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CMC Markets – Evening Update 14/11/12

By David Fiander
Equities Risk Manager
CMC Markets Singapore

Asian investors were cautious about taking on new risk positions today except for a little bit of bottom-picking in assets that were sold off heavily yesterday. Without any major economic data to guide decision making investors have been happy to ride the waves of momentum while keeping an ever cautious eye on Greece’s debt sustainability and rhetoric around the US Fiscal Cliff.

Japan’s Nikkei managed to finish marginally in the black today as it broke its run of 7 straight losing
days. The Index finished up 0.04% with shares in T.V manufacturer Sharp jumping by as much as 10% after reports that potential investors have come to the table to help the stricken company.

Report also came out today that Toyota will have to recall 2.77 million vehicles globally due to technical issues with their steering and water pump systems, the stock traded down 0.8%. Australia’s ASX 200 index finished modestly higher, up 0.2%, as the market bounced off its 7 week lows mostly on opportunistic value buys.

Financial were among the top preforming sectors today, gaining 0.6%. Hong Kong’s Hang Seng rose by 0.8% as financial also had a strong day. Shares in HSBC and China Construction Bank added more than 1% each.

The local Singapore market was the exception to the rule today as it traded down 0.6% despite all the other Asian regions posting gains. The big talking point today was about commodities trader Noble Group as the stock dropped by more than 8% during today’s session, the falls came on the back of news that the company’s Vice Chairman is looking to sell up to 225 Million shares in the company.

Share in Genting also dropped today after brokers cut their price target on the company; these re-ratings coming after the company reported a 19% drop in earnings for its 3rd Quarter.

Also reporting today was telecommunications company Singtel, the company announced a fall of 1.6% in 3rd quarter earnings leading the stock to trade down by as much as 1.3%.

In Forex news the Yen has been one of the biggest movers today as the dollar gained more than 0.5% on talk that Prime Minister Noda could dissolve the lower house this week leading to the possibility of an election next month and a new government with more propensity towards stimulus.

Gold traded relatively flat during the Asian session after a bumpy rise overnight. It is currently sitting
at 1,727/oz.

On the local front we have Retail sales data due out tomorrow with expectations that a monthly reading of 1.4% for September will bring the year on year reading up to 3.9%. On Friday we will get the final reading on inflation for the 3rd quarter and a reading of -2.9% is expected to take the yearly growth rates down to on 0.9%.

Shortly after this we will see the reading of Non-oil domestic exports which is expected to return a positive reading of 3.1% for October after a negative reading in the prior survey.

Looking at other economic data due this week we have a bit out of Europe and the US. Tonight we have unemployment data due out of the UK with the jobless rate expected to remain unchanged at 7.9% while later we will see the US readings on PPI and Retail Sales as well as the minutes from the most recent FOMC meeting.

Tomorrow night we will see preliminary 3rd quarter GDP readings out of Germany and France with both expected to show little or no growth. Later that night we will get the November monthly report from the ECB but we don’t expect anything out of the ordinary as they prefer words to weapons.

After the monthly report we will get a bevy of data with the Eurozone 3rd quarter actual reading of GDP expecting to show a contraction of -0.6% year on year while a modest monthly inflation reading of 0.2% is expecting to bring the year on year CPI reading to 2.5%.

The US reading of inflation is due out later that night and is expected to come in at 0.1% showing there is still plenty of room for stimulus if the US can find any more ammunition among their arsenal.