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StreetAccount Summary - Asian Market Recap: Nikkei +2.61%, Hang Seng (2.23%), Shanghai Composite (0.09%) as of 03:10 ET

Nov 06 ,2024

• Synopsis:

  • Asia equities closed mixed in a low-liquidity day while markets generally following 'Trump trade' moves with currencies weakening across the region as the dollar spiked, and regional sovereign yields followed Treasuries higher. Among equity benchmarks, Japan's Nikkei and Topix gained the most as the yen weakened while there were solid gains for India, Australia and Taiwan. The Kospi sank as the won weakened, while 'dollar-exposed' Jakarta and Manila also fell sharply. Greater China saw mainland stocks hold up for most of the day before a dip into the close, while the Hang Seng fell sharply, led by IT and internet stocks. Among other asset classes, crude oil contracts slid, precious metals moved lower on the dollar move, while copper and iron ore fell sharply. US futures indicate a higher open, European markets turned around negative futures into strong early gains. Cryptocurrencies rallying with bitcoin reaching new record high.

  • Asia equities responded quickly to indications Trump was set to pick up enough votes to win following early poll numbers from Florida, then Georgia, resulting in sharp spikes in Treasury yields and the US dollar. This weighed on Asia currencies significantly throughout the day with several reports of central banks intervening to support local currencies. But in equity markets only South Korea's Kospi suffered as a direct result, as Japan's benchmarks rallied strongly on the weaker yen. The Hang Seng fell sharply but has only pared early-week gains on fears the Trump Presidency will increase anti-China rhetoric and trade tariffs. Mainland China markets supported early on before they capitulated into the close.

  • In other developments, Malaysia's central bank held rates steady but also warned the US election outcome could increase ringgit volatility. New Zealand Q3 employment data showed jobs contracted while unemployment rate rose to its highest since Q4 2020, reinforcing expectations of 50 bp RBNZ rate cut in November. BOJ September minutes showed members saw more time to evaluate fallout from preceding overseas and market developments. October Japan final services PMI showed activity shrunk from prior month while India services activity accelerated.

  • Toyota Motor (7203.JP) posted its first quarterly profit decline in more than two years as weaker sales and production in Japan and the US weighed. Xpeng (9868.HK) unveiled its extended hybrid range technology as it bets on more versatile autos away from pure EVs. Keppel (BN4.SP) is to buy a Japanese AI-ready data center being developed by Mitsui Fudosan (8801.JP) as it looks to expand its data center funds under management.

• Digest:

  • Asia sovereign yields rise, currencies sink, equities mixed post US election:

    • Asia financial assets reflecting regional 'Trump trade' moves on probable Presidential election win for Donald Trump, capture of Senate by Republicans. JGB yields higher to track Treasury yields, Singapore sovereign yields notably higher, CGBs flat. US dollar spiked sharply just as first Florida results showed early momentum to Republicans; all Asia currencies lower; won seeing most severe weakening but AUD, yen, yuan all under pressure. Reports of intervention by PBOC to arrest yuan's fall, Malaysia and Indonesia central banks said they were on standby (Bloomberg, Reuters). Equities mixed: Nikkei and Topix substantially higher, India and Taiwan also seeing notable gains. Hang Seng down sharply as internet and IT stocks underperform, mainland China turning negative into close. Analysts expect Trump presidency would accelerate trade tariffs against China, could possibly influence NPC's weighting of fiscal support due later this week. Analysts urged caution on moves amid thin liquidity in Asia trading (Bloomberg).

  • Trump declares victory, set to become 47th President:

    • Donald Trump declared victory in US presidential race as markets closed in Asia Wednesday, formal declaration by AP expected soon. Early takeaways show Trump able to pick up votes in rural areas, Latinos, younger men; Harris unable to make up delta with pick up in older voters, women. Market moves most notable in FX with dollar rising most since Mar-2020 to its highest since early July. Dollar strongest against potential Trump tariff targets such as peso, yuan and euro. Bond markets under pressure with Treasury yield curve bear steepening, 10Y yield hit four-month high. Equity futures moving higher with S&P 500 and Nasdaq contracts up around 1%. Bitcoin up around 6% to record high. Market swings come as US election results continue to filter through with Trump leading Harris in Electoral College count, 267-224 according to AP. Agency declared crucial swing state Pennsylvania for Trump, also ahead in Wisconsin and Michigan. GOP also set to retake control of Senate after capturing their 51st seat (Politico). House of Representatives yet to be called.

  • BOJ discusses disclosure of individual rate projections, agrees to bolster information on underlying inflation:

    • Minutes for the September MPM added little to the main points on economic and policy assessments conveyed in the earlier Summary of Opinions. US macro risks were the primary concern following the weak payroll print in August. Preceding yen rebound alleviated upside risk to inflation and afforded more time to evaluate. Main new development came in discussions about market communications. Exploring ideas to enhance clarity, one member suggested disclosing individual policy rate projections (current dot plots only show MPC's risk balance on central GDP/core CPI forecasts). But this idea was generally played down as another member pointed out that an inevitably wide range of projections would unlikely lead to effective communication. Other suggestions included provision of information about underlying inflation (BOJ has so far avoided specifying any one measure), which was accepted by consensus. Another reaffirmed the current strategy of conveying their assessment of changes in the likelihood of realizing the baseline outlook scenario, as this is comparable with central banks in US and Europe.

  • Malaysia central bank keeps benchmark rate unchanged:

    • Bank Negara Malaysia (BNM) kept policy rate on hold at 3.0% as expected amid positive economic backdrop and steady inflation. BNM said stance remains supportive of economy, inflation and growth expectations remain in line with previous view. Added headline and core inflation at modest 1.8% YTD and expects price rises to remain manageable as global cost conditions, domestic demand pressures ease. Noted ringgit performance continued to be driven by external forces, said outcome of US election could heighten volatility into 2025 in warning it was bracing for further forex volatility. MPC said to remain vigilant on developments and will ensure policy stance remains conducive to sustainable economic growth. Decision by BNM as expected with Malaysia government expecting FY 2025 growth trajectory to be 4.5-5.5% range with additional support measures likely to emerge from 2025 government budget rather than monetary levers.

  • India services activity accelerates in October:

    • HSBC India final services PMI rose to 58.5 in October from September's ten-month low of 57.7, also above flash reading of 57.9. Service providers cited healthy customer demand domestically and abroad, which supported upturn in business activity. There was a recovery in growth of new export sales to clients from around the world. October saw marked expansion in services employment, quickest in 26 months. Outstanding business volumes increased for 34th straight month with rate of accumulation quickening to highest since July. Input price inflation rose to three-month high with greater food and wage costs, though overall rate still below long-run average. Companies continued to lift selling prices with rate of charge inflation rising to strongest since July. Business sentiment receded slightly from September but remained positive. HSBC India Composite PMI rose to 59.1 from September's 58.3 amid stronger growth at both manufacturers and service providers.

  • Notable Gainers:

    • +5.8% 7974.JP (Nintendo): reports H1 earnings and lowers FY guidance for revenue and operating income; most analysts not surprised by weak results; some highlight solid sequential growth in software and hardware sales volume amid final phase of current console cycle

    • +2.0% 7203.JP (Toyota Motor): reports Q2 results; confirms FY guidance

    • +1.8% 030200.KS (KT): issues 2028 targets including consolidated ROE 9-10%, plans a buyback and intends to cancel total KRW1T of treasury shares over FY25-28

    • +1.7% 017670.KS (SK Telecom): reports Q3 results with operating profit and revenue ahead of StreetAccount estimates

    • +0.7% 543904.IN (Mankind Pharma): reports Q2 results ahead of FactSet estimates

    • +0.4% 323410.KS (KakaoBank): reports Q3 earnings with net income ahead of FactSet estimates

  • Notable Decliners:

    • -16.0% 4385.JP (Mercari): reports Q1 earnings with revenue and core operating income below FactSet estimates

    • -8.3% 011790.KS (SKC Co.): reports Q3 earnings with revenue and operating profit below FactSet estimates

    • -7.8% 500188.IN (Hindustan Zinc): government to sell up-to 2.50% stake in Hindustan Zinc at floor price INR505/share

    • -2.1% 010130.KS (Korea Zinc Co.): South Korea's FSS reportedly suspends Korea Zinc's share sale plan

    • -0.6% 4689.JP (LY Corp.): reports Q2 results; revenue and adjusted EBITDA miss StreetAccount estimates

    • -0.4% 4902.JP (Konica Minolta): reports Q2 results with operating profit below FactSet estimates

• Data:

  • Economic:

    • Japan

      • October final services PMI 49.7 vs preliminary 49.3 and 53.1 in prior month

        • Composite PMI 49.6 vs preliminary 49.4 and 52.0 in prior month

    • New Zealand Q3

      • Q3 employment (0.5%) q/q vs consensus (0.4%) and revised +0.2% in Q2

        • Unemployment rate 4.8% vs consensus 5.0% and 4.6% in Q2

    • India October

      • Final Services PMI 58.5 vs consensus 58.3 and 57.7 in prior month

        • Composite PMI 59.1 vs 58.3 in prior month

  • Markets:

    • Nikkei: 1,005.77 or +2.61% to 39480.67

    • Hang Seng: (468.59) or (2.23%) to 20538.38

    • Shanghai Composite: (3.18) or (0.09%) to 3383.81

    • Shenzhen Composite: 2.01 or +0.10% to 2049.78

    • ASX200: 67.70 or +0.83% to 8199.50

    • KOSPI: (13.37) or (0.52%) to 2563.51

    • SENSEX: 784.66 or +0.99% to 80261.30

  • Currencies:

    • $-¥: +2.37 or +1.56% to 153.9930

    • $-KRW: +15.56 or +1.13% to 1394.8500

    • A$-$: (0.01) or (1.22%) to 0.6553

    • $-INR: +0.12 or +0.14% to 84.2309

    • $-CNY: +0.05 or +0.77% to 7.1600