Headlines/Economic Data
General Trend: Asian equity markets trade mostly lower
Utilities underperform
Energy shares outperform: During Asian session, Brent Crude Oil Futures traded at $70.95/bbl and WTI Futures hit $66.22/bbl (both the highest since Dec 2014)
Kospi Index outperforms, as chipmaker Hynix gains after Q4 results and guidance
US dollar (USD) continues to weaken amid comments from US officials and trade concerns
Euro gains ahead of upcoming ECB meeting
South Korean Won (KRW) gains despite first q/q GDP contraction since 2008
Kiwi (NZD) pares some of the losses seen after weaker than expected Q4 CPI
PBoC skips open market operation (OMO) for the first time since Jan 9th
US corporate earnings pick up on Thursday’s session.
Later today, Malaysia Central Bank (BNM) expected to raise rates for the first time since July 2014
Japan
Nikkei 225 opened -0.8%; closed -1.1%
TOPIX Electric Appliances Index -1.3% (Fanuc -0.7%, Advantest -3%, Canon Inc -1%, Fuji Electric -1.8%, Kyocera -1.6%, Mitsubishi Electric -1.9%. Sony -2.9%); Fanuc is expected to report earnings after the close on Friday
Financials trade generally weaker: Mitsubishi UFJ -1.7%, Mizuho -1.3%, Sumitomo Mitsui Financial -1.1%: TOPIX Securities Index -1.2%
Automakers trade weaker amid recent gains in Yen: Toyota -0.9%, Honda -1.1%
Isetan [3099.JP] -3% (due to report earnings today), Fast Retailing declined over 2%
Dentsu [4324.JP]: +4%(broker commentary)
Komatsu [6301.JP] -0.9% (Caterpillar due to report earnings on Thursday)
USD/JPY Nikkei speculates on recent yen strength, if is a product of a weak dollar or actually strengthening
(JP) Japan PM Abe: Must not waste the chance to do all to beat deflation
JGB (JP) Japan MoF sells ¥0.8T v ¥1.0T indicated in 0.60% (prior 0.60%) 20-yr bonds; avg yield 0.592% v 0.573% prior; bid to cover 4.17x v 4.56x prior
Looking Ahead: Japan Dec CPI data and BoJ Dec 2017 policy meeting minutes due for release on Friday
Korea
Kospi opened flat
(KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: -0.2% V 0.1%E; Y/Y: 3.0% V 3.4%E; 2017 GDP 3.1%
Hynix [000660.KR] Gains over 4%: Reports Q4 (KRW) Net 3.22T v 3.4Te, Op 4.5T v 4.3Te; Rev 9.03T v 8.9Te; Guides 2018 DRAM demand +20% y/y, NAND demand up ~40% y/y; Guides FY18 Capex to rise from KRW10.3T in 2017
Internet firm Naver [035420.KR] +4%: Reports Q4 (KRW) Net 180.2B v 223.5Be; Op 291.1B v 318.9Be; Rev 1.27T v 1.26Te; Announces KRW119B buyback
Hyundai Motor [005380.KR]: Declines by over 0.5% on session: Reports Q4 (KRW) Net 1.03T v 1.1Te, Op 775B v 1.1Te; Rev 24.5T v 24.1Te; warns 2018 to continue with slower global demand
Samsung Electronics +1.5% (tracks strength in Hynix)
(KR) North Korea govt spokesperson: advocates for ‘rapid’ improvement in North-South relationship
(KR) South Korea to establish special task force to probe cryptocurrency trading – Korean press
(KR) Bank of Korea (BOK) Statistic head: GDP fell in Q4 due to fewer work days and base effects
China/Hong Kong
Hang Seng opened -0.1%, Shanghai Composite -0.1%
Hang Seng Consumer Goods Index -0.5%: Esprit [0330.HK] has declined by over 15% (profit warning)
Hang Seng Financials Index -0.9%, Property/Construction -0.4%
Hang Seng Information Tech index -1%: Leshi Internet trades limit down (-10%) for the second straight session (shares resumed trading on Wed following 9 month halt)
Hang Seng Energy Index +1.8%, Materials +1.9%
MGM China Holdings [2282.HK]: Has declined by over 5% (delayed opening of MGM Cotai, affirmed cost est related to the project)
China Nuclear Engineering Corp [601611.CN ]China said to approve merger between Nuclear Corp and Nuclear Engineering – Chinese Press
(CN) Commerce Sec Ross: Commerce Dept’s report on Chinese intellectual property violations will be ‘a little while’; China’s 2025 technology plan is a direct threat to the US;
China is exporting more steel than the US has in capacity
(CN) China PBOC Gov Zhou was not re-elected to CPPCC National Committee – Xinhua
(CN) CHINA PBOC SKIPS OMO v injected CNY220B injected in 7,14 and 63-day reverse repos prior (1st skip since Jan 9th), Drains net CNY120B; Skipped OMO to safeguard bank liquidity stability, Targeted RRR cut to offset reverse repo demand
USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3724 V 6.3916 PRIOR (strongest fix since Nov 13th, 2015)
(CN) China Commerce Ministry (MOFCOM) Spokesperson Gao Feng: "strongly" opposes USTR report
(CN) China National Development and Reform Commission (NDRC) deputy sec general Fan Hengshan: there are "sufficient conditions" to sustain a growth rate of between 6.5-6.8%
Australia/New Zealand
ASX 200 opened +0.3%; closed -0.1%
ASX 200 Utilities Index -1.3%, Financials -0.2%; Resources Index +0.5%
(NZ) NEW ZEALAND Q4 CPI Q/Q: 0.1% V 0.4%E; Y/Y: 1.6% V 1.9%E
(NZ) New Zealand Workplace Relations Minister: Want to raise wages by collective bargaining
(NZ) According to analysts weaker than expected New Zealand Q4 CPI means markets will have to change their view that the RBNZ will raise rates a quarter-point later this year
(AU) Australia Foreign Exchange Committee Turnover report: Oct Australia Market avg FX trading $111.3B/day v $125.8B prior
(NZ) New Zealand sells NZ$150M in 3.5% 2033 bonds; avg yield 3.2576%; bid to cover 3.28x
(NZ) RBNZ: Q4 Sectoral Factor Model Inflation Index y/y: +1.4% v 1.4% prior
eServGlobal [ESV.AU] Cuts 14-months core revenue €8.3-8.5M (prior €9.7-11.0); -12%
(AU) S&P Affirms Australia sovereign AAA rating; Outlook negative
Looking ahead: Australia markets closed tomorrow for national holiday
Other Asia
(PH) Philippines Treasurer de Leon: Nation can cope with rising rates; planning local debt swap (1st since 2015); looking at yuan debt sale and Japan market tap
(PH) Philippines Environment Sec: Ban on open-pit mining remains
UMC [2303.TW]: +1% (Q4 net profit above ests)
(VN) Vietnam Central Bank orders banks to lower property loans
Looking Ahead: Malaysia Central Bank is due to make its monetary policy decision at 2:00 am EST (7 GMT)
North America
US equities ended mostly lower: Dow +0.2%, S&P500 -0.1%, Nasdaq -0.6%, Russell 2000 -0.7%
S&P500 Technology Sector -0.8%, Utilities -0.6%
Ford [F]: Reports Q4 $0.39 v $0.42e, Rev $41.3B v $37.2Be; Affirms FY18 $1.45-1.70 v $1.53e (prior $1.45-1.70)
(US) White House spokesperson Sanders: The Dollar is very stable; the White House believes in a free-floating currency [** NOTE: Earlier: (US) Treasury Sec Mnuchin: Not concerned about the level of the USD in the short-term; Weaker USD is good for trade]
(US) Pres Trump: would answer questions from Special Counsel Mueller under oath, will tell him there was no collusion with Russia
(US) DEC EXISTING HOME SALES: 5.57M V 5.70ME
(US) DOE CRUDE: -1.1M V -2ME
(US) TREASURY’S $34B 5-YEAR NOTE AUCTION DRAWS: 2.434%; BID-TO-COVER RATIO: 2.48 V 2.36 PRIOR AND 2.44 OVER THE LAST 12 AUCTIONS (highest yield since Apr 2010, highest BTC since Sept)
(MX) Mexico Central Bank Gov: Expects inflation to continue to slow in 2018 towards 3% target
Looking Ahead: Canada Nov Core Retail Sales, US Dec New Home Sales due for release
On Thursday corporate earnings are expected out of companies including 3M, Biogen, Caterpillar, Celgene, Freeport-McMoran, Intel, Intuitive Surgical, JetBlue, KLA-Tencor, Oshkosh, Raytheon, Robert Half, STMicroelectronics, Sherwin-Williams, Southwest Airlines, Starbucks, Western Digital, Wynn Resorts
Europe
(FR) FRANCE DEC NET CHANGE JOBSEEKERS: -2.7K V -19.3KE
(SA) Saudi Oil Min al-Falih: US oil boom is a threat as Mexican and Venezuelan output is declining; does not see signs of a significant oil demand slowdown; We only target inventories; we don’t have specific price target for oil; It is highly unlikely OPEC will change course in June; There will be a time when OPEC can adjust cuts level; June could be good opportunity for fine-tuning OPEC target
(UK) UK Office for Budget Responsibility’s Chote: UK economy is ‘weak and stable’ with 50% chance of another recession in five years – Independent
Looking Ahead: ECB rate decision, Germany Jan Ifo Survey due for release
Levels as of 01:00ET
Nikkei225 -1.1%, Hang Seng -0.2%; Shanghai Composite +0.1%; ASX200 -0.1%, Kospi +0.8%
Equity Futures: S&P500 -0.1%; Nasdaq100 +0.0%, Dax -0.0%; FTSE100 -0.2%
EUR 1.2440-1.2385; JPY 109.48-108.92; AUD 0.8106-0.8043;NZD 0.7393-0.7326
Feb Gold +0.5% at $1,362/oz; Mar Crude Oil +1.0% at $66.28/brl; Mar Copper +0.6% at $3.25/lb
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