Asian Bourses Have Been Lifted by the Improved Sentiment Globally
Good Morning CMT
Asian stock markets are mixed on Tuesday following the positive lead from Wall Street and the softness in crude oil prices. The South Korean market is declining after data showed that economic growth slowed in the third quarter. The Australian market advanced, with higher metal prices and the positive cues from Wall Street lifting investor sentiment. Banks are among the leading gainers.
In late-morning trades, the benchmark S&P/ASX 200 Index is adding 34.80 points or 0.64 percent to 5,443.30, off a high of 5,455.70 earlier. The broader All Ordinaries Index is up 32.60 points or 0.59 percent to 5,521.70.
• USD/CAD fell by over a point in the wake of comments from Bank of Canada Governor Poloz downplaying the need for lower rates before later clarifying his statement
• Looking ahead, highlights include German Ifo Business Climate, BoE's Carney and ECB's Draghi
Asian bourses have been lifted by the improved sentiment globally following the latest batch of firm earnings, which looks set to continue to dictate price action with Apple due to report later today. Nikkei 225 (+0.7%) is trading with modest gains, while the index has also supported by the weaker JPY. ASX 200 (+0.6%) follows suit with shares paring yesterday’s healthcare triggered losses while Chinese markets are indecisive with Shanghai Comp (-0.1%) and Hang Seng (-0.1%) down on mild profit taking after yesterday’s outperformance which saw the mainland index print 2-month highs. KOSPI (-0.5%) underperformed on the back of lower than prior Q3 prelim GDP figures, which comes despite beating expectations. Japanese bond yields continued to flatten across the curve, with outperformance yet again in the long end, with JGB’s tracking higher post the firm 20-yr auction.
Peoples Bank of China injected CNY 115bln in 7-day reverse repos, CNY 85bln in 14-day reverse repos, CNY 35bln in 28-day reverse repos.
Peoples Bank of China set mid-point at 6.7744 (Prev. 6.7690).
South Korean GDP (Q3 P) Q/Q 0.7% vs. Exp. 0.6% (Prev. 0.8%), Y/Y 2.7% vs. Exp. 2.6% (Prev. 3.3%).
EUROPE & UNITED KINGDOM
ECB's Nowotny (Neutral) has stated that asset scarcity is a concern in regards to QE.
CAD stole the limelight amid a backdrop of comments from Bank of Canada Gov. Poloz in parliament, in which he stated that “fiscal stimulus eases pressure for lower rates” and that the “best plan is to wait 18-months”, which saw CAD strengthen by over a point against the greenback, with the move exacerbated as USD/CAD tripped stops below 1.3300. However, the majority of the move was later pared after Poloz clarified that the comment regarding the best plan of waiting 18-months was in reference to the output gap and not monetary policy. The Peoples Bank of China yet again set a softer fix in light of the offshore yuan (CNH) hitting a record low against the USD. Firm commodity buying in China where Dalian iron ore hit limit up, consequently underpinned the gains in AUD which continued to hold above 0.7600.
Royal Bank New Zealand is to begin publishing forecasts for OCR rate vs. current forecast of 90-day bill rate, in order to provide greater transparency in regards to monetary policy and will be first implemented at the Nov 10th meeting.
Copper prices continued to track higher having tripped above intra-day highs, with support coming from firm commodity buying in China where Dalian iron ore hit limit up, while much of the advances in copper were aided by bargain buying after yesterday saw copper prices post its first daily gain in 2 weeks. WTI and Brent crude futures saw a rather subdued session in Asia with participant’s attention turning towards tonight’s API crude oil inventory report. Similarly, gold (+0.2%) prices were also flat with little in the way to instigate significant price action.
Analysts at Goldman Sachs states that the weakness in the CNY may lead to Chinese gold demand to increase.
Fed's Evans (Non-voter, Dovish) said that 3 US rate hikes are appropriate between now and the end of 2017, while he also commented that inflation is too low and as such the pace of rate hikes should be tied to the progress of achieving the inflation goal. (Newswires)
Fed watcher Hilsenrath stated that the Fed are likely to stand pat in November and that challenge will be how strongly they will signal a December move.
CNN/ORC poll showed Clinton ahead at 49% vs. 44% for Trump.