Headlines/Economic Data
General Trend: Energy, Real Estate and Materials companies underperform
(US) US 10-year Treasury yield higher by 2bps, after rising over 5bps on Friday’s session; yield at 2.86% vs 2.88% for Australia 10-year yield
Australia 10 year yield rises over 9bps amid gain in Treasury yields and weaker bid to cover at bond auction
Taiwan sells 10-year bonds at lower bid to cover, despite rise in yield
Broad dollar strength, rising 1% against the KRW
Japan
Nikkei 225 opened -1.5%; closed -2.6%
TOPIX Real Estate Index -3%, Electric Appliances -2.2%, Iron & Steel -2%, Securities -2%
Mitsubishi UFJ [8306.JP] Declines over 3%: Reported flat 9-month pretax profits
Softbank [9984.JP]: -2%: Expected to report earnings on Wed, Feb 7th
Toyota [7203.JP] -1.5%: Expected to report earnings on Tuesday Feb 6th
Fast Retailing [9983]: Declines over 3%: Jan domestic SSS -2.4% y/y
Honda [7267.JP] Gains over 1.5% after raising FY outlook
(JP) PM Abe backed candidate Taketoyo Toguchi said to defeat incumbent Susumi Inamine in the Nago mayoral elections – Japanese Press
(JP) Japan PM Abe expected to ask the US and South Korea o conduct a planned joint military drill after the Pyeongchang Winter Olympics without scaling it down so as to keep pressuring North Korea to give up its nuclear and missile development – Nikkei
(JP) Japan cryptocurrency exchange Coincheck, has not been successful tracking stolen funds, were transferred to anonymous e-wallets; not sure when they will resume withdrawals – Nikkei
(JP) Japan Jan PMI Composite: 52.8 v 52.2 prior; PMI Services: 51.9 v 51.1 prior
(JP) Japan PM Abe: 2% inflation is a global standard, market environment has greatly changed due to 2% target – Parliament
(JP) BoJ Iwata: Companies raising prices has not progressed ‘far’
(JP) Bank of Japan (BOJ) Gov Kuroda: No change in approach to QE; maintaining 2% inflation target is very important – Parliament
Korea
Kospi opened -1.5%
Continued weakness in chip sector: Samsung Electronics and Hynix drop further after Friday’s over 2% declines
Samsung: 005930.KR South Korea Appeals Court: Samsung’s support of equestrian sport constitutes bribery in the Jay Lee case
(KR) South Korea Dec Current Account Balance: $4.1B v $7.4B prior; Balance of Goods (BOP): $8.2B v $11.5B prior
(KR) North Korea military parade on Thursday is not targeted at the Olympics
(KR) Bank of Korea (BOK) sells KRW720B in 6-month bonds at 1.62%
(KR) According to Statistics Korea, 2017 online shopping in South Korea reached KRW78T, +19.2% y/y – Korean press
(KR) North Korea official: North Korea’s nuclear capabilities will deter Trump from ‘showing off on the Korean peninsula’ – UK press
(KR) South Korea sells KRW1.65T in 3-yr Govt bonds: avg yield 2.275%
China/Hong Kong
Hang Seng opened -2.7%, Shanghai Composite -1.5%
Hang Seng Energy Index -3%, Information Tech -2.7%, Materials -2.1%, Consumer Goods -2%, Financials -2%
(CN) Yuan (CNY) ‘internationalization’ may accelerate in 2018 – China Economic Info Daily
(CN) Chinese Academy of Social Sciences (CASS): China is likely to leave its benchmark interest rate unchanged in the near future amid reasonable inflation rises and a stable yuan, even with the higher likelihood of US Fed interest rate rise next month – China Daily
(CN) China Ministry of Commerce (MOFCOM): to launch anti-dumping investigation into US sorghum imports
(CN) China urges the US to drop its "Cold War mentality" earnestly assume its special disarmament responsibilities, correctly understand China’s strategic intentions and objectively view China’s national defense and military build-up
(CN) China PBoC: Skips OMO (8th straight session) v skipped prior; Net drain CNY40B v CNY90B prior
USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3019 v 6.2885 PRIOR
(CN) CHINA JAN PMI SERVICES: 54.7 V 53.5E (highest since May 2012); PMI COMPOSITE: 53.7 V 53.0 PRIOR
(CN) China securities regulator CSRC said to ask brokerage firms to help ‘avert sharp stock crashes’ – US financial press
Australia/New Zealand
ASX 200 opened -1.4%; closed -1.6%
ASX 200 Resources Index -2.5%, Energy -2.2%, Telecom -1.6%, Financials -1.4%, REIT -1.3%
(AU) Australia Jan CBA PMI Composite: 54.2 v 55.5 prior; PMI Services: 53.8 v 55.1 prior
AWE.AU Board recommends bid from Mitsui at A$0.95/share
WES.AU Guides H1 non-cash impairment for UK and Ireland Bunnings unit of A$795M resulting in underlying pretax loss A$165M; targeting H1 EBITDA of A$33M
(AU) Australia AOFM buy backs A$400M in bonds due March and Oct 2019; combined bid to cover 2.95x
(AU) Australia Jan Melbourne Institute Inflation M/M: 0.3% v 0.1% prior; Y/Y: 2.0% v 2.3% prior
(AU) Australia sells A$400M v A$400M indicated in April 2033 bonds, avg yield 3.0717%, bid to cover 1.87x
(AU) Australia Jan ANZ Job Advertisements M/M: +6.2% v -2.3% prior
(NZ) New Zealand Treasury: Sees annual inflation at ~1.0% in Q1; inflation to gradually pick up in 2018 and 2019
Other Asia
(ID) Indonesia Q4 GDP Q/Q: -1.7% v -1.7%e; Y/Y: 5.2% v 5.1%e; 2017 GDP Y/Y: 5.1% v 5.1%e
(MY) Malaysia Central Bank (BNM) Gov: Not on a tightening trend, monetary policy is still accommodative
(TW) Taiwan Central Bank sells NT$25B in 10-yr bonds at 1.069% v 0.981% prior (1.02-1.05%e); bid to cover 1.73x v 2.20x prior
North America
On Monday’s session, S&P500 Futures trade lower by more than 0.7% in Asia
(US) Outgoing Fed Chair Yellen: Asset valuations are generally elevated, but don’t want to call what we are seeing a bubble – PBS interview (from Feb 3rd)
(US) Fed’s Williams (moderate, voter): need to continue raising interest rates; hikes will keep the economy on track and avoid overheating (from Feb 2nd)
(US) Fed’s Kaplan (moderate, non-voter): Has more conviction in three rate hikes than six months ago; – There’s a chance I’m wrong and we may consider more than three hikes; Jobs report today [Friday] was consistent with his thinking (from Feb 2nd)
(US) Larry Lindsey said to withdraw from being considered for the Fed Vice Chairman position – US financial media
(US) White House econ adviser Cohn: White House would like to make individual side of tax reform permanent; We have had a mild backup in Treasury yields ; Stocks are seeing a few days of consolidation after a long rally; Expects strong Q1 GDP in the US; Strong dollar is always in the best interest of the US – Fox Business interview (From Feb 2nd)
QCOM Broadcom said to raise bid for Qualcomm to $80-82/shr (vs $70/share currently), ~$120B; will also include higher breakup fees – financial press
Looking Ahead: US Jan ISM Non-Manufacturing PMI due for release on Monday
Europe
(DE) Germany suspends coalition talks, will resume Monday 09:00GMT, failing to meet self imposed Sunday deadline; disputes over healthcare and labor policy remain
(FR) ECB’s Villeroy (France): whether we end QE program in Sept or taper somewhat more gradually is not a deep existential question; We will keep an eye on impact of exchange rate evolution and be prepared to reassess if necessary (from Feb 2nd)
(UK) UK Official: PM May has ruled out staying in customs union – press [Note: PM May advisers were said to consider a customs union deal covering trade in goods with the EU after Brexit, said a press report from Feb 1st. The possible plan would take effect after the 2-year Brexit transition period.]
Fiat Chrysler: US regulators reportedly to seek major fines and recall as part of Fiat diesel motor settlement – press
GKN [GKN.UK]: Onex in talks with GKN on aerospace unit – Uk press
Carillion [CLLN.UK]: Greybull Capital will be among bidders interested in acquiring parts of Carillion that might be ringfenced following its liquidation – FT
Looking Ahead: UK Jan Services PMI due for release
Levels as of 01:00ET
Nikkei225 -2.6%, Hang Seng -1.3%; Shanghai Composite +0.5%; ASX200 -1.6%, Kospi -1.1%
Equity Futures: S&P500 -0.2%; Nasdaq100 -0.1%, Dax -0.4%; FTSE100 -0.4%
EUR 1.2466-1.2424; JPY 110.29-109.79; AUD 0.7939-0.7890;NZD 0.7309-0.7278
Apr Gold -0.2% at $1,334/oz; Mar Crude Oil -0.8% at $64.91/brl; Mar Copper +0.4% at $3.19/lb
