General Trend:
- Interest rate sensitive sectors (Property, Financials, Banks) move lower in early trading in Shanghai
- Declining sectors in Japan include Insurance and Iron/Steel
- Softbank Group rises over 6%, activist investor Elliott said to acquire $2.5B stake
- Japanese companies expected to report earnings later today include Honda, Nippon Steel, Suzuki, Isuzu, Softbank Corp
- Declining sectors in Australia include Energy and Resources
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened flat
- Flight Center [FLT.AU]: Coronavirus affecting early H2 traffic patterns may be more difficult to meet FY20 guidance
- (AU) Reserve Bank of Australia Gov Lowe: Discussed lower rates extensively in Feb; Board will continue assessing the balance between cutting cash rate and holding; risk of cut outweighs benefit
- (AU) RBA STATEMENT ON MONETARY POLICY (SOMP): SEES JOBLESS RATE BETWEEN 5-5.25% FOR SOME TIME; Near-term growth forecast to reflect drought, bushfires, and coronavirus
- (AU) Australia Jan AIG Performance of Services Index: 47.4 v 48.7 prior
- (AU) Australia Port Hedland Jan Total Iron ore Exports 40.4Mt v 47.4Mt prior; Jan iron ore shipments to China: 33.98Mt v 41.4Mt m/m
- (AU) Australia Port Hedland said to issue ‘stage 3’ cyclone alert
- (NZ) Reserve Bank of New Zealand (RBNZ) Q1 Inflation Expectation Survey: 2-year Outlook: 1.9% v 1.8% prior
China/Hong Kong
- Shanghai Composite opened -0.3%, Hang Seng -0.5%
- Foxconn Industrial [601138.CN]: Started production of medical masks; main business line unchanged
- (CN) China PBoC Vice Gov Pan: FX reserves increased in Jan; MLF, LPR rates very likely to go down in Feb; Has ample policy room to counter coronavirus outbreak; some countries have overreacted; Virus could disrupt GDP activity in Q1
- (CN) China National Health Commission Feb 6th: Confirmed cases 31,161 v 28,018 prior; Death toll of 636 v 563 prior
- (CN) China Pres Xi: China’s virus prevention efforts have achieved positive results; China will continue with its transparent approach to dealing with the virus – Chinese press
- (CN) China Pres Xi: All people mobilized in ‘People’s War’ against coronavirus; Has taken comprehensive measures to combat coronavirus; China is fully confident and capable of defeating virus; economy has good momentum and that won’t change, confirmed commitment to phase 1 trade implementation – phone call with US Pres Trump on Thursday
- (CN) China PBoC: Coronavirus impact will be temporary; domestic economy remains resilient and will provide support for financial markets
- (CN) China Vice Fin Min Yu: Allocated CNY66.74B for virus control in fiscal funds; will ensure fiscal funding for virus control
- (CN) China CBIRC Vice Chair Zhou: Expect NPL ratio of banks to rise somewhat; have ample resources to cope with rise in bad loans; coronavirus will not have a big impact on financial system
- (CN) China PBoC Open Market Operation (OMO): Skips Reverse Repo operations for the 3rd consecutive session; Net CNY0B v drain CNY0B prior
- (CN) China PBOC sets Yuan Reference Rate: 6.9768 v 6.9985 prior
- (CN) China PBOC to auction CNY30B in 3-month and 1-year bills in Hong Kong on Feb 13th
- (US) Treasury Sec Mnuchin: China tariff removal is part of the trade deal
- (CN) 34 year old Wuhan China doctor Li Wenliang, who first warned of coronavirus on Dec 30th and was subsequently arrested for said warning, has died; trends on Chinese and Hong Kong social media
- (HK) China Min Foreign Affiairs Commissioner Xie Feng: Monitoring possibility of outbreak in Hong Kong closely; China’s work on virus is transparent; every level of government has been mobilized; maintaining close cooperation with Hong Kong officials
- (CN) S&P: See China 2020 GDP at 5.0% due to coronavirus
- (CN) China release of prelim trade data said to be delayed – financial press
Japan
- Nikkei 225 opened +0.1%
- Softbank [9984.JP]: Elliott reportedly buys $2.5B stake in SoftBank, urges share buybacks and governance improvements – press
- Toyota [7203.JP]: Extended China output halt to Feb 16th
- Honda [7267.JP]: To keep operations in Wuhan suspended to Feb 13th as previously planned
- (JP) Japan said to have found 41 additional cases of the coronavirus on the Yokohama cruise ship – Japanese media
- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Unchanged
- (JP) Japan PM Abe says the gov’t will compile emergency measures to respond to coronavirus impact by as early as next week – Japanese press
- (JP) Japan Econ Min Nishimura: Coronavirus starting to impact regional economies; watching for possible damage to consumption
- (JP) Japan megabanks to offer loans to companies impacted by the coronavirus – Nikkei
- (JP) JAPAN DEC LABOR CASH EARNINGS Y/Y: 0.0% V -0.1%E; REAL CASH EARNINGS Y/Y: -0.9% V -0.9%E
- (JP) Japan Jan Official Reserve Assets: $1.342T v $1.324T prior
- (JP) Japan Dec Household Spending Y/Y: -4.8% v -1.7%e (3rd straight decline)
- (JP) Japan Dec Preliminary Leading Index CI: 91.6 v 91.3e; Coincident Index:94.7 v 94.7e
- (JP) Japan LDP Party said to be encouraging issuance of digital currency
- (JP) Nikkei notes speculation is circulating that Japan authorities began selling yen, using cash from the Government Pension Investment Fund (GPIF) – Nikkei
Korea
- Kospi opened -0.3%
- (KR) South Korea Government: Has asked China to help resume production at South Korea auto parts factories in China
Other Asia
- (PH) Philippines Central Bank Gov Diokno: BSP has a lot of monetary space; next rate cut probably in middle of 2020; Not in a rush to cut RRR
North America
- (US) Fed’s Quarles (hawk, voter): Coronavirus is a notable risk and needs to be monitored carefully
- Wynn Resorts [WYNN]: Reports Q4 -$0.62 v $0.85e, Rev $1.65B v $1.70Be; Overall Macau Ops Adj property EBITDA $170.1M v $167.6M y/y; Losing $2.5M a day on Macau casino closures; too soon to say when Macau ops will reopen
- (US) Buttigieg said to have lead in Iowa Democratic caucus with 100% of precincts reporting
Levels as of 00:20 ET
- Nikkei 225, -0.3%, ASX 200 -0.4%, Hang Seng -1.1%; Shanghai Composite -0.9%; Kospi -1.2%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.3%, Dax -0.3%; FTSE100 -0.3%
- EUR 1.0985-1.0978 ; JPY 110.02-109.81 ; AUD 0.6746-0.6711 ;NZD 0.6465-0.6447
- Gold flat at $1,570/oz; Crude Oil +0.1% at $51.02/brl; Copper -0.5% at $2.584/lb
