New Zealand GDP contracts on waning govt spending and exports

Asian Market Update: New Zealand GDP contracts on waning govt spending and exports; China may cap new loans at more frequent intervals

Economic Data

- (NZ) NEW ZEALAND Q3 GDP Q/Q: -0.2% V 0.1%E (first contraction since Q1 of 2009); Y/Y: 1.5% V 1.8%E

- (SI) SINGAPORE NOV CPI M/M: 0.3% V 0.4%E; Y/Y: 3.8% V 3.8%E

- (PH) Philippines OCT Trade Balance: -$112M v $751M prior

Markets Snapshot (as of 12:00amET)

- Nikkei225 closed

- S&P/ASX +0.4%

- Kospi -0.3%

- Taiex +0.4%

- Shanghai Composite -0.2%

- Hang Seng +0.2%

- Mar S&P Futures +0.1% at 1,255

- Feb Gold +0.1% $1,388/oz

- Feb Crude oil +0.2% $90.89/brl

- Mar Copper -0.3% at $4.26

Overview/Top Headlines

- Asian equity markets are trading mixed despite yet another positive session on Wall St., where S&P500 finished in the green all three days this week. Australia is leading the gainers with positive sentiment stemming from M&A in the mining sector as Rio Tinto boosted its offer for Riversdale to A$3.9B from A$3.5B speculated in the press. China is once again the weakest regional index however, shedding about 0.2% on Chinese press report the central bank may monitor new Yuan loans as frequently as on a monthly basis.A separate report indicated state planner NDRC will recommend that 2011 new yuan loans target remains the same as in 2010 at CNY7.5T.
Korea's Kospi was also slightly weaker on reports today's military drills by the South will take place within 33km of the border with the North.

- In currencies, the dollar was softer across the board amid USD-long position squaring going into the holiday season. EUR/USD rose about 40 pips above $1.3130, helped by reports the Greek parliament approved its 2011 budget with a new deficit target of 7.4% of GDP vs 9.4% in 2010. Likewise, Cable rose about 50 pips to $1.5430, paring overnight weakness following downward revisions to UK GDP outlook. BOE's Fisher told UK Telegraph the risk of deflation in UK has diminished - further supporting Sterling. In commodity majors, AUD saw a 6-week high on the greenback above $1.0030 while NZD/USD recouped early session weakness onq/q GDP contraction in the Q3 - the first since Q1 of 2009. GDP components revealed the biggest rates of q/q decline in govt spending and exports, though residential building also showed its first drop since 2009. Kiwi dollar initially fell below $0.74 before rising as high as 0.7470 late in the day.

Speakers/Geopolitical/In the press

- Asia Development Bank (ADB) chief Kuroda: Asia-Pacific region growth to slow to 7.3% in 2011 from 8.6% in 2010; Private-sector demand growth is still solid - Nikkei News interview

- (UK) BOE's Fisher: Risk of deflation in UK has diminished; Smaller chance there will be a need to restart QE - Telegraph interview

Equities

- RIO: Makes A$3.9B offer for Riversdale (A$16/shr; above A$3.5B speculated by the press on Dec 20th)

- HPQ: Raised Q1 notebook shipment target by 10% to 9.4-9.6M units from 8.5-8.9M units prior - DigiTimes citing sources

- Hyundai Heavy: To set up a solar and wind power energy division - Korean press

- Hyundai Motor: May become prime bidder for Hyundai Engineering & Construction Co - Korean press

- GILD: Terminates phase III clinical trial of Ambrisentan in patients with Idiopathic Pulmonary Fibrosis; -1.8% afterhours

- BBBY: Reports Q3 $0.74 v $0.66e, R$2.2B v $2.1Be; Board authorizes new $2B share repurchase program (about 16% of market cap); +6.6% afterhours

- MU: Reports Q1 $0.15 v $0.28e, R$2.25B v $2.4Be; -3.5% afterhours

FX/Fixed Income/Commodities

- (CH) PBoC sells 3-month bills at 1.8131% - unchanged for 6th consecutive week

- (CH) PBoC sets yuan mid point at 6.6466 v 6.6461 prior close (strongest Yuan setting since Nov 21st)

- (KS) Bank of Korea (BOK) has lowered the ceiling on credit facility for smaller companies by KRW1T to KRW7.5T - Korean press

https://www.tradethenews.com