Asia Mid-Session Market Update: China wholesale inflation hits new 5-year highs; NDRC sees more uncertainty in 2017
***US Session Highlights***
- (US) Fed's Rosengren (moderate, non-voter in 2017): median rate projection for 2017 of three rate hikes seems reasonable if real GDP growth is robust
- (US) FHA reportedly plans to cut fees on government-guaranteed home loans - Politico
- (US) Fed's Lockhart (moderate, non-voter): gradual rate increases will continue; it's time for the Fed to shift to more of a support role
***US markets on close: Dow -0.4%, S&P500 -0.4%, Nasdaq +0.2%***
- Best Sector in S&P500: Healthcare
- Worst Sector in S&P500: Utilities
- Biggest gainers: GPN +7.2%, VRTX +4.4%, NVDA +4.1%, HCA +3.0%, UHS +2.8%
- Biggest losers: AYI -14.7%, SWN -4.9%, DVN -4.3%, RRC -4.3%, AA -3.9%
- At the close: VIX 11.6 (+0.2pts); Treasuries: 2-yr 1.19% (flat), 10-yr 2.38% (-4bps), 30-yr 2.97% (-4bps)
***US movers afterhours***
- ILMN: Says new 'Novaseq' DNA sequencer will be able to sequence a human genome in one hour (vs current technology that takes over 24 hours) - JP Morgan conf comments; +17.3% afterhours
- CUDA: Reports Q3 $0.22 v $0.15e, R$88.8M v $86.9Me; Guides Q4 $0.13-0.15 v $0.13e, R$87-89M v $86.7Me; +8.1% afterhours
- HALO: Guides FY17 R$115-130M, ex-Rev from any new ENHANZE global collaboration and licensing agreements - ahead of JP Morgan conf; -4.1% afterhours
- CRAY: Reports preliminary FY16 R$630M v $630Me (prior $620-650M); Believes to be difficult to grow in 2017 over 2016 - Needham conf; -4.2% afterhours
- WDFC: Reports Q1 $0.82 v $0.87e, R$89.2M v $96.3Me; affirms FY17 $3.64-3.71 v $3.67e, R$395-404M v $397Me; -5.8% afterhours
- FRSH: Reports prelim Q4 R$35.5M v $38.7Me, SSS -7.8% - ahead of ICR conf; reports prelim FY16 R$126.9M v $130Me, SSS -5.2%; -7.1% afterhours
***Asia Key economic data:***
- (CN) CHINA DEC PPI Y/Y: 5.5% V 4.6%E (4th straight positive print and a 5-year high)
- (CN) CHINA DEC CPI M/M: 0.2% V 0.1% PRIOR; Y/Y: 2.1% V 2.2%E
- (AU) AUSTRALIA NOV RETAIL SALES M/M: 0.2% V 0.4%E (4-month low)
***Asia Session Notable Observations, Speakers and Press***
- Asian indices are mixed with Nikkei225 and ASX200 the biggest decliners by nearly 1% each; Nikkei weighed down by firmer JPY, as automakers, retail, and utilities lagged; Australia biggest decliners were in healthcare and energy, while mining names performed stronger.
- In FX majors, USD was under most pressure against JPY with a 100pip slide as low as 115.20; GBP/USD consolidated US session decline as fears of "hard Brexit" weigh on the pound.
- China CPI data were the highlight of the economic calendar; While CPI was largely in line with consensus at 2.1%, PPI spiked to a fresh 5-year high of 5.5% - 4th consecutive y/y increase - thanks to accelerating increase in commodity prices that will eventually translate into higher consumer prices; CPI components saw Food CPI at 2.4% v 4.0% prior and non-food at 2.0% v 1.8% prior
- Chair of China State Planner spoke at length about economic performance this year, estimating 2016 GDP at 6.7% and CPI at 2%; NDRC added that 2017 will face increased uncertainties, but the govt will handle risks and maintain smooth growth using some of the recent policy tools such as debt-equity swaps.
- China Yuan fix was slightly firmer after yesterday's biggest weakening in months; Local press op/ed called for the govt to take measures to improve guidance for Yuan outlook to break cycle of depreciation expectations
- Australia retail sales grew just 0.2%, missing estimates, as department store spending remained flat while consumer staples grew by the biggest margin. JPMorgan economist notes the slowdown is not indicative of an overall decline in Q3, but does pose a concern.
China:
- (CN) China NDRC chairman Xu: China 2016 GDP may grow over 6.7%; CPI is growing moderately at 2%
- (CN) China will simplify approval procedures and ensure financing for key water and railway projects this year - China press
- (CN) China govt should take measures to improve guidance for Yuan outlook to break cycle of depreciation expectations - Chinese press
- (CN) China Passenger Car Association (PCA): China Dec retail auto sales at 2.76M units, y/y: +17.1% v +19.8% prior; 2016 sales +15.9% y/y
Japan:
- (JP) Japan Fin Min Aso confirms he spoke with George Soros, no comment on contents of talk
Australia:
- (AU) JPMorgan: Australia's weak Nov retail sales unlikely to signal q/q decline in Q3 - Australian press
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -0.8%, Hang Seng +0.6%, Shanghai Composite -0.1%, ASX200 -0.8%, Kospi -0.3%
- Equity Futures: S&P500 -0.2%; Nasdaq -0.2%, Dax -0.1%, FTSE100 flat
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0570-1.0625; JPY 115.20-116.20; AUD 0.7340-0.7385; NZD 0.7005-0.7050
- Feb Gold flat at 1,189/oz; Feb Crude Oil +0.2% at $52.06/brl; Mar Copper +1.1% at $2.56/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 8.6 tonnes to 805.0 tonnes; 28th straight decline; Lowest since Apr 29th
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.9234 V 6.9262 PRIOR
- (CN) PBOC to inject combined CNY120B in 7-day and 28-day reverse repos v CNY110B prior
***Asia equities / Notables / movers by sector***
- Consumer discretionary: Chow Tai Fook Jewellery Group 1929.HK +5.2% (Q4 result); Fast Retailing Co 9983.JP -3.1% (Dec Uniqlo SSS); Intime Department Store Group Co 1833.HK +34.3% (privatization); SJM Holdings 880.HK +3.5%; Pou Sheng International Holdings 3813.HK +6.8% (CEO to step down)
- Financials: Future Land Development Holdings 1030.HK +0.6% (profit alert)
- Industrials: Tiangong International Co 826.HK -1.0% (profit alert); Shenzhen Zhongjin Lingnan Nonfemet Co 000060.CN +1.2% (9-month result speculation)
- Technology: Seiko Epson Corp 6724.JP -7.6%
- Materials: Xinjiang Zhongtai Chemical Co 002092.CN +3.5% (raises guidance); Paladin PDN.AU -17.9% (bond issue and share raising); Northern Star NST.AU +2.0%, Evolution EVN.AU +2.3%, Saracen SAR.AU +1.8% (gold rises)
- Healthcare: Primary Health PRY.AU % (CEO charged with falsifying company documents)