Headlines/Economic Data
General Trend:
Japan Finance Min Aso declines to address US officials comments related to currencies
Japan Core CPI holds steady in Dec
US dollar (USD) trades with a generally weaker tone in Asia: PBoC continues to fix yuan at multi-year high
PBoC skipped open market operation (OMO) for second straight session; cited relatively high liquidity level in banking system
Australia/New Zealand
ASX 200 closed for holiday
China/Hong Kong
Hang Seng opened +0.6%, Shanghai Composite -0.4%
Hang Seng Information Technology Index +1.8%, Property/Construction +1.5%, Financials +1.2%; Energy -1.8%
Leshi Internet [300104.CN]: Trades limit down (-10%) for 3rd straight session
(CN) China Dec Industrial Profits Y/Y: 10.8% v 14.9% prior: 2017 industrial profits CNY7.52T, +21% y/y (fastest growth since 2012)
(CN) PBOC SETS YUAN REFERENCE RATE AT 6.3436 V 6.3724 PRIOR (strongest CNY fix since Nov 5th, 2015)
(CN) PBoC: Skips OMO (2nd straight session) vs skipped prior; Net drain CNY270B v CNY120B drain prior; Weekly Net drain CNY320B v CNY590B injection w/w
(CN) Previously announced PBoC targeted RRR cut* has limited impact on liquidity; PBoC to withdraw liquidity in open market operations (OMOs); PBoC may adjust OMO for deleveraging. – Xinhua (**Reminder: The targeted RRR cut that was announced last September, became effective on Jan 25th)
(CN) ‘Window’ not open yet for PBoC benchmark rate hike (in line with prior comments) – China Securities Journal
(CN) China NDRC: To crack down on irregularities in oil refining sector: Will focus on violations such as illegal crude oil purchases and processing.
(CN) China Finance Ministry (MOF): To swap CNY1.73T in existing local government debt by Aug
(CN) China NDRC: To allow banks to create private-equity funds to conduct market-based debt for equity swaps
(CN) China Finance Ministry Researcher Liu Shangxi: Sees next major source of China government debt is pension deficit.
South Korea
Kospi opened -0.1%
Hyundai Mobis [012330.KR]: Down over 8% (reported unexpected Q4 net loss)
Hyundai Motor [005380.KR] Has declined by over 4% (reported Q4 earnings on Thursday)
E-Mart [139480.KR]: +12.5% (Affinity and BRV to invest over KRW1T in E-Mart Online)
South Korea Unification Ministry: North Korea may stage ‘threatening’ military parade on Thursday, Feb 8th anniversary – South Korean Press
South Korea and the US are planning to hold second meeting on Free Trade Agreement (FTA) revision Jan 31-Feb 1st, expected to continue to focus on modifications and amendments
South Korea Trade Ministry comments on recently announced US tariffs on washing machines: To prepare steps to increase local demand for washers
Japan
Nikkei 225 opened +0.4%; closed -0.2%
Rakuten [4755.JP] Gained over 3% (announced online grocery delivery service with Wal-Mart)
Komatsu [6301.JP] Gained over 1.5% on session (Caterpillar reported earnings on Thursday)
Fujitsu [6702.JP]: +1.3% (confirmed talks regarding mobile phone business)
Isetan [3099.JP]: +1% (May report results later today)
Fanuc [6954.JP]: Flat (May report earnings today)
Shin-Etsu Chemical [4063.JP]: Flat (May report earnings later today)
Koito Mfg Co [7276.JP]: +1.7%, May report earnings today
JAPAN DEC NATIONAL CPI Y/Y: 1.0% V 1.1%E; EX-FRESH FOOD (CORE) Y/Y: 0.9% V 0.9%E
Japan Jan Tokyo CPI Y/Y: 1.3% v 1.1%e; Ex-Fresh Food (Core) Y/Y: 0.7% v 0.8%e
BoJ released Minutes of Dec 20-21 Policy Meeting: Most Members (Price momentum is being maintained; Appropriate to continue ‘powerful’ monetary easing); Some Members (Said must continue to look at both positive and negative effects of current policy, including effects on financial system) ; One Member (Said functioning of financial intermediation had not been impaired yet, but bank profits show effects of low rates on strength of financial institutions had been accumulating; Said BoJ should keep policy steady now, but might need to consider adjusting level of interest rates when economy, prices were expected to continue improving)
Japan Fin Min Aso: Reiterates G7 agreement is to avoid targeting FX for the sake of competitiveness; won’t comment on other countries’ remarks on FX
Former Japan FX Official Sakakibara (‘Mr Yen’): Expects USD/JPY to trade toward ¥100 by end of 2018; USD/JPY at ¥100 or ¥105 not a major problem; BoJ Gov Kuroda may start talking about an exit in 2-3 years
Other Asia
(SG) Singapore Dec Industrial Production M/M: -2.0% v +2.4%e; Y/Y: -3.9% v +0.8%e
(TH) Thailand Central Bank Gov Veerathai: To be more ‘stringent’ in monitoring Baht (THB); prepared to add more measures if Baht moves are ‘unusual’
North America
US equity markets ended mostly higher: Dow +0.5%, S&P500 +0.1%, Nasdaq -0.1%, Russell 2000 +0.1%
S&P500 Utilities +1.5%, Health Care +0.8%; Energy -0.8%
Intel [INTC]: Gained over 3% afterhours: Reports Q4 $1.08 v $0.86e, Rev $17.1B v $16.3Be; Raises FY18 capex plan materially; raises quarterly dividend by 10% to $0.30 from $0.2725 (2.65% yield); Guides Q1 EPS ~$0.65-0.75 v $0.73e, Rev $14.5-15.5B v $15.1Be
Starbucks [SBUX]: Down over 4% afterhours: Reports Q1 $0.65 v $0.57e, Rev $6.07B v $6.14Be; Affirms FY18 global comp sales growth +3-5% (prior +3-5%); to open 2,300 new stores (prior 2,300)
(US) Pres Trump: the Dollar will strengthen as the economy does; ultimately I want to see a strong dollar; Mnuchin comments this week were out of context – CNBC interview excerpts
(US) President Trump said to have ‘ordered’ special investigator Mueller fired in June 2017 – NY Times
Looking Ahead: US Dec Durable Goods and Q4 US Advance GDP due for release; Canada Dec CPI
Corporate earnings are expected out of companies including AbbVie, Air Products, Colgate, Honeywell, Lear, Moog, PolyOne, Rockwell Collins
Europe
(EU) ECB sources: ECB council divided about next move as the rise of the Euro complicates the forecasts; Some want to remove the easing bias in March; others prefer June for next policy adjustment; Others are more hesitant and want to fully reassess at the next meeting – press
(ES) Spain govt reportedly intends to move forward with plan to block separatist Puigdemont candidacy for regional Catalan president – press
(IE) Ireland Central Bank: Raises 2018 GDP growth forecast to 4.4% v 3.9% prior; raises 2017 GDP growth forecast to 7.0% v 4.9% prior; economy is not overheating at present; Brexit risks may have moved slightly in a benign way.
Looking Ahead: Euro Zone Dec M3 Money Supply and Private Sector Loans, along with UK Q4 Advance GDP due for release
Levels as of 01:00ET
Hang Seng +1.4%; Shanghai Composite +0.3%; Kospi +0.3%
Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.2%; FTSE100 +0.1%
EUR 1.2370-1.2434 ; JPY 109.34-109.77; AUD 0.8005-0.8058 ;NZD 0.7292-0.7345
Feb Gold +0.3% at $1,351/oz; Feb Crude Oil -0.2% at $65.36/brl; Mar Copper +0.3% at $3.212/lb
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