Asian Market Update: Japan household spending recovers; Traders look ahead to Yellen speech in the wake of softer US GDP outlook
***Economic Data***
- (JP) JAPAN FEB RETAIL SALES M/M: -2.3% V -0.9%E; RETAIL TRADE Y/Y: 0.5% (First rise in 4 month) V 1.6%E
- (JP) JAPAN FEB OVERALL HOUSEHOLD SPENDING Y/Y: +1.2% V -1.9%E (1st increase in 6-months)
- (JP) JAPAN FEB JOBLESS RATE: 3.3% V 3.2%E
- (KR) SOUTH KOREA MAR CONSUMER CONFIDENCE: 100 V 98 PRIOR
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -0.2%, S&P/ASX -1.3%, Kospi +0.2%, Shanghai Composite -1.1%, Hang Seng -0.4%, Jun S&P500 +0.1% at 2,030
***Commodities/Fixed Income***
- Apr gold -0.2% at $1,220/oz, May crude oil -0.6% at $39.17/brl, May copper -0.5% at $2.23/lb
- SLV: iShares Silver Trust ETF daily holdings rise to 10,257 tonnes from 10,230 tonnes
- (CN) China Feb fuel consumption 21.0Mt, +1.1% y/y
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5060 V 6.5232 PRIOR; first stronger setting in 4 sessions
- (CN) PBOC to inject CNY60B in 7-day reverse repos
- (NZ) New Zealand sells 6-month bills at 2.05%; Sells 1-year bills at 2.10%
***Market Focal Points/FX***
- Asian equity markets are mixed, tracking the uncertainty on display in US hours, as investors pause the latest wave of buying to process the recent GDP report and also tune in to Fed Chair Yellen's speech at the Economic Club of New York luncheon on Tuesday. Recall US put out its final Q4 GDP data when the markets were closed on Friday, and even though the data were revised higher, a closer look at the numbers revealed declining profitability of companies along with more leverage in consumption. Monday's US release of personal spending figures were also lukewarm, prompting Atlanta Fed GDPNow model to cut expectations for US Q1 growth to 0.6% from 1.4%. High-profile fixed income manager Gundlach later remarked that after this revision, it would be "inconceivable" for the Fed to hike rates next month. In Asian trading, Australia and Shanghai are leading the key indices to the downside with lower commodity prices and tighter mortgage polices respectively weighing on those markets. FX majors were also in tight ranges ahead of Yellen's speech - USD/JPY traded some 20pips around 113.50, AUD/USD was in a 30pip range above 0.7540, and NZD/USD rose about 40pips to 0.6760.
- Economic data - primarily out of Japan - was similarly mixed. Retail sales underperformed vs expectations while overall household spending grew y/y for the first time in 6 months, though Japan officials attributed the gains to extra day of Leap Year. There was also more speculation about the 2nd round of consumption tax hikes - Econ Min Ishihara noted economic conditions will drive the decision while PM Abe reportedly suggested he would only cancel plans for the increase in the event of a Lehman type crisis scale shock.
- Korea consumer confidence rebounded slightly, just as Fin Min Yoo remarked that internal estimates suggest factory output is recovering and March trade figures will show improvement. Bank of Korea is also likely to remain accommodative - a local press report speculated that the next policy board coming with the May decision will be more accommodative than the current and possibly revise down growth estimates.
- In China, the new head of Stats Bureau, Ning Jizhe, called for the govt to encourage the flow of private capital into more sectors along with greater infrastructure investment to help boost consumption. Earlier, a researcher with CASS estimated Q1 GDP around 6.7% and Q2 at 6.8% - within the 6.5-7.0% target range forecast by Premier Li earlier this month.
***Equities***
US equities / ADRs:
- CNL: Louisiana Public Service Commission votes to grant a new hearing on proposed Macquarie merger (3-2 vote); +12.8% afterhours
- FL: To enter S&P500 index, replacing CAM; DCT to enter S&P Midcap 400 index; +1.8% afterhours
- MDVN: Group of congressmen ask NIH and HHS to examine pricing on Xtandi drug; -6.1% afterhours
- SNX: Reports Q1 $1.37 v $1.36e, R$3.13B v $3.28Be; -8.0% afterhours
Notable movers by sector:
- Consumer discretionary: Tsingtao Brewery Co 600600.CN -2.4% (FY15 result)
- Financials: Greentown China 3900.HK -4.8% (FY15 result); China Pacific Insurance Group Co 2601.HK +0.2% (FY15 result); Sunac China Holdings 1918.HK -2.4% (FY15 result); ANZ Bank ANZ.AU -3.2% (tightens mortgage lending criteria)
- Industrials: BYD Company 1211.HK +3.6% (FY15 result); BAIC Motor Corp 1958.HK -1.5% (FY15 result)
- Technology: Sharp Corp 6753.JP -3.1% (expects to sign bailout pact with Hon Hai)
- Materials: China National Building Material Co 3323.HK -5.6% (FY15 result); China Nonferrous Metals 1258.HK -0.8% (FY15 result)
- Energy: APA Group APA.AU +0.2% (raises guidance)
- Utilities: China Datang Renewable Power Co 1798.HK -1.1% (FY15 result); Tokyo Electric Power Co Inc 9501.JP +1.2% (to cut costs)