Headlines/Economic Data
General Trend: Asian equities trade generally lower following negative leads out of the US
Energy shares underperform vs outperformance seen on Monday
Japan Dec Jobless Rate rises for the first time since May 2017; job-to-applicant ratio highest since Jan 1974
US Treasury Futures extend losses during Asian session
PBoC sets yuan weaker for first time in 8 sessions
Japan
Nikkei 225 opened -0.3%; closed -1.4%
TOPIX Securities Index -1.2%, Electric Appliances -1.7%
Hitachi Metals [5486.JP]: Declines over 5% (9-month profits declined y/y)
Fuji Electric [6504.JP]: Trades lower by over 1% (affirmed FY net profit forecast)
Hitachi Construction [6305.JP]: Gains over 7% (Raised FY18 guidance)
Canon Electronics [7739.JP]: Gains over 9% (FY profit rose by ~38%)
(JP) Japan’s Topix passes 1,900 for the first time since 1991
(JP) Japan Dec Overall Household Spending Y/Y: -0.1% v 1.5%e
(JP) JAPAN DEC JOBLESS RATE: 2.8% V 2.7%E; JOB-TO-APPLICANT RATIO: 1.59 (highest since Jan 1974) V 1.57E
(JP) Japan PM Abe Adviser Hamada: Yen could ‘firm’ in short-term on factors such as US currency policy
(JP) Japan Econ Min Motegi: Will closely watch FX rates as they have impact on Japan economy
(JP) Japan Fin Min Aso: Coincheck event is very regrettable; if needed authorities will search crypto exchanges
(JP) JAPAN DEC RETAIL SALES M/M: +0.9% V -0.2%E; RETAIL TRADE Y/Y: 3.9% V 2.2%E
JSR, 4185.JP Reports 9M Net ¥27.7B v ¥22.3B y/y; Op ¥37.2B, 44.5% y/y; +14.4%
(JP) Japan MoF sells ¥2.2T v ¥2.2T indicated in 0.10% (prior 0.10%) 2-yr JGBs; avg yield -0.130% v -0.136% prior; bid to cover 5.02x v 4.32x prior
(JP) Japan 10-yr JGB yield trades above 0.09% (highest since July)
Looking Ahead: Japan Dec Prelim Industrial Production due on Wednesday, along with comments from BoJ official Iwata
Korea
Kospi opened -0.3%
Chipmakers trade broadly lower: Hynix and Samsung Electronics decline over 2%
(KR) South Korea customs data shows washing machine exports have nearly halved over the past 5-yrs; with more declines likely from new US safeguard measures –
Korean press
(KR) According to Korea Financial Investment Association, the Korea stock market has seen the number of participants pass 25M for the first time – Korean press
(KR) South Korea Feb Business Manufacturing Survey: 77 v 82 prior; Non-Manufacturing Survey: 78 v 78 prior
Samsung, LG open new logistics facilities in US over safeguard measures – Korean press
(KR) South Korea Dec Department Store Sales y/y: 3.2% v 8.5% prior; Discount Store Sales y/y: 2.2% v 0.0% prior
(KR) North Korea armed forces have reportedly scaled back their winter military exercises due to shortages of fuel and food – press
Looking Ahead: South Korea Dec Industrial production due for release on Wed
China/Hong Kong
Hang Seng opened -0.7%, Shanghai Composite -0.3%
Hang Seng Materials Index -2.6%, Energy -2.5%, Info Tech -1.5%, Financials -1.4%, Property/Construction -0.9%
Wynn Macau, 1128.HK Forms special committee following recent sexual misconduct allegations related to Steve Wynn; -5.5% (declined 6.5% Monday)
(CN) Some China banks said to have been ordered to curb overnight lending – Chinese press
(CN) China Premier Li: China will properly manage the timing, pace and intensity of macroeconomic controls to achieve higher quality growth – CD
(CN) PBoC: Skips OMO (4th straight session) v skipped prior; Net drain CNY240B v CNY140B drain prior
(CN) PBOC SETS YUAN REFERENCE RATE AT 6.3312 V 6.3267 PRIOR (1st weaker setting in 8 sessions)
(CN) China targeting to meet crude steel capacity cut target early
(CN) China province of Shanxi (2nd largest coal producer) has asked coal miners to shorten or eliminate Spring Festival holiday – press
Looking Ahead: China Jan Official Manufacturing and Non-Manufacturing PMIs due on Wed
Australia/New Zealand
ASX 200 opened -0.1%; closed -0.9%
ASX 200 Energy Index -1.3%, Resources -1.4%, Utilities -1%, Financials -0.6%
(NZ) NEW ZEALAND DEC TRADE BALANCE (NZD): +640M V -125ME; YTD -2.84B V -3.44BE
Fortescue, FMG.AU Reports Q2 ore mined 47.5 Mt v 50.1 Mt y/y; ore shipped 40.5 Mt v 42.2 Mt y/y
Village Roadshow, VRL.AU Reports H1 substantially lower y/y
Looking Ahead: Australia Q4 CPI due for release on Wed
(AU) Wholesale energy prices more than doubled in last 12 months in Victoria and S. Australia – AMEO data
(NZ) S&P affirms New Zealand sovereign rating at AA; outlook stable
Other Asia
(PH) Philippines Central Bank Gov Espenilla: Peso is broadly stable over medium term
(TH) Thailand Central Bank: GDP may grow 4% in 2018; interest rate to remain accomodative to help economy
North America
US equity markets ended broadly lower: Dow -0.7%, S&P500 -0.7%, Nasdaq -0.5%, Russell 2000 -0.6%
S&P500 Energy Sector -1.5%, Utilities -1.3%, Real Estate -1.2%
Maxim Integrated Products [MXIM]: Declines over 8% in the afterhours, as Japan’s Renesas denied media report related to $20B merger.
MetLife [MET]: Declines over 6% in the afterhours: Reports prelim Q4 $0.61-0.66 v $1.10e; discovered material weakness in internal control over financial reporting; to see $135-165M FY17 net income impact; to increase reserves by $525-575M; to postpone earnings
Thomson Reuters [TRI] Confirms Advanced Discussions with Blackstone Regarding Financial & Risk (F&R) Business; no terms disclosed yet
Callidus Software [CALD]: To be acquired by SAP for $36.00/shr for $2.4B (~10% premium to closing price)
(US) FBI Deputy Director McCabe reportedly plans to step down effective today, sooner than expected – NBC News
(US) Treasury Sec Mnuchin comments before Tuesday’s Senate Banking Committee Testimony: Reiterates Treasury can fund government into Feb
(US) Treasury quarterly financing estimates: to borrow $441B in Jan-Mar quarter (v $512B prior projection); Treasury to borrow $176B in Apr-Jun quarter; Treasury borrowed $282B in Oct-Dec quarter v $275B estimate
Looking Ahead: Weekly US API Crude Oil Inventories due for release
Corporate earnings are expected from companies including AK Steel, AMD, Aetna, Corning, Electronic Arts, Harley-Davidson, Juniper, McDonald’s, Pfizer, Robert Half
Europe
(EU) Reportedly ECB officials are assuming the QE program will wind down over about 3 months (rather than suddenly halting the program); Even the hawkish members of the council are said to support a short taper period rather than a sudden halt to QE ; There has still not been a decision made on QE after the nominal end date in Sept – press
(UK) EU Chief Brexit Negotiator Barnier: EU institutions and govts are united in Brexit talks; Brexit transition to take 21 months
(UK) PM May spokesperson: "there remains some distance" between the UK and EU on more than one issue over the UK’s transition deal – Sky News
(UK) Unreleased UK Brexit analysis: UK would be worse off outside the EU under every scenario modeled – Buzzfeed
(UK) Moody’s: UK corporate credit quality to remain stable in 2018 despite Brexit uncertainty
(DE) Germany govt to raise 2018 GDP forecast to 2.4% from 1.9% prior – press
Luxottica [LUX.IT]: Reports Q4 Rev €2.09B v €2.07Be
Telecom Italia [TIT.IT]: CEO expected to announce plan for network spin off proposal on Monday
Looking Ahead: Euro Zone Q4 prelim GDP and Germany Jan Prelim CPI due for release
Levels as of 01:00ET
Nikkei225 -1.4%, Hang Seng -1.0%; Shanghai Composite -0.6%; ASX200 -0.9%, Kospi -1.1%
Equity Futures: S&P500 -0.5%; Nasdaq100 -0.7%, Dax -0.7%; FTSE100 -0.5%
EUR 1.2388-1.2361; JPY 109.20-108.66; AUD 0.8100-0.8066;NZD 0.7338-0.7314
Feb Gold -0.4% at $1,334/oz; Mar Crude Oil -1.0% at $64.88/brl; Mar Copper -0.9% at $3.17/lb
