Asia Mid-Session Market Update: Australia CPI misses estimates, weighs on AUD; Japan posts first trade surplus in 6 years
**US Session Highlights***
- (US) President Trump signs executive orders advancing the Keystone and Dakota pipelines, as expected - press
- (US) JAN PRELIMINARY MARKIT MANUFACTURING PMI: 55.1 V 54.5E (highest since March 2015); new orders rise m/m to highest since Sep 2014
- (US) DEC EXISTING HOME SALES: 5.49M V 5.51ME; supply shrinks to 3.6 months
- (US) JAN RICHMOND FED MANUFACTURING INDEX: 12 V 7E; Volume of new orders 15 v 11 prior
- (US) Jan Philadelphia Fed Non-Manufacturing General Business Conditions 37.7 v 19.5 m/m; New orders 28.9 v 20.2 m/m
***US markets on close: Dow +0.6%, S&P500 +0.7%, Nasdaq +0.9%***
- Best Sector in S&P500: Basic Materials
- Worst Sector in S&P500: Healthcare
- Biggest gainers: FCX +8.3%, PWR +7.6%, DHI +6.6%, LEN +6.0%, MOS +6.0%
- Biggest losers: VZ -4.4%, FSLR -3.4%, ENDP -2.6%, HUM -2.5%, WAT -2.2%
- At the close: VIX 11.1 (-0.7pts); Treasuries: 2-yr 1.22% (+6bps), 10-yr 2.47% (+7bps), 30-yr 3.06% (+7bps) 3
***US movers afterhours***
- BOBE: Sells Bob Evans Restaurants to Golden Gate Capital for $565M plus debt; Acquires Pineland Farms Potato Company for $115M; +15.8% afterhours
- STX: Reports Q2 $1.38 v $1.07e, R$2.89B v $2.81Be; +12.2% afterhours
- CREE: Reports Q2 $0.20 v $0.16e, R$347M v $325Me; Guides Q3 $0.01-0.09 v $0.08e, R$285-315M v $320Me; +3.6% afterhours
- AA: Reports Q4 $0.14 v $0.22e, R$2.54B v $2.21Be; Guides initial FY17 aluminum demand growth +4%; +3.4% afterhours
- CXO: Announces sale of $1.21B in assets to PAA; +2.9% afterhours
- ISRG: Reports Q4 $6.09 v $5.92e, R$757M v $749Me; Announces $2B buyback (7.8% of market cap); +1.3% afterhours
- COF: Reports Q4 $1.45 v $1.60e, R$6.57B v $6.61Be; -0.9% afterhours
- HA: Reports Q4 $1.28 adj v $1.30e, R$633M v $628Me; -2.5% afterhours
- CA: Reports Q3 $0.63 v $0.61e, R$1.01B v $1.01Be; -2.6% afterhours
***Asia Key economic data:***
- (JP) JAPAN DEC TRADE BALANCE: ¥641B (6-month high) V ¥281BE; ADJ TRADE BALANCE: ¥357B (3-month low) V ¥210BE; 2016 trade surplus
- (AU) AUSTRALIA Q4 CONSUMER PRICES (CPI) Q/Q: 0.5% V 0.7%E; Y/Y: 1.5% (1-year high) V 1.6%E; TRIMMED MEAN Q/Q: 0.4% V 0.5%E ; Y/Y: 1.6% (5-year low) V 1.6%E
- (AU) AUSTRALIA DEC SKILLED VACANCIES M/M: 0.2% V 0.3% PRIOR
- (AU) AUSTRALIA DEC WESTPAC LEADING INDEX M/M: 0.4% V 0.0% PRIOR
- (KR) SOUTH KOREA PRELIM Q4 GDP Q/Q: 0.4% V 0.3%E; Y/Y: 2.3% V 2.2%E
- (US) NORTH AMERICA DEC SEMI BOOK/BILL RATIO: 1.06 V 0.96 PRIOR; Discontinues publishing monthly report
***Asia Session Notable Observations, Speakers and Press***
- Asian indices mostly firmer, tracking the gains in US markets; Gaming and tech firms outperformed in Hong Kong, while Australia was bolstered by mining names.
- FX majors have been range-bound with the exception of AUD and JPY. Aussie fell on softer than expected CPI data, and JPY was somewhat stronger after improved terms of trade. MXN was also lower after US press reported Pres Trump will proceed with announcing plans a for a Mexico border wall initially funded by federal money.
- Moody's affirmed Australia AAA rating and stable outlook, forecast 2.5-3.0% GDP this year; Softer than expected Aussie CPI sent AUD/USD down about 50pips below 0.7540 - tobacco and fuel saw the biggest price increases while travel and other discretionary consumer spending lagged.
- BHP Q2 production report was largely positive with a rise in iron ore output q/q and y/y. BHP also affirmed FY17 production plans, but reduced copper output target.
- Japan Dec trade surplus was at a 6-month high as exports rose for the first time in 15 months; Overall, lower oil prices have also helped Japan register its first suprlus in 2016 in 6 years. Shipments to Asia and China were up over 12%, while those to Europe fell about 4%.
China:
- (CN) China planning to cut gasoline and diesel fuel prices by CNY70/ton - financial press
- (CN) China MOFCOM Official Wang: US anti-dumping ruling on Chinese tires hurts its interests
- (CN) China Financial News Commentary: PBOC should create interest rate corridor
Japan:
- (JP) Japan govt said to be looking to revamp team devoted to TPP talks to also include negotiators for FTA, EU-related trade deals – Japan press
- (JP) Japan PM Abe: Will not speculate on possibility of US/Japan trade talks
Australia / New Zealand:
- (AU) Moody's maintains Australia AAA rating; Outlook Stable
- (AU) JPMorgan now sees RBA cutting rates further in May and August - press
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +1.2%, Hang Seng +0.2%, Shanghai Composite +0.2%, ASX200 +0.4%, Kospi +0.2%
- Equity Futures: S&P500 +0.1%; Nasdaq +0.1%; Dax flat; FTSE100 -0.2%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0720-1.0740; JPY 113.40-114.00; AUD 0.7535-0.7600; NZD 0.7230-0.7260
- Feb Gold -0.5% at $1,205/oz; Mar Crude Oil -0.3% at $53.00/brl; Mar Copper flat at $2.71/lb
- SPDR Gold Trust ETF daily holdings fall 3.0 tonnes to 804.1 tonnes; 2nd straight decline; Lowest since Apr 29th
- SLV: iShares Silver Trust ETF daily holdings fall to 10,494 tonnes from 10,524 tonnes prior; lowest since July 2016
- (US) Weekly API Oil Inventories: Crude: +2.9M v -5.0M prior
- (CN) PBOC SETS YUAN MID POINT AT 6.8596 V 6.8331 PRIOR (biggest margin of weakness since Jan 9th)
- (CN) PBOC to inject combined CNY30B in 14-day and 28-day reverse repos v CNY20B prior
***Asia equities / Notables / movers by sector***
- Consumer discretionary: 210.HK Daphne International Holdings -1.5% (FY16 result); 47.HK Hop Hing Group Holdings +14.3% (profit alert)
- Financials: 6837.HK Haitong Securities -2.2% (FY16 result); 1336.HK New China Life -0.9% (profit warning); 086790.KR Hana Financial Group +3.3% (JPMorgan making positive comments); 086790.KR Hana Financial Group % (FY16 result)
- Industrials: 1072.HK Dongfang Electric Corp -2.8% (profit warning); 1157.HK Zoomlion Heavy Industry Science and Technology Co -4.7% (profit warning); 7312.JP Takata Corp +18.2% (not expect court-led turnaround); 6594.JP Nidec Corp -2.0% (9-month result)
- Technology: 6502.JP Toshiba -2.8% (to announce writedown); 006400.KR Samsung SDI Co +4.6% (battery risk eased); 066570.KR LG Electronics Inc +1.5% (FY16 result)
- Materials: 600362.CN Jiangxi Copper Company +3.9% (profit alert); AWC.AU Alumina +8.4% (aluminum rises, Alcoa reports); SFR.AU Sandfire Resources +5.5% (expects to be debt free); WSA.AU Western Areas +5.0% (Citi raises rating); BSL.AU Bluescope Steel -1.4% (Credit Suisse cuts rating); NST.AU Northern Star Resources -2.7% (Q2 result); BHP Billiton BHP.AU +3.2% (Q2 result)
- Energy: COE.AU Cooper Energy +2.9% (raises guidance)
- Healthcare: PRY.AU Primary Health Care +4.6%
- Utilities: EPW.AU ERM Power -2.7% (Citi cuts rating)