HomeContributorsFundamental AnalysisAsian Market Update: NZ Unemployment Rises As Participation Rate Hits Record High

Asian Market Update: NZ Unemployment Rises As Participation Rate Hits Record High

NZ unemployment rises as participation rate hits record high

Asia Mid-Session Market Update: China manufacturing PMI still expanding but at 3-month low; NZ unemployment rises as participation rate hits record high

US Session Highlights

(US) Presidential trade adviser Navarro: Germany is benefiting from grossly undervalued euro – financial press

German Chancellor Merkel: Do not want to influence Euro exchange rate; has always called upon ECB to have independent policy


(US) NOV S&P/CASE-SHILLER 20-CITY M/M: 0.88% V 0.65%E; Y/Y: 5.27% V 5.03%E; HOUSE PRICE INDEX (HPI): 192.14 V 191.77 PRIOR

(US) President Trump: On Medicare and Medicaid, we need prices way down; prices have been astronomical – meeting with industry executives

(US) JAN CHICAGO PURCHASING MANAGER: 50.3 V 55.0E (lowest since May 2016); new orders 49.1 v 56.5

(US) JAN CONSUMER CONFIDENCE: 111.8 V 112.8E; 1-year consumer inflation expectation: 4.9% v 4.5% in Dec

US markets on close: Dow -0.5%, S&P500 -0.1%, Nasdaq flat

Best Sector in S&P500: Utilities

Worst Sector in S&P500: Industrials

Biggest gainers: TMO +6.4%, MNK +4.9%, MYL +4.7%, DHR +4.4%, ABC +4.4%

Biggest losers: UA -23.4%, UPS -6.8%, VLO -3.6%, PNR -3.5%, NUE -3.3%

At the close: VIX 12.0 (+0.1pts); Treasuries: 2-yr 1.22% (+2bps), 10-yr 2.45% (-3bps), 30-yr 3.05% (-3bps)

US movers afterhours

AMD: Reports Q4 -$0.01 v -$0.02e, R$1.11B v $1.07Be; Guides initial FY17 Rev " to grow" % y/y, GM to "increase"; +3.6% afterhours

AAPL: Reports Q1 $3.36 v $3.22e, R$78.4B v $77Be; iPhone shipments 78.3M v 74.8M y/y (v 77Me); +3.0% afterhours

CB: Reports Q4 $2.72 v $2.43e, Net premiums written $6.94B v $7.21B y/y; +1.1% afterhours

EA: Reports Q3 $0.00 v -$0.14 y/y, net Rev $1.15B v $1.07B y/y; -1.1% afterhours

X: Reports Q4 $0.27 (ex $0.88 in charges, unclear if comp) v $0.01e, R$2.65B v $2.67Be; guides initial FY17 adjusted EBITDA $1.3B v $510M y/y; -0.6% afterhours

ILMN: Reports Q4 $0.85 v $0.81e, R$619M v $614Me; -1.5% afterhours

Asia Key economic data:

(CN) CHINA JAN MANUFACTURING PMI (GOVT OFFICIAL): 51.3 (6th consecutive month of expansion, 3-month low) V 51.2E; Non-manufacturing PMI: 54.6 v 54.5 prior

(JP) JAPAN JAN FINAL PMI MANUFACTURING: 52.7 V 52.8 PRELIM (5th month of expansion, confirms highest level since Mar 2014)

(AU) AUSTRALIA JAN AIG MANUFACTURING INDEX: 51.2 V 55.4 PRIOR (4th straight month of expansion, 3-month low)


(NZ) NEW ZEALAND Q4 UNEMPLOYMENT RATE: 5.2% (3-quarter high) V 4.8%E; EMPLOYMENT CHANGE Q/Q: 0.8% (5-quarter low) V 0.7%E; Y/Y: 5.8% V 6.1%E;
Participation rate 70.5% v 70.2%e (record high)

(KR) SOUTH KOREA JAN PMI MANUFACTURING: 49.0 V 49.4 PRIOR (6th consecutive contraction)

(KR) SOUTH KOREA JAN TRADE BALANCE: $3.2B V $5.3BE; Exports Y/Y: 11.2% v 9.0%e; Imports Y/Y: 18.6% v 10.1%e

Asia Session Notable Observations, Speakers and Press

Asian indices are cautiously higher as US immigration policy-driven selling subsides, even though the focus on Washington remains close after today’s volatility in FX markets following claims by Trump’s advisor that Germany benefits from undervalued Euro. Germany’s Merkel defended EMU’s monetary policy and Germany’s independence from the ECB, while Japanese officials also stepped up their defensive rhetoric against claims that Japan is manipulating FX. Separately from the currency markets, Trump has nominated Colorado’s Neil Gorsuch (age 49) for US Supreme Court seat, as speculated earlier.

PMI data across Asia-Pacific have been mixed – China’s manufacturing remained in expansion but slid to a 3-month low, as closely watched Input Price component fell to 64.5 from 69.6. Conversely, New Export Orders rose to 50.3 v 50.1 m/m and Employment rose to 49.2 v 48.9 m/m. Separately, Japan’s manuf PMI was confirmed at the highest level in nearly 3 years, while Korea’s PMI continued to retreat with 6th straight month of contraction.

NZD was volatile earlier in the session as Q4 unemployment rate rose to a 3-quarter high, however economists were quick to point out that the jump was cushioned by participation rate hitting a record high thanks to strong arrivals.


(CN) China State-owned Assets Supervision and Administration Commission (SASAC): Debt risks of SOEs are controllable – China Daily

(CN) China Stats Bureau: Coal production in 2016 fell 9.4% y/y to 3.36B tons – China Daily


(JP) Japan PM Abe: Will tell Trump, Japan will contribute to US jobs and infrastructure

(JP) Japan PM Abe adviser Hamada: Trump’s one sided arguments on border tax and currencies are destructive to Japan and world economy

(JP) Japan Chief Cabinet Sec Suga: Not setting exchange rate target, follows G7 on policy; watching fx closely with a sense of urgency

(JP) Japan Vice Fin Min of International Affairs (currency chief) Asakawa: Japan’s monetary policy is aimed at beating deflation, not FX market – press

(JP) Former BOJ exec Momma: BoJ’s next move will likely be to raise 10-yr bond yield target, could start discussions within BOJ on this later this year

Australia/New Zealand:

(AU) Morgan Stanley economist: Australia consumer companies to face more pressure in 2017 "as leading housing indicators soften, the savings rate is lower YoY and income growth remains weak" – press

(NZ) Citigroup: Latest employment data show labor demand and supply are containing wage growth; Gives RBNZ some time before considering rate hike – press

(NZ) New Zealand PM English calls for Sept 23 national elections – press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.6%, Hang Seng -0.7%, Shanghai Composite closed, ASX200 +0.5%, Kospi +0.5%

Equity Futures: S&P500 +0.1%; Nasdaq +0.4%; Dax flat%; FTSE100 +0.1%

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

EUR 1.0785-1.0805; JPY 112.65-113.25; AUD 0.7550-0.7585; NZD 0.7260-0.7340

Apr Gold -0.1% at $1,211/oz; Mar Crude Oil -0.2% at $52.73/brl; Mar Copper -0.2% at $2.72/lb

(US) Weekly API Oil Inventories: Crude: +5.8M v +2.9M prior; Biggest build since Nov 1st

(AU) Australia MoF (AOFM) sells A$800M in 2.75% 2027 Bonds; avg yield: 2.7841%; bid-to-cover: 3.24x

Asia equities / Notables / movers by sector

Consumer discretionary: FXJ.AU Fairfax Media +6.1% (buyer interest report); 028150.KR GS Home Shopping +4.2%; 7419.JP Nojima Corp +9.7% (9-month result); 2802.JP Ajinomoto Co +3.2% (9-month result); ANN.AU Ansell -5.6% (JPMorgan cuts rating); SEA.AU Sundance Energy Australia -20.0% (guidance)

Financials: CYB.AU CYBG -3.1% (Q1 trading update); OFX.AU OzForex Group -24.9% (guidance; CEO resigns); 8411.JP Mizuho Financial Group -1.1% (9-month result)

Industrials: GUD.AU GUD Holdings +4.0% (H1 result); 5411.JP JFE Holdings +4.3% (9-month result); 5333.JP NGK Insulators +5.2% (9-month result); 7211.JP Mitsubishi Motors +12.7% (9-month result); 1911.JP Sumitomo Forestry +5.6% (raises guidance)

Technology: 7974.JP Nintendo Co. -3.0% (guidance); 6502.JP Toshiba Corporation +0.8% (press speculates about exit nuclear construction); 6967.JP Shinko Electric Industries -17.5% (9-month result); YPB.AU YPB Group Ltd -13.6% (Q4 result); GBT.AU GBST Holdings -16.9% (guidance); 4902.JP Konica Minolta -8.5% (9-month result)

Materials: 6988.JP Nitto Denko Corp +5.7% (9-month result); 581.HK China Oriental Group +51.7%; 5471.JP Daido Steel Co +12.9% (9-month result); ILU.AU Iluka -4.8% (JPMorgan cuts rating)

Energy: 639.HK Shougang Fushan Resources Group -2.0%; SXY.AU Senex Energy +6.1% (affirms capital raising); 9532.JP Osaka Gas +2.9% (9-month result); 9506.JP Tohoku Electric +3.0% (9-month result); 9503.JP Kansai Electric Power +2.1% (9-month result)

Healthcare: SRX.AU Sirtex Medical -1.0% (received draft claim alleging it misled market); 7459.JP Mediceo Paltac Holdings -0.9% (9-month result)

Utilities: 9501.JPTokyo Electric Power Co +1.6% (9-month result)

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