Asia Market Update: Nikkei 225 catches up to positive 2018 start seen for other markets ;Upcoming US ADP Nonfarm payrolls data in focus
***Headlines/Economic Data***
General Trend: Nikkei 225 outperforms on catch up rally after being closed for past 3 sessions
-Energy shares gain after Wednesday's up move in oil prices.
-South Korean equities underperform
-China Caixin Services PMI hits more than 3 year high in Dec
Japan
-Nikkei 225 opened +1.4% (in first trading session of 2018); closed +3.3%
-Japanese stocks at highest since 1991 as market reopens after New Year holiday break
-Topix Securities Index +4.3%, Electric Appliances +3.1%, Iron & Steel +2.1%
-Japanese mega banks start 2018 on a positive note: Sumitomo Mitsui Financials +2.7%, Mitsubishi UFJ +2.3%, Mizuho Financial +2.0%
-Automakers track US gains: Toyota +2.3%, Honda +2.5%
-SBI Holdings: +17.5% (gains attributed to the recent strength seen for the Ripple cryptocurrency)
-Fast Retailing +2.7% (to report Dec SSS after close on Friday)
-Softbank +4% (tracks gains on the Nasdaq)
-Nintendo +4.4%: Pokemon Go expected to finally enter China market, said a press report released on Jan 2nd.
-Shin-Etsu Chemical +4.8% (broker commentary)
-Chip-related firm SUMCO +3.8% (broker commentary)
- (JP) Japan Dec Final PMI Manufacturing: 54.0 v 54.2 prelim (highest level since Feb 2014)
- (JP) Japan Fin Min Aso: GDP growth has steadily increased from 5-years ago; Economy, labor and wage environment has also truly changed
Korea
-Kospi opened +0.7%, has since reversed gains
Hyundai Motor -2.5% (union announced partial strike), Kia Motors -2.4%: South Korea Dec Auto Exports Y/Y: -40.4%
LG Chemicals -3.4%: China continues to exclude South Korea battery makers from subsidy, said a South Korean Press report.
Amorepacific -2.5% (broker commentary)
Steelmakers track US gains: Posco +2.5%
Lotte Shopping +5.5% (broker commentary)
Mixed trading in the chip sector: Samsung Electronics -0.9% , Hynix +1.4%
- (KR) South Korea Fin Min Kim and BOK Gov Lee agree to closely monitor risk factors and take swift measures if needed
- (KR) South Korea military: No imminent missile launch seen from North Korea
-(KR) South Korea Dec Foreign Reserves: $389.3B v $387.3B prior (record high): Bank of Korea said weakness in the US dollar (USD) increased the value of its holdings denominated in other currencies when converted.
China/Hong Kong
-Hang Seng opened +0.4%, Shanghai Composite +0.1%
Hang Seng Energy Index +3%, Information Technology +1.4%
- (CN) China researcher sees GDP growth of 6.3%/year by 2020 – 21st Century Herald
-(CN) China PBOC outlined plan to limit power use by some bitcoin miners
- (HK) Hong Kong Dec PMI Services: 51.5 v 50.7 prior (~4-yr high)
- (CN) China PBoC: Skips OMO for 9th straight session; Net drains CNY130B v CNY90B prior
- USD/CNY (CN) China PBoC sets yuan reference rate at 6.5043 v 6.4920 prior
- (CN) CHINA DEC CAIXIN PMI SERVICES: 53.9 V 51.9 PRIOR (fastest rise since Aug 2014); PMI COMPOSITE: 53.0 V 51.6 PRIOR
Australia/New Zealand
-ASX 200 opened +0.2%; closed +0.1%
ASX 200 Energy Index +1.2%, Financials flat ; Utilities -1.1%
-(AU) According to industry expects with the Australia property cycle reaching its peak, new floats of A-REITs are unlikely and major offshore investors instead may be eyeing opportunities - AFR
-(NZ) Realestate.co.nz reported that New Zealand Dec new listings totaled 7,133, -6.2% y/y
Looking ahead: Australia Nov Trade Balance due for release on Friday
Other Asia
- (SG) Singapore Dec PMI Composite: 52.1 v 55.4 prior (first fall in six months and the slowest pace of expansion since July)
-(TW) There is speculation that Taiwan could raise interest rates in Q3, would be first rate hike since 2011 – US financial press
-(TW) Taiwan Premier: concerned about impact from US tax overhaul
-(TW) Taiwan to cut central government budget - Taiwanese Press
North America
-US equity markets ended higher: Dow +0.4%, S&P500 +0.6%, Nasdaq +0.8%, Russell 2000 +1.1%
S&P500 Energy Sector +1.5%, Health care +1%, Tech +0.8%
-Intel: On Wednesday's session, Intel declined by over 3% amid a report from The Register that suggested that a design flaw in Intel's processor chips drove a security-related redesign of the Linux and Windows kernels
- Costco Dec SSS above ests: Reports Dec SSS (ex-gas) 8.8%; US SSS (ex-gas) 9.1% v 6.8%e
-CVS To hold conference call on Thursday Jan 4th to discuss 2017 and 2018 earnings guidance
-(US) FOMC MINUTES FROM DEC 13 MEETING: OFFICIALS SAW MODEST BOOST FROM TAX CHANGES; Generally agreed flatness of yield curve not unusual by historical standards; some expressed concern a possible future inversion could portend economic slowdown; Several Fed officials concerned by low inflation expectations
-(US) DEC ISM MANUFACTURING: 59.7 V 58.2E; PRICES PAID: 69.0 V 64.5E
-(US) Pres Trump: [Former adviser] Steve Bannon has nothing to do with me or my Presidency. When he was fired, he not only lost his job, he lost his mind - White House statement ** NOTE Earlier: Steve Bannon was quoted in a new book saying the June 2016 Trump Tower meeting between Donald Trump Jr. and a Russian lawyer was "treasonous"
-(US) Weekly API Oil Inventories: Crude: -5M v -6M prior
Looking Ahead: US Dec ADP Nonfarm Employment Change due for release on Thursday, along with the weekly DoE Crude Oil Inventories
Europe
- (UK) UK govt reportedly plans to guarantee EU-level farming grants post-Brexit - UK press
-(UK) Tony Blair denies claim he told Trump about UK spying - Sky News
-(UK) London link may allow for UK stock trading during China hours – US financial press
-(DE) Chancellor Merkel's CDU/CSU and SPD agreed to hold exploratory talks on joint govt from Jan 7th
Looking ahead: UK Dec Services PMI to be released
***Levels as of 01:00ET***
- Nikkei225 %, Hang Seng +0.5%; Shanghai Composite +0.7%; ASX200 +0.1%, Kospi -0.5%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.3%; FTSE100 -0.1%
- EUR 1.2023-1.2005; JPY 112.78-112.48; AUD 0.7842-0.7815;NZD 0.7110-0.7073
- Feb Gold -0.6% at $1,310/oz; Feb Crude Oil +0.8% at $62.09/brl; Mar Copper +0.5% at $3.27/lb