General Trend:
- Equity Futures pare losses amid reports China trade delegation to the US to include PBoC Gov Yi Gang
- Shanghai Telecom Services Index -3.1%; Canada confirmed US filed extradition request for Huawei’s CFO
- China autos decline, NDRC commented on industry support measures
- Japan’s Machinery index declines, Komatsu drops on guidance from Caterpillar
- Daiwa Securities declines ahead of expected earnings report
- Energy and financial shares decline in Australia
- Canada confirms US filed extradition request for CFO Meng; China asks US to withdraw arrest order for Meng
- China PBOC said to be again planning to offer offshore yuan bills in February
- Japan 30-yr JGB yield fall below 0.65%, lowest level since Dec 2016
- Japan government downgrades view on exports for the first time in 3-months
- Aussie declines on NAB business conditions data (multi-year low), pares loss on RBA comments
- Australia Q4 CPI due for release on Wed
- US/China trade talks remain in focus (Jan 30-31st)
- US companies due to report earnings on Tuesday are 3M, AMD, Allergan, Amgen, Apple, Biogen, Corning, Harley Davidson, KLA-Tencor, Lockheed Martin, Pfizer, PulteGroup, Robert Half, Verizon, Xerox, eBay (includes afterhours)
Headlines/Economic Data
Japan
- Nikkei 225 opened -0.5%
- (JP) Spring 2019 Wage talks begin between business and labor leaders; key issue for the talks will be whether or not workers receive raises sufficient to prepare for October’s planned consumption hike – Japan press
- (JP) Japan 2018 shipments of White goods $22B (highest in 22 years), driven by strong air conditioner sales – Japan press
- (JP) Japan Cabinet Office (Govt) Jan Monthly Economic Report: Maintains economic assessment; downgrades view on exports, cites US/China trade war (first cut in 3-months); exports are weakening vs flat prior view
- (JP) Japan MoF sells ¥399.5B v ¥400B indicated in 0.80% (prior 0.8%) 40-yr JGBs, highest accepted yield 0.7400% v 0.9400% prior, bid to cover: 3.79x v 3.85x prior
Korea
- Kospi opened -0.2%
- 010950.KR Reports Q4 (KRW) Net -247.9B v 386.9B y/y, Op Profit -292.4B v 369.3B y/y, Rev 6.9T v 5.8T y/y
- (KR) South Korea Treasury sells KRW800B v KRW800B indicated in 30-yr bonds; avg yield 2.095% v 1.96% prior, bid to cover 2.11x
- (KR) Bank of Korea (BOK): No plans to issue or authorize a digital currency in the near future
China/Hong Kong
- Hang Seng opened -0.7%, Shanghai Composite -0.2%
- (CN) China said to cut minimum spread for local government bond issues over China Treasury bonds to 25-40bps v 40bps prior – financial press
- (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 7th consecutive session; Net: CNY0B drain v CNY0B drained prior
- (CN) China PBoC sets Yuan Reference Rate: 6.7356 v 6.7472 prior
- (CN) China Vice Premier Liu He has arrived in Washington DC ahead of the Jan 30-31 trade talks; Chinese delegation includes PBoC Gov Yi Gang, China NDRC Vice Chairman and China’s Vice Finance Min – Xinhua
- (CN) China PBoC Dir of Monetary Policy Sun Guofeng: PBoC Bank Bills Swap (CBS) scheme is not China’s version of quantitative easing;CBS does not change the net liquidity of the market, whereas with QE the central bank buys assets – Chinese press
- (HK) Hong Kong commercial spaces seeing increased termination of office leases due to trade war – HK press
- (CN) China expected to fight US demands for structural changes in next round of trade talks, parties still remain divided – US press
- (CN) China Banking and Insurance Regulatory Commission (CBIRC): Insurance companies being encouraged to buy more shares/bonds of high quality listed companies as part of their role in making long term investments to foster stable development – Xinhua
- (CN) China said to cut minimum spread for local government bond issues over China Treasury bonds to 25-40bps v 40bps prior – financial press
- (HK) Hong Kong Chief Exec Lam: Exports in early 2019 expected to be worse than Q4
- HUAWEI.CN DOJ unseals indictment against Huawei for conspiring to steal trade secrets from T-mobile
Australia/New Zealand
- ASX 200 opened -0.0%
- (AU) Reserve Bank of Australia (RBA) member Harper: Reiterates expect next rate move to be up, strong budget and jobs growth show economy is strong; not a lot of evidence of negative wealth effect
- (AU) AUSTRALIA DEC NAB BUSINESS CONDITIONS: 2 V 11 PRIOR; CONFIDENCE: 3 V 3 PRIOR
- (NZ) New Zealand Dec Trade Balance (NZ$): +264M v +150Me; Exports: 5.5B v 5.5Be; Imports: 5.2B v 5.3Be; Trade Balance (12-month YTD): -5.86B v -5.8Be
- TPM.AU Halts roll out of 5G equipment after Australia govt announcement in Aug that it would prohibit use of Huawei equipment in 5G networks
- (NZ) New Zealand PM Ardern: Cannot comment on interim Kiwibuild targets; home building not at pace would like to see
Other Asia
- 2330.TW Discloses that a shipment of chemicals used in the manufacturing process deviated from specs and caused wafers to have lower yields at on facility; should still be able to achieve Q1 guidance as issued on 1/17
- 2330.TW Suppliers have agreed to cut prices by 10% after TSMC warned of a weaker H1 during talks with suppliers; TSMC in return promised suppliers that if H2 orders and profits recover, will boost order volumes to compensate for suppliers’ losses – DigiTimes
- 2409.TW Reports Q4 (NT$) Net 280M v 1.6Be; Op 1.45B v 1.9Be; Rev 77.09B v 77.3Be
North America
- (MX) Mexico Central Bank Dep Gov Esquivel: it’s possible a US slowdown could affect the Mexican economy
- PCG California regulator approves waiver needed for bankruptcy, the measure will allow the utility to receive DIP financing
Europe
- (UK) UK PM May urges MPs to support the ‘Brady amendment’ that calls for the Irish backstop to be replaced by alternative arrangements – press
Levels as of 12:50ET
- Hang Seng -0.3%; Shanghai Composite -0.1%; Kospi +0.1%; Nikkei225 +0.1%; ASX 200 -0.5%
- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.4%, Dax -0.1%; FTSE100 +0.1%
- EUR 1.1418-1.1444; JPY 109.14-109.39; AUD 0.7138-0.7172; NZD 0.6817-0.6850
- Commodity Futures: Gold 0.0% at $1,303/oz; Crude Oil +0.5% at $52.27/brl; Copper +0.4% at $2.69/lb
