HomeContributorsFundamental AnalysisAsian Market Update: NZD Falls As RBNZ Signals Neutral Stance

Asian Market Update: NZD Falls As RBNZ Signals Neutral Stance

NZD falls as RBNZ signals neutral stance

Asia Mid-Session Market Update: NZD falls as RBNZ signals neutral stance, calls out market expectations of hikes premature

US Session Highlights

(US) DOE Crude: +13.8M v +2.5Me; Gasoline: -0.9M v +1Me; Distillate: +0.03M v +0.5Me


(US) President Trump order to get rid of 2 regulatory initiatives for each new initiative is challenged in court by environmental group NRDC and others – press

(EU) ECB’s Draghi: ECB will remain accommodative until at least the end of his term, Oct 2019 – France press report of earlier Draghi remarks

US markets on close: Dow -0.2%, S&P500 +0.1%, Nasdaq +0.2%

Best Sector in S&P500: Utilities

Worst Sector in S&P500: Financials

Biggest gainers: MCHP +6.0%, CTSH +5.0%, KSS +4.3%, XRX +4.1%, JWN +4.1%

Biggest losers: AKAM -10.6%, GILD -8.6%, AIZ -6.8%, ICE -4.8%, JEC -3.7%

At the close: VIX 11.5 (0.2pts); Treasuries: 2-yr 1.15% (-2bps), 10-yr 2.35% (-4bps), 30-yr 2.96% (-6bps)

US movers afterhours

PAYC: Reports Q4 $0.18 ex-items v $0.12e, R$87.8M v $86.2Me; extends existing stock repurchase plan; Guides Q1 Rev $114.5-116.5M v $114Me; +10.5% afterhours

IMPV: Reports Q4 $0.32 v $0.03e, R$78.4M v $70.2Me; Guides Q1 -$0.06 to -$0.02 v -$0.10e, R$67-69M v $68Me; +9.7% afterhours

PCMI: Reports Q4 $0.51 v $0.36e, R$586.6M v $578Me; +9.1% afterhours

SCSS: Reports Q4 $0.25 v $0.32e, R$313.4M v $314Me; +6.2% afterhours

WFM: Reports Q1 $0.39 adj v $0.39e, R$4.92B v $4.99Be; Q2 SSS to date tracking -3.2%; -1.5% afterhours

FISV: Reports Q4 $1.16 v $1.16e, R$1.43B v $1.48Be; -2.6% afterhours

QLYS: Reports Q4 $0.23 v $0.18e, R$52.2M v $52.8Me; Guides Q1 $0.17-0.19 v $0.20e, R$52-53M v $54.8Me; -7.1% afterhours

IRBT: Reports Q4 $0.49 v $0.39e, R$212.5M v $206Me; Guides initial FY17 $1.35-1.65 v $1.69e, R$770-785M v $763Me; -9.1% afterhours


(US) Ninth Circuit Court of Appeals will not be issuing ruling on Trump travel ban today – press

(US) Senate confirms Jeff Sessions as the next US Attorney General by 52-47 margin

Asia Key economic data:


(NZ) NEW ZEALAND DEC BUILDING PERMITS M/M: -7.2% V -9.6%PRIOR (2nd straight decline)


(AU) AUSTRALIA DEC HIA NEW HOME SALES M/M: +0.2% V +6.1% PRIOR; 2nd straight increase


(JP) JAPAN JAN M2 MONEY STOCK Y/Y: 4.1% V 4.0%E; M3 MONEY STOCK Y/Y: 3.5% V 3.5%E

(JP) JAPAN DEC CORE MACHINE ORDERS M/M: 6.7% V 3.0%E; Y/Y: 6.7% V 4.5%E

Asia Session Notable Observations, Speakers and Press

Markets stateside as well as in Asia appear to have reached an equilibrium, with sessions of modest losses alternating with those of modest gains; Few macro catalysts are observed, even as bond markets rally continues to put in question the confidence of 3 FOMC rate hikes this year. Investors are now looking forward to Fed Chair Yellen’s Congressional testimony next week as key determinant of near term policy bias.

Fixed income markets had begun to price in the possibility of RBNZ preparing for a rates liftoff after the latest quarterly inflation data returned to target range for the first time in over 2 year. However today’s RBNZ statement, economic projections, and subsequent commentary delivered a squarely neutral assessment. While acknowledging progress on inflation, RBNZ is not convinced the upward pressure can be sustained and also noted elevated uncertainty from external factors. NZD/USD was most volatile among the majors, selling off by 100pips below $0.72.

PBoC has once again skipped its reverse repo operations, calling liquidity conditions ample; Separately, a local press report speculated the central bank will continue to tighten policy, even though economists have suggested that last week’s 10bp hike in reverse repo yields were an adjustment to fundamentals rather then a start of a trend.

Ahead of the high profile Abe-Trump summit tomorrow, Japan PM signaled he is prepared to discuss the currency issues at G20, with local press also calling for more formal framework for cooperation between US and Japan. BOJ Dep Gov Nakaso also noted that while the central bank is prepared to consider raising long-term rates target in the future, momentum behind inflation does not yet justify the shift.


(CN) China Ministry of Commerce (MOFCOM) Spokesperson Sun Jiwen: Urges other countries to drop protectionism

(CN) White House press secretary: Pres Trump sent letter to China Pres Xi; Looking forward to constructive relationship – press

(CN) PBOC may continue tightening of monetary conditions in 2017 – Chinese press


(JP) Japan PM Abe: To suggest to Trump to talk about currency issues at G20 and G7

(JP) Japan PM Abe to propose new cabinet level framework for US-Japan talks on trade, security, and macroeconomic issues – press

(JP) Japan Chief Cabinet Sec Suga: nothing has been decided on US/Japan economic framework

(JP) BOJ Dep Gov Nakaso: Momentum towards price target not yet sufficiently firm; BOJ should consider raising long term rate increase in near future, though momentum toward hitting price goal not yet sufficient

Australia/New Zealand:

(NZ) RBNZ Gov Wheeler: comfortable with a neutral bias, neutral bias was the right one to have at this point; Market a bit ahead of itself in pricing in 2017 rate hike.

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.4%, Hang Seng +0.4%, Shanghai Composite +0.4%, ASX200 +0.2%, Kospi +0.2%

Equity Futures: S&P500 flat; Nasdaq flat; Dax flat; FTSE100 flat

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0675-1.0700; JPY 111.70-112.30; AUD 0.7610-0.7645; NZD 0.7190-0.7280

Apr Gold +0.3% at $1,243/oz; Mar Crude Oil +0.6% at $52.60/brl; Mar Copper +0.3% at $2.67/lb


(CN) PBOC skips reverse repo operations (5th consecutive halt)

SPDR Gold Trust ETF daily holdings rise 5.7 tonnes to 832.7 tonnes; 6th consecutive increase; Highest since Dec 16th

(JP) Japan MoF sells ¥723B in 0.6% (0.6% prior) 30-yr bonds; Avg yield: 0.907% v 0.745% prior; Bid to cover: 3.23x v 3.33x prior

Asia equities/Notables/movers by sector

Consumer discretionary: 751.HK Skyworth Digital +1.8% (Jan result); 2432.JP DeNA Co +1.9% (9-month result); 034230.KR Paradise Co -0.8% (Q4 result)

Consumer staples: 2607.JP Fuji Oil Holdings +5.5% (9-month result); 168.HK Tsingtao Brewery Co +5.3% (Carlsberg to bid stake); RHL.AU Ruralco Holdings +4.1% (ACCC not oppose acquisition)

Financials: 6881.HK China Galaxy Securities Co +1.1% (Jan result); PMV.AU Premier Investments -2.2%; AMP.AU AMP Capital +3.8% (FY16 result)

Industrials: 2238.HK Guangzhou Automobile Group +3.1%, 1958.HK +2.7% BAIC Motor Corp (Jan result); 6448.JP Brother Industries -7.9% (9-month result); 4118.JP Kaneka Corp -11.5% (9-month result); 052690.KR Kepco Engineering & Construction +7.0% (offer to join UK project); 1919.HK COSCO Shipping Co +10.4% (Maersk to be profitable this year); 7202.JP Isuzu Motors -0.2% (9-month result)

Technology: 3436.JP Sumco Corp +6.6% (Q4 result)

Materials: RIO.AU Rio Tinto -0.9% (FY16 result); 3863.JP Nippon Paper Industries -1.5% (9-month result)

Energy: AGL.AU AGL Energy +4.5% (H1 result); 1662.JP Petroleum Exploration +3.6% (9-month result)

Telecom: 035720.KR Kakao Corp +5.6% (Q4 result)

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