HomeContributorsFundamental AnalysisAsian Market Update: Japan GDP Maintains Growth Trajectory

Asian Market Update: Japan GDP Maintains Growth Trajectory

Japan GDP maintains growth trajectory

Asia Mid-Session Market Update: Trump-Abe summit marred by North Korea missile launch; Japan GDP maintains growth trajectory

Friday US markets on close: Dow +0.5%, S&P500 +0.4%, Nasdaq +0.3%

Best Sector in S&P500: Materials

Worst Sector in S&P500: Consumer Staples

Biggest gainers: ATVI +18.9%; CBG +7.7%; NWSA +7.3%

Biggest losers: CERN -4.4%; TDC -3.2%; WU -3.1%

At the close: VIX 10.9 (-pts); Treasuries: 2-yr 1.21% (flat), 10-yr 2.41% (+1bps), 30-yr 3.01% (flat)

Weekend US/EU Corporate Headlines

SAZ.DE: Private equity group Cinven makes €3.6B takeover offer or ~€58/shr (17% premium to Fri close) – press


(US) White House advisor Stephen Miller: Administration is considering different options after immigration ban decision in the appeals court, including drafting a new executive order – press

(ES) Spain PM Rajoy has been reelected as the leader of the ruling conservative Popular Party for the 4th term – press

(MX) Approval rating for Mexico’s left-wing National Regeneration Movement party leader López Obrador has risen 4pts since the US election give his vocal opposition to President Trump – press

Key economic data:

(JP) JAPAN PRELIM Q4 GDP Q/Q: 0.2% V 0.3%E; Y/Y: 1.0% V 1.1%E


Asia Session Notable Observations, Speakers and Press

Asian equity markets remaining bid despite the geopolitical concerns and uncertainty regarding US policy. Sentiment continued to reverberate from the reflation "Trump-trade" persisting in the US session on Friday and pushing indices to record highs. Lift in commodity prices such as new 2-year high in Dalian iron ore has buoyed miners in Australia, while a 2-week high in USD/JPY above ¥114 is supporting Japan’s export-rich market.

Pro-growth business and tax agenda of US Pres Trump is once again overshadowing other factors. Trump met with Japan PM Abe over the weekend, pledging commitment in joint defense and investment in Japan business partnership, hinting he will announce big news on taxes and other industry-supportive changes in the near term.

Another missile launch by North Korea on Sunday has not deterred buyers. This is the first launch during the Trump administration, and thus far he has only stated that US stands to defend Japan 100%. North Korea’s state press KCNA announced the test of ballistic missile was successful, while South Korea defense officials said the missile flew 500km before falling into the sea though also acknowledging this was an improved version of the last test. KCNA also stated that the missile type launched on Sunday would be capable of carrying a nuclear warhead.

Japan Q4 preliminary GDP was a decimal shy of consensus but roughly on par with the growth rates reported in Q3. Key components showed flat Private Consumption v 0.3% prior, though Japan Econ Min attributed the slowdown to rising food prices. In contrast, CAPEX was a bright spot, growing 0.9% after a contraction of -0.4% in Q3.

Attention this week turns to Fed Chair Yellen semiannual testimony in Congress, and investors will look for more clues on how probable are the expectations of a March rate hike. Recall the last FOMC decision has dented those probabilities, producing a bounce in US treasuries. Part of the uncertainty lies with the fiscal side of the US economy, and whether President Trump’s bold agenda will nudge the purse strings of Republican controlled Congress. Over the weekend, Fed vice chair Fischer echoed as much, stating that there is significant uncertainty about what Congress and the Administration will do with fiscal policy.


(CN) Mitsubishi UFJ analyst: PBoC is "trying to juggle too many balls" given all of its various policy tools – press

(CN) China FX regulator SAFE chief Pan: will continue supporting opening of financial markets – Chinese press

(CN) China state researcher: PBoC should step up risk controls in 2017 – Chinese press

(CN) Schedules for approval of 3rd batch of Free Trade Zones (FTZ) have been submitted to central govt; Expected to be launched soon – Chinese press


(JP) Japan Econ Min Ishihara: No change to view of Japan in moderate recovery

(JP) Japan Chief Cabinet Sec Suga: Important that US and Japan firmly ally on North Korea; urge China to take constructive measures on North Korea

Australia/New Zealand:

(AU) RBA Gov Lowe: Hard to say that exchange rate is too high – AFR (update)

(NZ) ANZ: New Zealand housing shortage estimated at about 60K units – NZ press

Asian Equity Indices/Futures (23:00ET)

Nikkei +0.6%, Hang Seng +0.5%, Shanghai Composite +0.6%, ASX200 +0.7%, Kospi flat

Equity Futures: S&P500 +0.2%; Nasdaq +0.2%, Dax +0.3%, FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (23:00ET)

EUR 1.0610-1.0635; JPY 113.45-114.15; AUD 0.7655-0.7680; NZD 0.7180-0.7210; GBP 1.2465-1.2495

Apr Gold -0.4% at 1,231/oz; Mar Crude Oil -0.1% at $53.80/brl; Mar Copper +0.7% at $2.80/lb

GLD SPDR Gold Trust ETF daily holdings rise 4.1 tonnes to 836.7 tonnes; 7th consecutive increase; Highest since Dec 16th

(CN) PBOC to inject combined CNY100B v CNY50B on Feb 2nd in 7-day, 14-day and 28-day reverse repos (1st injection after 6 consecutive halts)

(CN) PBOC SETS YUAN MID POINT AT 6.8898 V 6.8819 PRIOR; 2nd straight weaker setting; weakest CNY setting since Jan 13th

(AU) Australia MoF sells A$300M in 4.5% 2033 bonds; avg yield 3.164%; bid-to-cover 3.42x

Asia equities/Notables/movers


AMC.AU Amcor +4.5% (H1 result)

AZJ.AU Aurizon +3.6% (H1 result)

JBH.AU JB Hi-Fi +2.8% (H1 result)

OZL.AU Oz Minerals +2.8% (raised at Morgan Stanley)

BHP.AU +2.3%, RIO.AU +3.4% (iron ore price at 2-year high)

NCM.AU Newcrest Mining +1.0% (H1 result)

ANN.AU Ansell Ltd -2.3% (H1 result)

Hong Kong

175.HK Geely Auto +6.0%; 494.HK Li& Fung -3.2% (Geely replace Li&Fung in Hang Seng)

1098.HK Road King Infrastructure Limited +4.9% (profit alert)

337.HK Greenland Hong Kong +1.6% (Jan sales)

1628.HK Yuzhou Properties Company -1.1% (Jan sales)

434.HK Boyaa Interactive -1.4% (profit warning)


7312.JP Takata +8.0% (9-month result)

1605.JP Inpex +5.9% (9-month result)

6502.JP Toshiba +2.1% (9-month result speculation)

9432.JP Nippon Telegraph And Telephone Corp -1.8% (9-month results)

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