Fri, Aug 19, 2022 @ 13:32 GMT
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Asian Market Update: Japan Wholesale Inflation Accelerates

Asia Mid-Session Market Update: Kospi outperforms as impeached but defiant Park vacates Blue House; Japan wholesale inflation accelerates; Western Australia elects Labor candidate

Friday US markets on close: Dow +0.2%, S&P500 +0.3%, Nasdaq +0.4%

Best Sector in S&P500: Utilities

Worst Sector in S&P500: Real Estate

Biggest gainers: ULTA +4.6%; EL +3.5%; ENDP +2.8%

Biggest losers: TDG -4.3%; SLG -2.0%; HES -2.0%

At the close: VIX 11.7 (-0.6pts); Treasuries: 2-yr 1.36% (flat), 10-yr 2.58% (-2bps), 30-yr 3.17% (-1bp)

Politics

(FR) France IFOP daily presidential poll for March 10th: Second round poll: Macron 25.5% v 25% prior , Le Pen 26.0% v 26.0% prior; Fillon 19.5% v 19.0% prior

(AU) Opposition Labor party’s Mark McGowan wins Western Australia premier elections – press

Key economic data:

(JP) JAPAN JAN CORE MACHINE ORDERS M/M: -3.2% V -0.1%E; Y/Y: -8.2% (biggest decline in 8 months) V -3.7%E

(JP) JAPAN FEB PPI (CGPI) M/M: 0.2% (4-month low) V 0.2%E; Y/Y: 1.0% (2-year high) V 1.0%E

(NZ) New Zealand REINZ Feb House Sales Y/Y: -14.2% v -14.7% prior

Asia Session Notable Observations, Speakers and Press

Asian equity markets are tracking the optimism on Wall St on Friday, where a robust NFP print was solid enough to confirm healthy labor market and solidify expectations of a Fed hike this week but not too great that would magnify the case for more than 3 hikes this year. Korea’s Kospi is leading the charge as impeached Pres Park has vacated presidential palace, but struck a defiant tone that "the truth will come out" about the controversial allegations of corruption against her office. Australia’s ASX200 is underperforming, as mining and energy shares slump on lower commodity prices.

In FX, USD/JPY has retreated in line with US Treasury yields after NFP did not produce the blowout seen in the AFP report earlier. EUR/USD however has maintained its momentum toward 1-month high of 1.07 in the wake of more hawkish ECB sentiment last week. GBP traded with a softer tone after press reports that PM May could trigger Article 50 as soon as Tues, March 14th, but also that UK is drawing up contingency plans for the unlikely event it has to walk away from talks with the European Union without a deal.

Economic docket was largely limited to 2nd tier data from Japan, where rising regional wholesale inflation has sent PPI to a 2-year high on annualized basis.

China

(CN) China equities raised to Overweight at Goldman Sachs on reflation

(CN) China Commerce Min Zhong Shan: Trade war between China and US would harm both economies; vows stronger oversight of companies investing overseas

(CN) PBoC Deputy Gov Gongsheng: China should prevent household leverage from rising – Chinese press

(CN) China Banking Regulatory Commission (CBRC) ofifcial Yu Xuejun: China could consider a reduction to the Reserve Requirement Ratio (RRR) to ensure that liquidity does not drop when the PBoC’s medium-term lending facility and pledged supplementary lending instruments expire

(CN) China National Development and Reform Commission (NDRC) Vice Chairman Ning Jizhe: survey-based unemployment rate in 31 major cities was about 5% in Jan-Feb – press

Japan

(JP) Japan Cabinet approval rating -5pts to 50% – Mainichi

(JP) BoJ data shows that at the end of Jan, Japan bank holdings of JGBs fell to ¥79.59T, the first time below ¥80T since 2003 – Nikkei

Australia

(AU) Australia Treasurer Morrison: Macroprudential measures have had a positive effect; working to ease pressure on rising house prices

(AU) Opposition Labor party’s Mark McGowan wins Western Australia premier elections – press

(AU) Westpac: Labor’s victory in Western Australia elections slightly increases the risks of a downgrade for state’s AA+/negative rating

(NZ) New Zealand Institute of Economic Research (NZIER) Survey: Raises FY16/17 CPI forecasts to 1.7% from 1.4%; Lowers FY17/18 inflation 1.7% from 1.8%

Korea

(KR) According to a survey by Korea International Trade Association (KITA), 56.2% of businesses say deployment of THAAD has hurt business – Korean press

(KR) South Korea Customs Service: Exports in the first 10 days of March rose 19.3% y/y – Korean press

(KR) South Korea’s impeached President Park has vacated the presidential palace on Sat, two days after court ruling – press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.2%, Hang Seng +0.9%, Shanghai Composite +0.4%, ASX200 -0.4%, Kospi +1.2%

Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.1%, FTSE100 flat

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

EUR 1.0675-1.0700; JPY 114.65-114.90; AUD 0.7535-0.7575; NZD 0.6915-0.6940; GBP 1.2155-1.2180

Apr Gold +0.4% at 1,207/oz; Apr Crude Oil -0.8% at $48.09/brl; May Copper +0.5% at $2.62/lb

SPDR Gold Trust ETF daily holdings fall 8.9 tonnes to 825.2 tonnes; lowest since Feb 6th; 4th straight decline

iShares Silver Trust ETF daily holdings fall to 10,268 tonnes from 10,303 tonnes prior; 11-month low

(CN) PBOC SETS YUAN MID POINT AT 6.8988 V 6.9123 PRIOR (2nd consecutive firmer setting and strongest since March 7th)

(CN) PBOC to inject combined CNY30B v zero prior (1st injection, after 2 consecutive skips)

(JP) BoJ data shows that at the end of Jan, Japan bank holdings of JGBs fell to ¥79.59T, the first time below ¥80T since 2003 – Nikkei

(KR) South Korea sells 5-yr Govt bonds at 1.99%

Asia equities/Notables/movers

Australia

Evolution Mining EVN +6.3%, Northern Star NST +4.8%, Newcrest Mining NCM +5.2% (gold price rises)

BWP Trust BWP -2.7% (cut at UBS)

Oil Seach OSH -3.2% (oil price extends decline)

Japan

Toshiba 6502.JP +3.8% (speculation over Tec stake sale)

Pioneer 6773.JP +4.7% (raised at MS)

Toyota 7203.JP flat (annual wage talks with unions)

Hong Kong

China Lilang Ltd 1234.HK -2.1% (FY16 result)

ICBC 1398.HK +2.2% (raised at Goldman)

HSBC 5.hk +2.2% (AIA’s Mark Tucker to be new chairman, replacing Douglas Flint; effective Oct 1st); AIA 1299.HK -2.8%

China Aoyuan Property Group Limited 3883.HK +5.1% (FY16 result)

China Resources Cement Holdings Limited 1313.HK +8.5% (FY16 result)

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