Headlines/Economic Data
Bank of Japan (BoJ) again leaves daily bond purchases unchanged ahead of next week’s policy meeting (Monday Jan 22- Tuesday Jan 23rd)
Fate of US stopgap funding bill is now in the hands of US Senate (**Note: The deadline for a government shutdown is midnight on Friday, Jan 19th)
Asian currencies trade firmer vs US dollar: Taiwan Dollar (TWD) trades at highest level vs US dollar (USD) since Nov 2013; Korean Won (KRW) gains over 0.4% on session; Yuan (CNY) fixed stronger on session
Asia bond yields track earlier rise in US Treasury yields: Australia 3-year yield 2.240% (highest since late 2014)
WTI Crude Oil declines by over 1%
Australia/New Zealand
ASX 200 opened +0.2%; closed -0.1%
ASX 200 REIT Index -0.7%, Telecom -0.6%, Financials -0.1%
(AU) Australia Government plans review of energy efficiency legislation
(NZ) NZ PM Ardern says she is expecting first child in June; Winston Peters to be acting PM for 6 weeks after baby is born
(NZ) New Zealand Dec Business Manufacturing PMI: 51.2 v 57.7 prior (5-year low)
China/Hong Kong
Hang Seng opened +0.1%, Shanghai Composite +0.2%
Hang Seng Property/Construction Index +1.5%, Industrial Goods +1.3%, Materials +1.2%, Information Tech +0.7%; Financials flat
Shanghai Pharmaceuticals [2607.HK]: -4.5% (To raise HK$3.13B by selling 153.2M H-shares at HK$20.43/share)
Tencent [700.HK]: Announced patent cross-licensing agreement with Google
Leshi Internet [300104.CN]: Terminates asset restructuring and name change plan; to hold investor meeting on Tuesday Jan 23rd
Huawei: Said to guide 2018 Rev at $102.2B – Chinese Press [**Note: The company guided its FY17 Rev at CNY600B (~$93.4B) v CNY522B y/y (+14.9% y/y)]
HNA unit Suparna Airlines said to miss yuan denominated lease payment – US financial press
(CN) US government panel may not approve any deals by China conglomerate HNA Group until there is clarify on the company’s owners – financial press
(CN) PBOC SETS YUAN REFERENCE RATE AT 6.4169 V 6.4401 PRIOR (strongest yuan fix since Dec 9, 2015)
(CN) China PBOC OMO: Injects CNY230B v CNY160B injected in 7,14 and 63-day reverse repos prior: Net injection CNY80B v CNY90B injected prior; For the week, net injection at CNY590B v CNY40B net injection w/w
(CN) Shanghai International Energy Exchange Exec: China crude oil futures won’t be used to challenge WTI futures
(CN) China issues sector components of Q4 GDP: Finance Sector GDP +4.0% y/y, IT/Software sector +33.8% y/y; Property sector +4.8% y/y (**Reminder from Thursday’s session: CHINA Q4 GDP Q/Q: 1.6% V 1.7%E; Y/Y: 6.8% V 6.7%E)
(CN) China govt plans further restrictions on private bond offerings – Chinese press
Korea
Kospi opened +0.2%
Weakness in chipmakers: Samsung Electronics -1.5%, Hynix -2.4%
Japan
Nikkei 225 opened +0.4%; closed: +0.2%
Financials trade generally higher: TOPIX Securities Index +0.8%, Mitsubishi UFJ +0.8%, Sumitomo Mitsui +1.3%
TOPIX Real Estate Index +0.9%
Fast Retailing [9983.JP]: -0.3%
(JP) Japan Government Pension Fund (GPIF) may report 3-month investment profit of ¥6.3T – Japanese Press
Other Asia
(ID) Indonesia proposes reduction in income tax rate for small business
(PH) Philippines Central Bank (BSP) Gov Espenilla: domestic tax reform may ‘temporarily’ stroke inflation; To update CPI forecast to account for Peso (PHP), oil prices and domestic tax reform; Can wait for risks related to CPI to wane before cutting the reserve ratio requirement (RRR)
Taiwan Semi [2330.TW] +2.5% (Reports Q4 (NT$) Net 99.3B v 97.2Be; Op 108.9B v 107.5Be
North America
US equity markets ended mostly lower: Dow -0.4%, S&P500 -0.2%, Nasdaq flat, Russell 2000 -0.6%
S&P500 Real Estate Sector -1%, Energy -0.8%
American Express [AXP] Down over 2% afterhours: Reports Q4 $1.58 v $1.54e, Rev $8.84B v $8.72Be; suspends buyback in H1 to rebuild capital after tax reform; Guides initial FY18 $6.90-7.30 v $6.83e
IBM: Shares down over 3% in afterhours: Reported Q4 results, FY18 guidance
Metlife [MET]: Confirms it and Financial Stability Oversight Council (FSOC) file motion to dismiss appeal in SIFI* litigation; motions to bring litigation proceedings to an end
(US) NPD: US Dec Total Video Game Spending $3.3B, +10% y/y; 2017 US video game industry Rev $36.0B (record), +18% y/y (Hardware +19%, software +18%)
(US) White House said to consider San Francisco Fed President Williams for number 2 job at Fed (Vice Chair) – US financial press
(US) Fed’s Mester (voter, hawk): Favors three to four rate hikes in 2018, 2019
US Government Funding: (US) House passes procedural vote to advance stopgap continuing resolution for debate – press
(US) Majority of House Freedom Caucus will back stopgap spending bill
(US) Pres Trump reportedly has called into a House Freedom Caucus meeting to negotiate to pass stopgap bill – press
(US) Senate Democrats say they have the votes to block govt funding bill – Politico
(US) Sen Paul (R-KY): will vote no on stopgap spending bill in Senate
Sen Graham (R-SC), Sen Rounds (R-SD) have indicated they will also be ‘no’ votes
(US) Sen Maj Leader McConnell (R-KY) reportedly is planning for a govt shutdown; Could stage various votes to embarrass the Democrats over the weekend if govt shuts down – Politico
(US) Sen Flake (R-AZ): a five-day stopgap bill is now under discussion (in case month long funding bill fails to get enough votes) – press
(US) US Senate Democrats said to plan to permit procedural vote on stopgap spending bill – US financial press
(US) US Senate plans first procedural vote on stopgap US government funding bill later tonight
(US) US Senator Schumer (D): Democrats will support procedural vote on stopgap; Senate should move ‘very short-term’ stopgap bill
(US) US Senate passes procedural motion to start debate on stopgap bill
(US) Treasury $13B 10-year TIPS draw 0.548%, BTC 2.69 (strongest BTC since May 2014)
(US) US– 10-year Treasury yield hits highest level since 2016 (during Asian session)
(US) DOE CRUDE: -6.9M V -2.5ME
Europe
(UK) Prime Min May: reiterates there will not be second referendum on Brexit; declines to comment on how she would vote in a theoretical second referendum
(EU) ECB’s Coeure (France): Euro Zone is in expansion and is no longer in recovery
(FR) ECB’s Villeroy (France): prepared to trigger a counter cyclical cushion if needed; French banks should be cautious about creating excess credit growth; Already took some measures in December to curb lending in France
(FR) France Pres Macron: would never link Brexit and bilateral issues with the UK
(FR) France Fin Min Le Maire: completion of bank and capital markets EU union is priority; Plans to make joint Germany-France proposal on bitcoin regulation to G20
BASF: Reports prelim FY17 EBIT €8.3B v €7.9Be, +32% y/y, Rev €64.5B v €57.6B y/y; As forecast by BASF, sales, income from operations (EBIT) before special items and EBIT are considerably above the level of the previous year. The earnings figures exceed analyst estimates significantly; The reduction in the U.S. corporate tax rate from 35% to 21% results in one-time noncash, deferred tax income of almost EUR400 million in the fourth quarter of 2017.
Levels as of 01:00ET
Hang Seng +0.2%; Shanghai Composite +0.5%; Kospi +0.1%
Equity Futures: S&P500 flat; Nasdaq100 flat, Dax -0.1%; FTSE100 -0.2%
EUR 1.2232-1.2270 ; JPY 110.79-111.13; AUD 0.7997-0.8021 ;NZD 0.7288-0.7312
Feb Gold +0.3% at $1,331/oz; Feb Crude Oil -1.2% at $63.20/brl; Mar Copper +0.3% at $3,209/lb
