Japan Tankan survey sees first decline in 7 quarters

Asian Market Update: Japan Tankan survey sees first decline in 7 quarters, Dollar spikes higher on Moody's Spain Outlook cut

Economic Data

(JP) JAPAN Q4 TANKAN LARGE MANUFACTURERS INDEX: 5 V 3E (first decline in 7 quarters); LARGE MANUF OUTLOOK: -2 V 0E

(JP) JAPAN OCT TERTIARY INDUSTRY INDEX M/M: 0.5% V 0.2%E (3-month high) 

(CH) CHINA NOV ACTUAL FDI Y/Y: 38.2% V 7.9% PRIOR; YTD Y/Y FDI: 17.7% v 15.7% PRIOR (3-month high)

(CH) CHINA OCT CONFERENCE BOARD LEADING ECONOMIC INDEX: 0.9% V 0.6% PRIOR (6-month high)

(AU) AUSTRALIA NOV NEW MOTOR VEHICLE SALES M/M: +0.2% V -0.5% PRIOR; Y/Y: -0.9% V 3.4% PRIOR

(AU) AUSTRALIA DEC DEWR SKILLED VACANCIES M/M: -1.0% V -1.3% PRIOR (AU) AUSTRALIA DEC WESTPAC CONSUMER CONFIDENCE M/M: +0.2% V -5.3% PRIOR; CONFIDENCE INDEX: 111.0 V 110.7 PRIOR

(KS) SOUTH KOREA NOV UNEMPLOYMENT RATE: 3.2% V 3.6% PRIOR (6-month low) (SI) SINGAPORE FINAL Q3 UNEMPLOYMENT RATE 2.1% V 2.1% PRELIM

(SI) SINGAPORE OCT RETAIL SALES M/M: 0.9% V -2.4% PRIOR; Y/Y: -2.8% V 0.3% PRIOR; EX-AUTO:5.3% V 5.3% PRIOR

(PH) PHILIPPINES OCT UNEMPLOYMENT RATE: 7.1% V 6.9% PRIOR 

Markets Snapshot (as of 12:00amET)

- Nikkei225 flat

- S&P/ASX -0.2%

- Kospi flat

- Taiex flat

- Shanghai Composite -0.1%

- Hang Seng -0.7%

- Dec S&P Futures -0.1% at 1,240

- Feb Gold -0.5% $1,397/oz

- Jan Crude oil -0.4% $87.91/brl

- Mar Copper -0.2% at $4.19 

Overview/Top Headlines

- Asian equity markets are trading mixed to negative, tracking yet another late-session profit-taking in the US. Commentary in the FOMC decision was widely perceived as leaning toward the dovish side of the scale, remaining concerned about high unemployment, modest income growth, lower housing wealth, and tight credit conditions. In turn, the US treasury market continued to defy perceived Fed commitment to complete the $600B QE2 program, as hyperinflation hawks helped the 10-yr yield test a fresh 7-month high above 3.50%. Likewise, the greenback saw moderate gains in the wake of FOMC and on accelerated selloff in US debt. Furthermore,greenback gains were helped by a Moody's revision in Spain outlook to Negative, sending EUR/USD below 1.3320, GBP/USD below 1.5730 and USD/JPY above ¥83.80. In commodity majors, USD strength took AUD as low as $0.9930, while USD/CAD rose to 1.0090.

- Economic data was highlighted by fresh signs the recovery in Japan's manufacturing sector is slowing. Q4 Tankan fell for the first time in nearly two years and Outlook turned further into contraction territory - the lowest level since Q1. In China, a steep rise in November foreign direct inflows (FDI) seem to justify a rate hold by the PBoC. China Ministry of Commerce (MOFCOM) Spokesman Yao Jian remarked that total inbound FDI could reach $100B in 2010. Separately, a PBoC survey revealed only about 50% of bankers polled anticipate key policy rates rising in Q1 of 2011.

Speakers/In the press

- (EU) George Soros: Irish government to be elected next spring is bound to repudiate the current arrangements

- (CH) According to PBoC Q4 survey, about 50% of bankers anticipate key policy rates rising in Q1 of 2011

- (JP) Bank of Japan (BOJ) to start buying about ¥450B in ETFs and ¥50B in REITs as part of previously announced ¥5T asset-purchase program as early as today - Nikkei News 

Geopolitical

- (US) Senate to hold formal vote on passage of tax cut legislation on Wednesday

- (KS) According to South Korean press, North Korea may be working on an underground excavation that could be preparation for a new nuclear test

Equities

- BRCM: Raises Q4 Rev to top end of prior range to approx $1.9B v $1.9Be; Reduces Q4 margin guidance (guided R$1.8-1.9B v $1.8Be on Oct 26th); Flat afterhours

- ADSK: Increases Share Repurchase Program Authorization by 20M shares (about 9% of shares outstanding); +0.8% afterhours

- TM: Union confederation representing about 322K workers not expected to seek a pay hike - Nikkei News

- Westpac: Chairman: Economic activity and business investment in Australia on the rise 

FX/Fixed Income/Commodities

- API PETROLEUM INVENTORIES: CRUDE: -1.44M V -2.5ME; GASOLINE: +2.41M V +2ME; DISTILLATE: +1.95M V -500KE; UTILIZATION: 86.1% V 86.7%E

- SPDR Gold Trust daily holdings fall by 3.0 tons to 1,286.8 tons

- Large manufacturers see USD/JPY averaging ¥86.47 in FY10/11. That is the lowest level in survey history.

- (BR) S&P affirms Brazil BBB- rating; Outlook remains stable

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