General Trend:

  • Markets little changed to slightly weaker in the session, with US markets closed for holiday and no major catalysts in the region.
  • Chinese equities decline after gains on Monday’s session
  • Shares of Jiayuan International remain volatile, weigh on overall Hang Seng Property Index
  • Hang Seng health care index declines amid concerns in China regarding gene-editing
  • PetroChina declines after FY guidance
  • BHP declines after quarterly production update, weighs on overall ASX 200 index
  • Nikkei reverses opening gain, Electric Appliance firms and large banks are among the decliners
  • Tokyo Steel rises ahead of earnings report (expected after market close)
  • China plays down concerns about job losses in tech sector
  • South Korea prelim Q4 GDP comes in stronger than expected but 2018 GDP of 2.7% is a 6-yr low
  • UK PM May presented “Plan B’ for Brexit, which did not outwardly appear much different or said to have impressed ministers, later in the day Labour leader Corbyn endorsed plans for a second Brexit referendum, and wants the govt to provide MPs the final approval next week on a second vote. Also saw a separate report that “dozens” of ministers were ready to resign on Brexit
  • US think tank releases paper identifying undeclared nuclear missile site in North Korea with a possible 19 others
  • Bank of Japan is holding its 2-day policy meeting from Jan 22-23rd
  • New Zealand Q4 CPI due for release on Wednesday
  • Davos World Economic Forum meeting is being held Jan 22-25th
  • US companies expected to report earnings on Tuesday include Fifth Third, Halliburton, IBM, Johnson & Johnson, Travelers (includes after hours)
  • Looking ahead: In tomorrow’s session we will see results of BoJ meeting, as well as the quarterly outlook report from Japan

Headlines/Economic Data

Japan

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  • Nikkei 225 opened +0.2%
  • 6752.JP Said to be supplier of batteries for Tesla’s made in China – Japan press
  • (JP) Japan Fin Min Aso: Important that exchange rates are stable in Golden week holiday, do not expect any crisis situation

Korea

  • Kospi opened +0.2%
  • (KR) South Korea Dec PPI M/M: -0.5% v -0.7% prior (3rd consecutive decline); Y/Y: 1.0% v 1.5% prior
  • (KR) SOUTH KOREA Q4 PRELIM GDP Q/Q: 1.0% V 0.6%E; Y/Y: 3.1% V 2.7%E; 2018 2.7% (slowest growth in 6-yrs)

China/Hong Kong

  • Hang Seng opened flat, Shanghai Composite flat
  • 2269.HK CEO: In talks with three separate vaccine developers to manufacture their products in China – SCMP
  • (CN) China Securities Regulatory Commission (CSRC) asked banks to to extend agreements on loans in which shares have been pledged up as collateral in order to stabilize the market; as of Jan 21 CNY4.4T worth of shares were on the line (9.75% of total market cap) – FT
  • (CN) China military has significantly boosted its navy, air force and new strategic units; downsized land based army as part of a strategic shift designed to transform the People’s Liberation Army into a comprehensive modern force – Xinhua
  • (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 2nd consecutive session; Net: CNY80B drain v CNY80B drained prior
  • (CN) China PBoC sets Yuan Reference Rate: 6.7854 v 6.7774 prior
  • (CN) China National Development and Reform Commission (NDRC): China has the ability to keep economy growing within a reasonable range
  • (CN) China President Xi: Current economic situation is good but faces deep and complicated changes; Must be on guard against ‘black swan’ risks while fending off ‘gray rhino’ events (overnight)
  • (CN) China regulators approve 93 video game titles Jan 7th v 80 reported on Dec 30th
  • HUAWEI.CN US to seek extradition of CFO Meng – Canada press
  • (CN) China National Bureau of Statistics (NBS) reports 2018 births at 15.23M, lowest rate since 1961 (the last year of China’s great famine), also lowest since easing one child policy in 2014

Australia/New Zealand

  • ASX 200 opened -0.1%
  • BHP.AU Reports Q2 iron ore production: 66 MT v 72MT y/y, attributable iron ore production 57.8M tons v 59.0Mte; Affirms FY19 Iron ore production, raises copper guidance
  • OSH.AU Reports Q4 (A$) Rev 503.1M v 475M q/q; production 7.4 MMBOE v 7.5 q/q

North America

  • IMF updates its World economic Outlook (WEO): Cuts Global GDP growth forecast from 3.7% to 3.5% citing no-deal Brexit and trade concerns (three-year low)
  • (US) US President Trump: China’s latest economic numbers show need for trade
  • LOGI Reports Q3 $0.79 v $0.67e, Rev $864.4M v $863Me; Raises FY19 op income $340-345M (prior op income $325-335M); Affirms Rev 9-11% y/y

Europe

  • (UK) Prime Minister May: Presents ‘plan B’ on Brexit with a “new” approach, Ireland backstop remains sticking point, Parliament remains underwhelmed
  • (UK) Labour leader Corbyn endorsed plans for a second Brexit referendum, and wants the govt to provide MPs the final approval next week on a second vote – Telegraph
  • (UK) Labour Party appears to be supporting the Cooper amendment – tweet
  • (UK) “Dozens” of UK ministers said to be close to resigning over Brexit – Times

Levels as of 12:50ET

  • Hang Seng -1.2%; Shanghai Composite -1.2%; Kospi -0.4%; Nikkei225 -0.6%; ASX 200 -0.5%
  • Equity Futures: S&P500 -0.7%; Nasdaq100 -1.0%, Dax -0.5%; FTSE100 -0.4%
  • EUR 1.1355-1.1386; JPY 109.39-109.69; AUD 0.7134-0.7161;NZD 0.6721-0.6735
  • Feb Gold -0.3% at $1,278/oz; Mar Crude Oil -1.1% at $53.22/brl; Mar Copper -0.3% at $2.66/lb
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