Headlines/Economic Data
General Trend: Asian equity markets trade mixed, energy companies outperform
Chinese cities start to issue 2018 GDP targets: Shanghai and Beijing are both targeting around 6.5% growth
Dollar trades below 110 for first time since Sept: PBoC fixed yuan at multi-year high for 4th straight session
US Dollar (USD) Index moves below 90 for first time since late 2014
Japan Jan Prelim Manufacturing PMI nears 4-year high
Japan Dec exports growth at slowest pace since April 2017, yet monthly export amount hits highest since 2008 (exports to Asia and China hit record)
Japan 2017 Trade Surplus with the US +3.1% y/y (2-year high)
Japan
Nikkei 225 opened -0.4%; closed -0.8%
Topix Electric Appliances Index -1.7% (Fanuc -3% due to report earnings on Friday after the close)
Mega banks trade broadly weaker: Sumitomo Mitsui -2.5%, Mitsubishi UFJ -2.5%, Mizuho Financial -1.5%
TOPIX Real Estate Index +1.1% (tracked Tuesday’s outperformance in S&P500 Real Estate Index)
Nidec [6594.JP] -3% (expected to report earnings after the close)
(JP) JAPAN DEC TRADE BALANCE: ¥359.0B V ¥535.0BE; ADJ ¥86.8B V ¥276.7BE; Exports y/y: 9.3% (13th consecutive rise, slowest growth since April 2017) v 10.0%e; Imports y/y: 14.9% v 12.4%e
(JP) JAPAN JAN PRELIM PMI MANUFACTURING: 54.4 V 54.0 PRIOR
(JP) Japan Trade Union Confederation Chief Kozu: Rising monthly wages will boost consumer spending
(JP) Japan Nov Final Leading Index CI: 108.3 v 108.6 prelim; Coincident Index: 117.9 v 118.1 prelim
(JP) BOJ announcement related to daily bond buying operation: leaves amounts unchanged
(JP) Japan Econ Min Motegi: Believes that start date for Trans-Pacific-Partnership will not change; March 8th is the target date for signing the agreement (after the close)
(JP) Japan Cabinet Office report indicates Japan will not be able to achieve a primary budget surplus until FY27 (2-yrs longer than prior indications) unless it manages to dramatically curb spending – Nikkei
Korea
Kospi opened -0.1%
Banks trade generally lower following gains on Tuesday: Hana Financial -3%, KB Financial -1.3%, Woori -1.6%
LG Household & Health Care [051900.KR] -5.5% (reported FY17 results on Tuesday’s session)
LG Electronics [066570.KR]: -5.5% (Reported final FY17 results after Tuesday’s close; Trade concerns)
LG Display +2% (positive broker commentary following Q4 earnings report and guidance)
(KR) South Korea removed from EU blacklist of tax havens – Korean press
(KR) Main opposition party has called on North Korea to delay military parade – Korean press
(KR) S&P: Corporates in South Korea show improvement in creditworthiness; Hyundai Motors rating faces downgrade pressure due to US market; LG Electronics may be ‘greatly’ impacted by US safeguard issue related to washing machines
Looking Ahead: Q4 Prelim GDP due for release on Thursday
China/Hong Kong
Hang Seng opened -0.1%, Shanghai Composite +0.2%
Hang Seng Info Tech Index -0.9%, Materials -0.7%, Consumer Goods -0.8%, Property/Construction -0.7%, Financials -0.3%; Energy +2.2%
Leshi Internet [300104.CN]: Opens limit down (-10%) after being halted for 9-months
(CN) China said to be prepared to support stocks after trading resumption for shares of Leshi Internet
USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3916 V 6.4009 PRIOR (strongest setting since Dec 4th, 2015)
(CN) China PBOC OMO: Injects CNY220B v CNY170B injected in 7,14 and 63-day reverse repos prior
(CN) China Official: CNY100B in solar subsidies are unpaid as of 2017; To roll out solar subsidy-free pilot projects in 2018
(CN) former PBOC vice gov Zhu: Interest rates are likely to remain unchanged given govt’s current focus on reducing debt levels, and a stable inflation rate – Chinese press
(CN) China MoF sells 3-yr bonds, avg yield 3.56%, bid to cover 2.33x; 7-yr upsized bonds at 3.8592% v 3.91%e, bid to cover 2.51x
Australia/New Zealand
ASX 200 opened flat; closed +0.3%
ASX 200 Energy Index +0.8%, Utilities +0.6%, Financials +0.4%
Santos, STO.AU Reports Q4 Rev $861M v $753M y/y; FY17 sales volumes 83.4Mt (record high)
(AU) Australia Dec Westpac Leading Index M/M: 0.3% v 0.1% prior
(NZ) New Zealand Dec Credit Card Spending M/M: 0.6% v 0.8% prior; Y/Y: 6.3% v 9.1% prior
(NZ) New Zealand government delays law banning foreigners from purchasing property – NZ press
(AU) Australia Treasury is expected to boost its global forecasts in the May budget, due to a surge in confidence across advanced and emerging market economies – AFR
Looking Ahead: New Zealand Q4 CPI to be released on Thursday
Other Asia
(MY) MALAYSIA DEC CPI Y/Y: 3.5% V 3.5%E [**Note: The data is above Malaysia’s 2-3% inflation target for the 12th straight month]
(MY) There is press speculation that Malaysia Central Bank (BNM) may raise interest rates by 25bps at Thursday’s meeting – US financial press
(TW) Taiwan Jan 1-22nd foreign capital flow $3.28B – Taiwan press
UMC Corp [2303.TW]: -1.5%: expected to report Q4 earnings after close
AU Optronics [2409.TW] +3.5% (positive broker commentary)
TSMC [2330.TW] Chairman: Sees negative impact from NT$ gains
Moody’s: Asia high-yield corporate bond covenant quality score declines to weakest level on record
(VN) Vietnam shut main Ho Chi Minh City stock exchange for second day amid technical malfunction
North America
US equities closed mostly higher: Dow -0.1%, S&P500 +0.2%, Nasdaq +0.6%, Russell 2000 +0.1%
S&P500 Real Estate Sector +1.5%, Utilities +1%
Texas Instruments [TXN] Down over 6% afterhours: Reports Q4 $1.09*(ex $0.75 tax expense) v $1.09e, Rev $3.75B v $3.73Be; Guides Q1 $1.01-1.17 (adj) v $1.07e, Rev $3.49-3.79B v $3.64Be
United Continental [UAL]: Down over 4% afterhours Guides initial FY18 $6.50-8.50 v $6.63e; Guides initial FY18 non fuel CASM -1% to 0%; FY18 capacity +4-6% – earnings call comments
(US) Senate confirms Jerome Powell as incoming Fed Chair (as expected)
(US) Fed nominee Goodfreind: transparency could be improved regarding reference rules for monetary policy
(US) White House Econ Adviser Cohn: Trump’s message at Davos will be to invest in America, not that hes withdrawing the US from the global trade scene – press
(US) TREASURY SELLS $26B IN 2-YEAR NOTE AUCTION; DRAWS 2.066%; BID-TO-COVER RATIO: 3.22 V 2.52 PRIOR AND 2.82 AVG OVER THE LAST 12 (first 2-year auction above 2.00% since 2008)
(US) Weekly API Oil Inventories: Crude: +4.8M v -5.1M prior
(US) US AIA Dec Architecture Billings Index: 52.9 v 55.0 prior; New projects inquiry index 61.9 v 61.1 prior
Looking Ahead: US Dec Existing Home Sales due for release, along with Weekly DoE Crude Oil Inventories
Corporate earnings are expected out of companies including Comcast, Discover, Ford, General Dynamics, GE, Las Vegas Sands, SL Green, United
Technologies, Whirlpool
Europe
(UK) Conservative MPs have told PM May that the UK must not be bound by EU rules during the Brexit transition period
(UK) EU Chief Brexit Negotiator Barnier: hope UK will indicate what it wants in Brexit talks by March
(EU) EURO ZONE JAN ADVANCE CONSUMER CONFIDENCE: 1.3 V 0.6E; *(EU) EURO ZONE JAN ADVANCE CONSUMER CONFIDENCE: 1.3 V 0.6E ( Reading is highest since Aug 2000)
Looking Ahead: Euro Zone Prelim Jan Manufacturing and Services PMIs due for release (Euro Zone, France, German); UK Nov Avg Earnings and Unemployment Rate, Dec Claimant Count Change; France Jobseekers data (US session)
Levels as of 01:00ET
Nikkei225 -0.8%, Hang Seng -0.1%; Shanghai Composite +0.3%; ASX200 +0.3%, Kospi -0.0%
Equity Futures: S&P500 +0.0%; Nasdaq100 +0.0%, Dax +0.1%; FTSE100 -0.2%
EUR 1.2335-1.2291; JPY 110.34-109.81; AUD 0.8017-0.7993;NZD 0.7377-0.7349; GBP 1.4049-1.3997
Feb Gold +0.3% at $1,340/oz; Mar Crude Oil +0.0% at $64.45/brl; Mar Copper +0.6% at $3.14/lb
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