZEALAND SEPT BUSINESS NZ PMI: 48.2 V 47.4 PRIOR (4th consecutive contraction; first rise in 4 months)
(JP) JAPAN SEPT TOKYO AVERAGE OFFICE VACANCIES: 8.9% V 9.2% PRIOR
(JP) JAPAN SEPT BANK LENDING EX-TRUSTS: 1.2% V 1.1% PRIOR; INCL TRUSTS: 1.0% V 0.8% PRIOR (35-month high)
(JP) JAPAN AUG MACHINE ORDERS M/M: -3.3% V -2.3%E (first decline in 3 months); Y/Y: -6.1% V -4.6%E
(KR) SOUTH KOREA SEPT PRODUCER PRICE INDEX (PPI) Y/Y: 1.0% V 0.3% PRIOR (4-month high)
(JP) JAPAN BOJ RELEASES SEPT MONETARY POLICY MINUTES: Japan price trend is weakening; Must consider ways to influence fx rates, and boost inflation expectations
Markets Snapshot (as of 03:45GMT)
Nikkei225 +0.1%
S&P/ASX flat
Kospi -0.3%
Shanghai Composite -0.3%
Hang Seng +0.2%
Dec S&P500 +0.1% at 1,427
Dec gold flat 1,765/oz
Nov Crude Oil +0.3% at $91.56/brl
Notes/Observations
Asian equity markets are trading without conviction despite another round of selling in US hours that saw Dow Industrials post a 2nd day of triple-digit losses. Today's action packed session included a rating agency cut of Spain, two central bank rate decisions, and mixed Aussie employment data, confounding investors willing to see the silver lining through the otherwise bleak tape.
S&P got the ball rolling with a 2-notch cut of Spain to BBB-, its lowest level of investment grade. S&P kept its outlook at Negative, pointing to rising unemployment and national-regional government tensions limiting policy options. EUR/USD quickly sold off some 50 pips all the way below $1.2830 but rebounded late in the day above $1.2860, as traders came to terms with the S&P's catch-up action to bring its rating in line with Moody's. The latter, already rating Spain at lowest investment grade level, remains on deck with its review expected to conclude some time this month.
Brazil Central Bank cut its SELIC target rate by 25bps to new record low 7.25%. The rate cut went against the majority of analysts forecasted COPOM to remain on hold for the first time since it began its policy easing campaign in Aug of 2011, however the central bank also indicated this action would likely be its last for some time.
South Korea cut its 7-day repo rate by 25bps to 2.75% as widely expected after BOK signalled increased focus on growth in its letter to parliament last week. BOK also cut its 2012 and 2013 GDP targets by 0.6pts to 2.4% and 3.2% respectively, and also narrowed its CPI target to 2.5-3.5% from 2.0-4.0% prior for 2013-15 period. The rate decision was not unanimous, however no BOK member called for a 50bp cut.
Aussie dollar received some relief from recent trouble, bouncing some 60pips above 1.0280 after better than expected employment data. Although unemployment rate rose more than expected, analysts attributed the shift to expanding labor force, as participation rate rose 2 ticks up from its multi-month lows. Attention shifts to China September data expected early next week as well as the start of the IMF summit in Tokyo.
Fixed Income/Currencies/Commodities
(JP) Japan MoF sells ¥640.5B in 1.9% 30-yr JGBs; Avg yield: 1.934% v 1.902% prior, bid to cover: 5.10x v 4.46x prior (highest demand since Jan 2011)
(US) API PETROLEUM INVENTORIES CRUDE: +1.65M V +500KE (4th consecutive build); GASOLINE: +2.47M V -500KE; DISTILLATE: -6.2M V -500KE; UTILIZATION: 87.3% V 88.1% W/W
Speakers/Political/In the Papers
(JP) Japan Econ Min Maehara, Fed Chairman Bernanke to meet on Friday, 12th Oct - financial press
(JP) Japan Center for Economic Research (JCER): Japan's July-Sept GDP estimated at -0.31% y/y; Estimate for Real GDP in FY12/13 lowered by 0.37pts to 1.71% - Nikkei News
(CN) China's top four banks' Sept new loans at CNY166B - financial press
(CN) Central Huijin Investment purchased stakes in top 4 Chinese banks overnight and will continue to increase its stake - financial press
(CN) China may name sovereign wealth fund CIC chairman Lou as the head of PBoC - Chinese press
(US) Fed's Fisher (hawkish, non-voter): Short term fiscal fixes will not reduce unemployment; Businesses will not invest in environment of uncertainty
Asia Equities
Hynix 660.KR: May post Q3 operating loss after reporting Q2 profit of KRW22.8B - Korean press
PKX: Signs MOU with Caterpillar to extend cooperation - Korean press
ILU.AU: Reports Q3 Rev A$224.5M v A$532.5M y/y; Sees combined output materially lower y/y
BXB.AU: Reports Q1 Rev $1.43B, +3% y/y; on track to achieve FY13 profit guidance
CTRP: Reached an agreement with hotel chain operator Jumeirah Group to allow web users to book hotel rooms directly online - Shanghai Daily
Fuji Heavy 7270.JP: To double output of center wing boxes for Boeing Co.'s 787 Dreamliner passenger jet to 10 by the end of next year - Nikkei News
US/Europe Equities
RT: Reports Q1 $0.05 v $0.06e, R$332.9M v $335Me
WMT: Guides FY13 Rev $466-475B v $472Be; guides FY14 Rev +5-7% (implies R$489-508B v $495Be) - investor day
AAPL: South Korea High Court said to have halted sales ban on Apple products in Korea - Korean press
GOOG: Chairman Schmidt: Sees over a billion Android devices activated within a year; Would consider a search deal if contacted by Yahoo