Japan's Nikkei soared to a seven-year high and the yen tumbled to its lowest since early 2008 against the dollar this morning, as the Bank of Japan unexpectedly eased monetary policy due to concerns that a decline in oil prices would weigh on consumer prices and delay a shift in sentiment away from deflation.
The BOJ decided to raise its monetary base target to an annual increase of ¥80T yen ($724.5B), from ¥60T-70T.
The Nikkei surged 5.1% to 16,462, its highest since November 2007, while the dollar is up 1.5% to ¥110.84, its highest since January 2008.
Russia and Ukraine sign an agreement the parties say will guarantee the flow of Russian gas exports into Ukraine through the winter, following a long and bitter dispute over payments.
European Union energy chief Guenther Oettinger, who brokered the deal, says "we can guarantee a security of supply over the winter," not only for Ukraine but also for the EU nations closest to the region that stood to suffer should the conflict in Ukraine worsen.
The Japanese Government Pension Investment Fund is the world's largest pension fund with more than $1T in assets. It's no secret the fund's managers are planning to cut holdings of JGBs and boost allocations to domestic equities (among other assets), but the question is how much.
Expectations are for the GPIF to cut its JGB weighting to 40%, but chatter today says the fund plans to go as low as 25%, while ramping its Japanese stock holdings all the way to 25%.
Reuters reported yesterday that the GPIF hasn't waited for its review to be completed and has already cut JGB holdings down to just over half the portfolio, but it's not immediately clear where the fund has reallocated that money.
The central bank had been expected to leave policy unchanged, but instead last night hiked the benchmark Selic rate by 25 bps to 11.25%. The move comes following the re-election of Dilma Rousseff, which rattled Brazilian markets.
"Very well done," says Goldman's Alberto Ramos. "This definitely is a great step forward to rebuild the credibility of the inflation-targeting regime ... This is market friendly."
The Bovespa is higher by 2% in the early going. EWZ +3.2% premarket
In its latest shift away from consumer finance, General Electric (NYSE:GE) is in early-stage talks to sell its 43% stake, likely worth more than $1B, in its South Korean auto-financing and credit-card businesses.
The sale would unwind a partnership that began a decade ago between GE and Hyundai Motor (OTC:HYMLY).
It isn’t exactly clear how much GE will receive from the sale, but it has already received some of its original investment back through dividends.
Visa (NYSE:V) and MasterCard (NYSE:MA) welcomed Beijing's new plan to open up its market for clearing domestic bank card transactions, following the approval from China's State Council.
The move marks the the latest step taken by China this year to open up its financial markets. In August, the Chinese cabinet said it was freeing up the domestic courier market, allowing companies such as FedEx and UPS to establish independent courier operations.
While the statement - an end to QE, retention of the "considerable time" language, chatter about improving employment -wasn't much a surprise, the fact that the dissent came from the dove camp suggests perhaps there was a bit more hawkishness in the conference room than past meetings.
In any case, while stocks and longer-dated rates have a relatively subdued reaction, money is moving into the greenback (UUP +0.7%), with the euro (FXE -0.7%), yen (FXY -0.7%), pound (FXB -0.2%), Swiss franc (FXF -0.6%), loonie (FXC -0.4%), and aussie (FXA -0.6%) all considerably lower than they were 30 minutes ago.
In line with an earlier statement from Moody's saying it is in no rush to decide whether to cut Brazil's rating, newly re-elected President Dilma Roussef affirmed that the country will avoid a downgrade in her second term, and that the economy will recover.
Brazil currently stands two notches into investment-grade zone for Moody's and Fitch, although Standard & Poor's previously cut the government's debt to near-junk level.
Meanwhile, Brazil's central bank will likely keep interest rates steady for a fourth straight time today, holding its ground until Rousseff announces changes to economic policy.
The Westpac MNI China Consumer Sentiment Indicator fell markedly in October from an already weak level, printing 110.9 vs. 113.2 in September, -2% M/M and -9.5% Y/Y. The survey indicates that the anxieties gnawing away at the Chinese consumer through most of this year remain very much in evidence as Q4 opens.
The survey does not augur well for Nov. 11 "Single’s Day" online sales - China’s version of Black Friday.
The results underscore the contrast with economic growth, which is being supported by exports. The domestic side tells a different story.
"I think we'd be crazy not to," says Jim Chanos, still short Brazil, but taking some profits after a near 20% dive in the Bovespa over the last couple of months which may or may not have had its denouement in yesterday's post-election plunge.
Among the individual names Chanos had in the past talked about being short were Petrobas (PBR +4.3%) and Vale (VALE +0.6%), from which the Bovespa is heavily weighted. The two combine to represent about 8% of the assets in the iShares MSCI Brazil Capped ETF (EWZ +5.6%).
"I think a lot of [Rousseff's reelection] is priced in already now," says Chanos.
CME (NASDAQ:CME) Chief Executive Phupinder Gill has expressed interest in buying a stake in South Korea's main exchange operator if it offered to sell some of its shares.
Korea Exchange spokesman Noh Byung-soo announced that he was aware of the remarks but said the exchange had no plan to sell shares.
Korea Exchange is owned by a group comprising dozens of local financial companies but is designated as a public enterprise.
Separately, Korea Exchange and CME announced that the Korea Exchange's U.S. Dollar Futures contract would be hosted AH on the CME Globex electronic trading platform from Dec. 8. The two have been in a partnership agreement since 2009.