HomeContributorsFundamental AnalysisAsian Market Update: Australia Retail Sales Disappoint Ahead Of Tomorrow's RBA Decision

Asian Market Update: Australia Retail Sales Disappoint Ahead Of Tomorrow’s RBA Decision

Australia retail sales disappoint ahead of tomorrow’s RBA decision

Asia Mid-Session Market Update: China Caixin Services PMI edges lower; Australia retail sales disappoint ahead of tomorrow's RBA decision

Friday US markets on close: Dow +0.9%, S&P500 +0.7%, Nasdaq +0.5%

Best Sector in S&P500: Financials

Worst Sector in S&P500: Basic Materials

Biggest gainers: MTD +6.7%; M +6.4%; MS +5.5%

Biggest losers: HBI -16.4%; FCX -5.8%; CMG -4.5%

At the close: VIX 11.0 (-1.0pts); Treasuries: 2-yr 1.20% (flat), 10-yr 2.49% (+2bps), 30-yr 3.11% (+3bps)

Weekend US/EU Corporate Headlines

Dow and DuPont to offer sale of R&D capability to ease antitrust concerns – FT

Board Unanimously Rejects Unsolicited Proposal from Frontline Ltd.


(US) Defense Secretary Mattis: not considering increasing US forces in the Middle East in response to Iran’s misbehavior, but US will not ignore Iran’s activities

(US) Homeland Security has "suspended any and all actions" related to implementing Pres Trump’s immigration ban on 7 Muslim-majority countries

(US) President Trump: Will not attend May meeting with NATO leaders in Europe

Key economic data:

(CN) CHINA JAN CAIXIN PMI SERVICES: 53.1 V 53.4 PRIOR (first sequential decline in 4 months)

(AU) AUSTRALIA DEC RETAIL SALES M/M: -0.1% (First m/m decline since Aug 2015) V 0.3%E; Q4 Q/Q: 0.9% V 0.9%E


(JP) JAPAN DEC LABOR CASH EARNINGS Y/Y: 0.1% V 0.4%E ; REAL EARNINGS (EX-INFLATION) Y/Y: -0.4% V 0.0% PRIOR; 2016: 0.5% (biggest increase since 2010)

Asia Session Notable Observations, Speakers and Press

Asian markets tracking the Friday rally on Wall St, where low wage growth component of the monthly jobs data eases the pressure on the Fed to deliver on its promise of higher rates in the most immediate term; Australia markets underperforming as commodity prices retreat.

Political standoff in the US between the DOJ and the Courts remains tense after a Washington State judge temporarily blocked the administration’s travel ban and Homeland Security dept suspended all implementation; White House plans to appeal the order.

China Jan Caixin services PMI eased for the first time in 4 months after hitting a multi-month high in Dec. Economists noted the contrast of employment components in manufacturing vs services, with the former reducing employment and the latter hiring faster. Rising input prices were also cited, along with expectations of decelerating economy after Q1 given decreasing propensity for restocking.

Ahead of tomorrow’s RBA decision, where expectations are largely for a rate hold, today’s Australia retail sales were disappointing registering first sequential decline in over a year. Some economists see that as a one-off given some recent liquidation activity in the industry, others expect the reduced activity to give RBA pause while also monitoring the price developments.

Japan wage growth slowed in December, though 2016 wage inflation was still the highest since 2010.


(CN) China State Researcher Baoliang: China should assess impact of President Donald Trump’s economic policies and guard against forex market volatility and capital outflows – Chinese press

(CN) China should raise central fiscal deficit to 3.5% of GDP – Chinese press

(CN) China Foreign Min Lu Kang: US should stop "making wrong remarks" about security in the South China Sea – press

Australia/New Zealand:

(AU) JPMorgan economist: Weakness in Australia retail data was heavily concentrated in households good retailing, which may be due to liquidation sales of a major Australian hardware/home improvement retailer – SMH

(NZ) JPMorgan: RBNZ policy statement this week may come across as hawkish as it trumpets recent return of inflation above 1% as evidence price pressure is picking up – press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.2%, Hang Seng +0.6%, Shanghai Composite +0.4%, ASX200 -0.1%, Kospi +0.2%

Equity Futures: S&P500 flat; Nasdaq flat, Dax flat, FTSE100 -0.1%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0770-1.0790; JPY 112.20-112.70; AUD 0.7655-0.7685; NZD 0.7295-0.7305; GBP 1.2475-1.2500

Apr Gold +0.4% at 1,225/oz; Mar Crude Oil +0.4% at $54.03/brl; Mar Copper +0.7% at $2.64/lb

SPDR Gold Trust ETF daily holdings rise 3.3 tonnes to 814.5 tonnes; 3rd straight increase; Highest since Dec 31st

(AU) Australia Port Hedland Jan Iron Ore Exports 40.3Mt v 43.9Mt m/m, +19% y/y

(CN) PBOC SETS YUAN MID POINT AT 6.8606 V 6.8556 PRIOR; weakest Yuan setting since Jan 20th

(CN) PBOC skips reverse repo operations v CNY50B on Feb 2nd and raising all offer yields by 10bps

(KR) South Korea sells 3-yr govt bonds; avg yield 1.655%

Asia equities / Notables / movers

7267.JP Honda: Reports 9-month Net ¥521B v ¥438B y/y, Op Profit ¥703B v ¥567B y/y, Rev ¥10.24T v ¥10.94T y/y; +2.0%

5214.jp Nippon Electric: CLSA Raised 5214.JP to Outperform from Underperform; +6.1%

7270.JP Fuji Heavy May report FY16/17 op profit of ¥410B, -28% y/y but above ¥373B prior forecast – Nikkei; -0.6%

NAB.AU NAB: Q1 trading statement; +0.8%

IGO.AU Independence Group: Credit Suisse Raised IGO.AU to Outperform from Neutral; +1.8%

DUE.AU Duet: Establishes A$150B debt facility with Westpac; -1.5%

AWE.AU AWE: Macquarie cut; -1.7%

338.HK Sinopec Shanghai: Nomura cut; -1.0%

610.HK Wai Kee Holdings: Guides FY16 net profit at least +50% y/y; +5.2%

240.HK Build King Holdings; Guides FY16 net profit at least +50% y/y; +11.3%

149.HK China Agri Products: Profit warning; -24.6%

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