General Trend:
- Telecom index outperforms in Shanghai
- Heavily weighed companies decline on the Nikkei: Fast Retailing drops ahead of earnings report, Softbank declines over 2%
- Financials decline in Australia, BHP weighed down by ex-dividend
- Oil Futures pare some of the recent gains as equities decline
- USD/CNY declines below 6.80 for the first time since Aug, Yuan fixed stronger
- China DEC inflation data misses ests, little impact on the markets
- China car sales for the year fall for the first time in 20-yrs
- China President Xi and North Korea Leader Kim reach joint agreement to increase cooperation between the two countries; China supports N.Korea/US summit and resolution through dialogue
- The partial US government shutdown is approaching the record 21 days
- Fed Chairman Powell is expected to speak during the NY afternoon on Thursday
- Australia retail sales due for release on Friday
Headlines/Economic Data
Japan
- Nikkei 225 opened -0.8%
- (JP) Japan Investors Weekly Net Buying of Foreign Bonds: -¥1.0T v -¥312.2B prior; Foreign Buying ofJapan Stocks: -¥248.5B v -¥496.4B prior
- (JP) Japan Dec Official Foreign Assets: $1.27T v $1.26T prior
- (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates economy is expanding moderately; to keep rates extremely low for a period of time, to maintain QQE with yield curve control as long as needed to reach 2% inflation in a stable manner
- (JP) Japan MoF sells ¥700B v ¥700B indicated in 0.70% (prior 0.90%) 30-yr JGBs, avg yield: 0.715% v 0.794% prior, bid to cover 4.03x v 3.78x prior
- (JP) Japan Nov Preliminary Leading Index: 99.3 v 99.6e; Coincident Index: 103.0 v 103.0e
Korea
- Kospi opened +0.1%
- (KR) South Korea President Moon New Year’s Briefing: Exports no longer lead to employment growth, faith in govt policies have decreased; Kim’s visit to China signals that next Trump/Kim summit will be soon
- 051910.KR Plans to invest KRW1.2T to expand battery plants in China
China/Hong Kong
- Hang Seng opened -0.3%, Shanghai Composite flat
- (CN) CHINA DEC CPI M/M: 0.0% V -0.3% PRIOR; Y/Y: 1.9% V 2.1%E (matches lowest since June 2018); PPI Y/Y: 0.9% V 1.6%E (slowest rise since 2016); 2018 CPI y/y: 2.1% v ~3% target v 1.6% in 2017; PPI 3.5% v 6.3% in 2017
- (CN) China Commerce Ministry (MOFCOM) comments on recent talks with the US: China and US agree to continue close communication on trade; had ‘broad, deep, detailed’ communication with the US
- (CN) USTR issues formal statement on US-China trade talks: discussed fairness and reciprocity; Talks focused on China’s pledge to purchase a substantial amount of ag, energy, manufactured goods, and other products and services from the US; Discussed need for any agreement to provide for complete implementation subject to ongoing verification and effective enforcement (overnight)
- (CN) China PBoC Gov Yi Gang: Reiterates stance to implement prudent monetary policy; will keep liquidity at a reasonable level and use targeted measures to support the real economy; to offer targeted MLF in late January (overnight)
- (CN) China Dec retail passenger vehicle sales at 2.26M units, -19% y/y; Overall 2018 retail passenger vehicle sales at 22.7M units; -6.0% y/y (1st annual decline since 1992) – PCA
- (CN) China PBoC Open Market Operation (OMO): Skips OMO operations for the fourth consecutive day; Net: CNY70B drain v CNY40B drain prior
- (CN) China PBoC sets yuan reference rate: 6.8160 v 6.8526 prior (strongest setting since end of Aug 2018)
- (HK) Hong Kong Chief Exec Lam: Recent softer home prices is a healthy adjustment; govt has the ability to deal with external uncertainties
Australia/New Zealand
- ASX 200 opened +0.1%
- CGC.AU Warns will need to cut FY18 guidance due to certain factors: has experienced subdued demand in a number of categories, namely tomato, berry and avocado during December (-34% in session)
- NBL.AU Reports H1 Rev A$457M, +140% y/y (+14% in session)
- IRI.AU Guides H1 (A$) Net 11.1-11.7M v 9.3M y/y; Rev 49.0-50.5M v 45.7M y/y (+32% in session)
- (AU) Australia swap markets are pricing in a 28% probability of an RBA rate cut in 2019 – US financial press
- (AU) Australia Dec Port Hedland Iron Ore Shipments 45.8Mt v 39.4Mt prior; Exports to China: 37.4Mt v 32.9Mt prior
Other Asia
- 2330.TW Reports Dec Sales NT$89.8B v NT$98.4B m/m; -0.1% y/y; 2018 Sales NT$1.03T, +5.5% y/y
North America
- (US) FOMC MINUTES FROM DEC 19TH MEETING: OFFICIALS EXPRESSED LESS CERTAINTY ABOUT ‘TIMING AND SIZE’ OF FUTURE RATE INCREASES
- FCAU US expected to announce settlement on diesel civil case, thought to be less than $500M – US financial press
- (US) Pres Trump calls meeting with congressional leaders ‘a total waste of time’; Trump tweets: “Just left a meeting with Chuck and Nancy, a total waste of time. I asked what is going to happen in 30 days if I quickly open things up, are you going to approve Border Security which includes a Wall or Steel Barrier? Nancy said, NO. I said bye-bye, nothing else works!”
- (US) US Senate Finance Committee Chairman Grassley (R) said Congress will not grant President Trump any expansion of powers over tariffs, other trade solutions – financial press
- (MX) Mexico President Obrador: Battle over border wall is a US domestic issue
- BA Reports 2018 jetliner sales of 893 v Airbus’s 747 (beating Airbus for the first time in 6-yrs) – SCMP
Europe
- (UK) DEC BRC LFL SALES Y/Y: -0.7% V -0.3%E
- (UK) UK PM Spokesperson Slack: PM May will provide certainty on way forward if she loses Brexit deal vote next week
Levels as of 12:50ET
- Hang Seng 0.0%; Shanghai Composite 0.0%; Kospi 0.0%; Nikkei225 -1.3%; ASX 200 +0.3%
- Equity Futures: S&P500 -0.5%; Nasdaq100 -0.6%, Dax -0.4%; FTSE100 -0.1%
- EUR 1.1539-1.1570; JPY 107.82-108.27 ; AUD 0.7147-0.7188; NZD 0.6771-0.6794
- Feb Gold +0.4% at $1,296/oz; Feb Crude Oil -1.2% at $51.76/brl; Mar Copper +0.3% at $2.67/lb
