Asia Market Update: Equities track lower on an uninspiring US session; China property names weaker on expected continued regulation
***Headlines/Economic Data***
General Trend:
- US dollar (USD) weakens broadly in early Asia, later pares losses
- Aussie rises amid better than expected home loans data, Westpac Consumer Confidence hits 4-year high; later pares gain
- Australia 10-year yield rises amid syndicate pricing
- China continues to play down need for rate hike: PBoC Adviser said not necessary for China to raise benchmark interest rates in near term
- China Q4 GDP and Australia monthly employment data due for release on Thursday
- China sells 5-year bonds at lower than expected yield
-(CN) PBOC reminds that RRR cut announced for some banks in Sept, to go into effect Jan 25th
- Japan Nov Core Machine Orders has highest value since June 2008
- BoJ again leaves bond purchases unchanged at daily operation
- Bitcoin continues its weakness as Asia regulators continue to indicate they will crack down on cryptocurrency
- Coinbase: Notes buys and sells are temporarily unavailable
- Bithumb: Delayed cash withdrawals for some clients
Japan
-Nikkei 225 opened -0.7%; closed -0.4%
- TOPIX Iron & Steel Index -1.2%: Nippon Steel -1.5% (Fire reported at Nippon Steel's Naoetsu production facility - Japanese press)
- General weakness in the Japanese mega banks: Sumitomo Mitsui -1%, Mizuho -1%, Mitsubishi UFJ -1% (tracks declines in S&P500 Financials sector)
- Fast Retailing -1.3% (gained 2.8% prior session)
- Softbank -1.2% (gained 2.0% prior session)
- (JP) Japan Nov Core Machine Orders M/M: 5.7% v -1.4%e; Y/Y: +4.1% v -1.0%e
- Toyota and Honda suspend exports to Vietnam since the beginning of the year following the implementation of a rule that requires stringent checks on imported vehicles - Nikkei
Looking Ahead: Japan Nov Industrial Production due for release on Thursday
Korea
-Kospi opened -0.2%
- Weakness in chip sector: Samsung Electronics -0.3%, Hynix -0.3%
- Chemicals firms trade lower: LG Chemicals -2%, Lotte Chemical -2%
- Celltrion [068270.KR]: -3.5% (cautious broker commentary)
- Doosan Heavy [034020.KR] -4% (Doosan Group denied press report related to sale of Doosan Heavy)
- Samsung SDS [0.18260.KR] +4.5% (positive broker commentary)
- (KR) South Korea Deputy PM and Fin Min Kim: suggestion to close down cryptocurrency exchanges is still an option under consideration, despite anticipated side effects - Korean press
- (KR) US Secretary of State Tillerson: North Korean intercontinental ballistic missile launch in November was witnessed by passengers on a San Francisco-to-Hong Kong commercial flight
- (KR) Bank of Korea sells KRW2.43T in 2-year monetary stabilization bonds (MSB): yield 2.15%
-(KR) South Korea Fin Min Kim: Will leave FX rates to market but take action if necessary
Looking Ahead: Bank of Korea interest rate decision due for Thursday (expected to leave rates unchanged at 1.50%)
China/Hong Kong
-Hang Seng opened -0.3%, Shanghai Composite +0.1%
- China property names decline after report that China would continue with property curbs; Hang Seng Property/Construction Index -1.0%
- Property company Country Garden [2007.HK] -4%: Planning to raise HK$23.4B by selling shares and convertible bonds
- Hang Seng Materials Index -1.8% (+1.6% prior session), Energy -1.9% (+1.1% prior session)
- HNA Group unit Bohai Capital halted ahead of ‘expected major issue’
- General weakness among airlines: China State-owned Assets Supervision and Administration Commission (SASAC) said it will allow less than 50% state holding in top 3 state airlines
- (CN) China researcher: No need for PBOC to hike interest rates – press
- (CN) China PBoC OMO: Injects CNY200B in 7,14 and 63-day reverse repos v CNY320B prior: Net injects CNY100B v CNY270B drained prior
- USD/CNY (CN) PBoC sets yuan reference rate at 6.4335 v 6.4372 prior (strongest fix since Dec 10, 2015)
- (CN) China MoF sells 5-yr bonds: avg yield 3.81% v 3.84%e, bid to cover 3.39x
- (HK) Hong Kong Chief Lam: Take ‘great exception’ to report compiled by British peer Paddy Ashdown that casts doubts on rule of law and China’s influence over city
Looking Ahead: China Q4 GDP and Dec data (Fixed Asset Investment, Industrial Production, Retail Sales) due for release on Thursday
Australia/New Zealand
- ASX 200 opened -0.2%; closed -0.5%
- ASX 200 Resources Index -1.4%,Telecom -1%, Financials -0.3%
- (AU) Australia Jan Westpac Consumer Confidence Index: 105.1 v 103.3 prior; m/m: 1.8% v 3.6% prior (4-yr high)
- (NZ) New Zealand Dec ANZ Commodity Price: -2.2% v -0.9% prior
-(AU) Australia to sell A$9.6B in new 2029 bonds, priced at yield to maturity of 2.86%
-(NZ) New Zealand mortgage brokers see uptick in interest after lending curbs lifted - NZ press
-(AU) According to analysts the RBA cash rate is poised to fall below the Fed funds rate for the first time in over 15 years, will see a sharp fall in the the A$ as a result - AFR
- (AU) AUSTRALIA NOV HOME LOANS M/M: 2.1% V 0.0%E; INVESTMENT LENDING: 1.5% V 1.8% PRIOR; Owner Occupied Loan Value m/m: 2.7% v -0.5% prior
Looking Ahead: Australia Dec Employment data due for release on Thursday
Other Asia
- (IN) India Economic Affairs Sec Garg: Requirement of additional borrowing reduced to INR200B vs INR500B originally seen
- (IN) India 10-year bond yield near 7.43%, down over 12bps
- (SG) Singapore Dec Non-Oil Domestic Exports M/M: -5.0% v -4.4%e; Y/Y: +3.1% v 8.6%e; Electronic Exports Y/Y: -5.3% v 5.1% prior
- (PH) Philippines Central Bank Gov Espenilla: Sees no Philippine Peso freefall given fundamentals
- Nanya Technology [2408.TW] -4.7%: Sees Q1 DRAM prices rising 'mildly' - local press
North America
- US equity markets reversed gains and ended mostly lower: Dow flat, S&P500 -0.4%, Nasdaq -0.5%, Russell 2000 -1.2%
S&P500 Energy Sector -1.3%, Materials -1.2%
- (US) Pres Trump tweets: "The Democrats want to shut down the Government over Amnesty for all and Border Security."
- (US) US House Republicans discuss stop-gap government funding bill through Feb 16th (in line with prior press speculation)
- (US) Republican Representative Simpson: Stop-gap funding bill expected to include 6-year Childrens Health Insurance Program (CHIP) reauthorization; will not include 'Dreamer' immigration legislation
- (US) Republicans said to discuss attaching 2-year delay of medical device and 'cadillac' health plan taxes related to Obamacare - financial press
- (US) Former White House adviser Steve Bannon has reportedly been subpoenaed by Special Counsel Mueller in Russia investigation - NYT
- Ford [F] -3% in afterhours: Reports prelim FY17 $1.78 v $1.81e, Guides initial FY18 adj EPS $1.45-1.70 v $1.53e; announces supplemental cash dividend - ahead of DB conf
- PayPal [PYPL] -2% in afterhours: Guides initial FY18 Rev $15.0-15.25B v $15.4Be; Affirms Op profit growth ~20%
Looking Ahead: US Dec Industrial Production and Nov TIC data due for release, along with Bank of Canada rate decision, Weekly API Crude Oil Inventories
- Earnings expected from companies including ASML, Alcoa, Bank of America, Goldman Sachs
Europe
- (EU) ECB Weidmann (Germany): would be appropriate to end ECB's asset purchases this year - press interview; Analyst expectation for a mid-2019 rate hike is about in line with ECB guidance
- (FR) ECB's Villeroy (France): Must monitor Euro movements on prices; recent rise is a source of uncertainty - press interview
- (EU) Eurogroup Chief Centeno: signals we're getting from Germany are very encouraging; it makes sense for a monetary union to have a budget capacity that plays a role of supporting investment
- EUR/USD: During early Asia session, traded above highs seen in Dec 2014 amid broad US dollar weakness
- Nestle: Confirms agreement to sell US confectionery business to Ferrero for $2.8B
- Informa [INF.UK]: Boards of UBM and Informa confirm that they are in talks on potential combination of the two companies
***Levels as of 01:00ET***
- Nikkei225 -0.4%, Hang Seng -0.3%; Shanghai Composite +0.5%; ASX200 -0.5%, Kospi -0.5%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax +0.1%; FTSE100 +0.2%
- EUR 1.2323-1.2238; JPY 110.91-110.19; AUD 0.7999-0.7948;NZD 0.7291-0.7237
- Feb Gold -0.1% at $1,335/oz; Feb Crude Oil -0.1% at $63.64/brl; Mar Copper -0.6% at $3.20/lb