Asia Market Update: Regional currencies weaker on USD strength; PBOC injects via OMO for the 1st time in 16 sessions coming back from holiday break
***Headlines/Economic Data***
General Trend:
-Asian equity markets trade mixed after earlier weakness in US markets
-Shanghai Composite opens higher upon return from Lunar New Year break
-Chinese cobalt producers rise as Apple is speculated to consider direct purchases from miners
-Qantas and Air New Zealand rise after earnings reports
-Yen trades broadly higher: USD/JPY declines amid selling in the Yen crosses
-PBoC injects cash in first OMO since before the Lunar New Year break
Japan
-Nikkei 225 opened -0.8%; closed -1.1%
- Topix Iron& Steel Index -2.3%, Securities -1.5%, Electric Appliances -1.3%, Real Estate -1.3%
- Japanese automakers trade generally lower as the Yen strengthened
- Ricoh [7752.JP]:Declines over 4% amid press speculation related to possible impairment loss
- (JP) Japan PM Adviser Hamada: Reiterates BoJ should consider buying foreign bonds - US financial press
-(JP) Japan Cabinet Office (Gov’t) Monthly Economic Report for February:Maintains its overall assessment , economy is recovering gradually(yesterday after close)
-(JP) Japan MoF sells ¥1.0T v ¥1.0T indicated in 0.60% (prior 0.60%) 20-yr bonds; avg yield 0.5610% v 0.592% prior; bid to cover 4.44x v 4.17x prior
Looking Ahead: Japan Jan CPI data due to be released on Friday
Korea
-Kospi opened -0.5%
- (KR) South Korean brokerages expect Bank of Korea(BOK) rate hike in May and leave rate unchanged next week - Korean press
-(KR) South Korea Q4 Household Credit (KRW): 1.45T v 1.42T prior; Household Debt y/y: 8.1% v 9.5% prior
-(KR) North Korea to have official visit to the South On Feb 25th - Korean press
China/Hong Kong
-Hang Seng opened -1.1%, Shanghai Composite +1.2%
- Shanghai Property Index rises over 1%
- Hang Seng Financials Index -1.3%, Energy -1.1%, Information Tech -0.9%, Property/Construction-0.9%
- (CN) China Jan Swift GlobalPayments (CNY) 1.7% v 1.5% prior
-(CN) China PBOC OMO: Injects CNY350B in 7,28 and 63-day reverse repos v skipsprior (1st injection after 16 consecutive skips)
-(CN) PBOC SETS YUAN REFERENCE RATE AT 6.3530 V 6.3428 PRIOR
-(US) Treasury undersecretary Malpass accuses China of “patently non-market behavior”; US needs a stronger response to counter it - press
-(CN) According to China National Tourism Administration (CNTA) Lunar New year tourism totaled CNY475B, +12.6% y/y - Xinhua
-(CN) Chinese companies are being forced to halt trading as their owners attempt to unwind loans collateralized with stocks - FT
Australia/New Zealand
-ASX 200 opened +0.1%; closed +0.1%
- ASX 200 Utilities Index -2.4%, REIT -1.3%, Financials -0.2%; Consumer Discretionary +1.1%
- Qantas, QAN.AU Reports H1 (A$)Net 607M v 515M y/y, Pretax 976M v 852M y/y; Rev 8.66B v 8.18B y/y;Announces On-market share buy-back of up to A$378M
-CrownResorts, CWN.AU Reports H1 (A$) Net 192.4M v 175Me; EBITDA 447.7M v 448Me; Rev 1.80B v1.7Be; to buyback 29.3M shares
-Viralytics [+175.2%], VLA.AU To be acquired by Merck forA$1.75/shr valued at A$502M
-Air New Zealand [+4%],AIR.NZ Reports H2 (NZ$) NPAT 232M v 229Me, Rev 2.7B v 2.7Be; raisesdividend
-(NZ) New Zealand sells NZ$150M in 3.5% 2033 bonds; avg yield 3.3421%
-(AU) Australia sells A$500M v A$500M indicated in June 2018 notes, avg yield1.6924%, bid to cover 6.06x
-(NZ) New Zealand Jan Credit Card Spending M/M: -0.6% v 0.6% prior; Y/Y: 4.6% v6.3% prior
Looking Ahead: New Zealand Q4 Retail Sales data due for release on Friday
Other Asia
- (PH) Philippines updates CPI base year to 2012 from 2006
- (TH) Thailand Central Bank Gov Veerathai: The economy can weather volatile capital flows, economic fundamentals are strong; no need to rush to raise rates
North America
- US equity markets ended mostly lower: Dow -0.7%, S&P500 -0.6%, Nasdaq -0.2%, Russell 2000 +0.1%
- S&P500 Real Estate -1.8%, Energy -1.7%
- (US) Chair of the Council of Economic advisers Kevin Hassert: Sees 2018 GDP at 3% of which 0.8% per year of growth to the president's policies - US media
-ROKU Reports Q4 +$0.06 v -$0.11e,Rev $188.3M v $183Me;-22% after hours
- MLNX Guides Q1 Rev $240-250M v$227Me; Non-GAAP gm's 68.5-69.5%; CFO resigns; +11% after hours
- (US) FOMC MINUTES FROM JAN 31 MEETING: MAJORITY SAW STRONGER GROWTH LIFTING LIKELIHOOD OF FURTHER HIKES;Almost all Fed officials see inflation rising to 2% goal
-(US) Fed's Kashkari (dove, non-voter): US economy is doing very well, surprised at confidence and optimism due to tax cut, not sure how much of a long term difference tax cut will make
- (US) Fed’s Harker (non-voter, moderate): US inflation to hit or exceed 2% goal by end of 2019;Reiterates he sees two 2018 rate hikes as appropriate
-(US) Fed's Quarles (hawk, FOMC voter): Economy is performing well; current policy remains accommodative, gradual rate increases are appropriate
- (US) TREASURY'S $35B 5-YEAR NOTE AUCTION DRAWS: 2.658%; BID-TO-COVER RATIO: 2.44 V 2.48 PRIOR AND 2.45 OVER THE LAST 12 AUCTIONS
- (US) Weekly API Oil Inventories: Crude: -0.9M v +3.9M prior
Looking Ahead: Canada Dec Retail Sales and US Weekly DoE Crude Oil Inventories to be released; Fed’s Dudley expected to speak in NY morning; Other Fed speakers expected include Bostic
Europe
- (DE) German FinanceMinistry Feb Report: Jan Tax Rev +2.8% y/y; No end in sight for German economicexpansion
-(GR) Moody's raises Greece sovereign rating two notches to B3 from Caa2;outlook Positive
- (UK) Reportedly the PM May's Cabinet did not agree to her negotiating strategy for the Brexit transition period - UK Telegraph
- (UK) Govt spokesperson: UK continues to see 2 year Brexit transition period, while EU is saying 21 months
-(DE) ZEW raises concern about higher EU contribution by Germany – European Press
Looking Ahead: Germany Feb Ifo Survey due for release, along with second reading of UK Q4 GDP
- ECB to also publish monetary policy meeting minutes
***Levels as of 01:00ET***
- Nikkei225 -1.1%, Hang Seng -0.8%; Shanghai Composite +2.2%; ASX200 +0.1%, Kospi -0.6%
- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.5%,Dax -0.1%; FTSE100 -0.1%
- EUR 1.2344-1.2300; JPY107.77-107.15; AUD 0.7809-0.7790;NZD 0.7321-0.7308
- Apr Gold -0.5% at $1,326/oz; Apr Crude Oil -0.9% at $61.12/brl; Mar Copper -1.0% at $3.17/lb