Asia Overnight Highlights – 7 November 2011
Connie Tse, Celeste Tay, Fiona Lim
ASIA OUTLOOK: Wall Street failed to find much reprieve as European concerns continued to weigh in Friday’s overnight session. Non-farm payrolls exceeded expectations net of revisions even as the headline Oct figures undershot the market consensus. Alongside this was a surprise fall in the unemployment rate. However, these were insufficient to lift sentiment. Instead, investors fretted over German Chancellor Merkel’s and IMF Chief Lagarde’s comments that after the two-day G20 meeting there was still a lack of commitment to the EFSF. Meanwhile, concerns surrounding Italy mounted as the 10y bond yield climbed as much as 21bp to 6.40%. Players waited cautiously on the sidelines in front of the Greek confidence vote. As it turned out, Papandreou won the vote in the 300-member parliament by 153 votes to 145. The Dow closed -0.51% lower as the SP ended down 0.63%. Over the weekend, the political theatrics continued in Greece as Papandreou scrambled to form a coalition government that would persuade international leaders to unblock fresh funding for Greece. But Greece’s main opposition party was quick to shoot this down with its leader, Samaras, calling for snap elections once again. (FT) As we write late on Sunday, Greek political figures continue to bicker over the formation of a crisis coalition with Papandreou announcing that he will resign as soon as a deal for an interim coalition government is agreed on (CNBC); a senior member from his party has said this could happen as early as Sunday night (European time) (Telegraph).
EUR/USD managed to firm above the 1.3800 mark again on the formation of the Greek coalition government, and talks of the new government aiming to be sworn in and hold a confidence vote within a week. Weekend warning by SNB that it is prepared to take action to weaken its currency also supported the EUR. Choppy EUR and inconclusive news from the Eurozone will continue to dictate the fluctuations in sentiment. We expect USD/Asians to find range-bound trading amid the choppy EUR. On the data front, attention will be on Indonesia’s Q3 GDP coming out this morning, and we expect a reading of 6.45% y/y vs 6.49% y/y previously. Taiwan CPI and trade numbers and be out later in the afternoon. Singapore, Malaysia, India and Philippines are away for holiday.
OVERNIGHT NEWS HIGHLIGHTS
- US: Oct Nonfarm payrolls rise 80k from 158k in Sep vs 95k exp.
- US: Private payrolls increase 104k from 191k in Sep vs 125k exp.
- US: Unemployment rate slips to 9.0% vs 9.1% exp.
- US: Gold spot: 1754.65/oz (-0.52%)
- WTI Crude oil: $ 94.26 (+$0.19 from day before)
- Reuters/Jefferies Commodities Index: 320.44 (+0.13%)
- 10Y UST: 2.033 (-1.96%)
- DJI 11983.2 (-0.51%); SP 1253.2 (-0.63%); Nasdaq 2686.1 (-0.44%)
ASIA NEWS
- Hong Kong: Sustained economic slowdown in Europe and US will inevitably impact Hong Kong’s economic growth, according to Financial Secretary John Tsang; Can’t be optimistic on falling demand from European and American markets.
- South Korea: FinMin Bahk says inflation moderating recently, and sees both downside and upside risks to infla tion.
- Philippines: BSP Governor Amando Tetangco said has policy flexibility to support economic growth amid global uncertainties; Inflation has become less of a concern for emerging market economies including Philippines; Domestic inflation over policy horizon is manageable.
- India: RBI Deputy Governor Anand Sinha said Indian banks’ profit margins may come under pressure because of the decision to free up lenders’ savings rate; nation’s bank need lot of equity to meet Basel III norms.
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