Asian Market Update: China Premier Li hints reform needed to achieve targets; BOJ's Kuroda plays down threat of another tax hike
***Economic Data***
- (AU) AUSTRALIA FEB SKILLED VACANCIES M/M: -0.9% V -0.4% PRIOR
- (SG) SINGAPORE FEB CPI M/M: -0.1% V +0.2%E; Y/Y: -0.8% V -0.7%E; CORE CPI Y/Y: 0.5% (5-month high) V 0.3%E
***Index Snapshot (as of 03:45 GMT)***
- Nikkei225 flat, S&P/ASX -0.5%, Kospi -0.1%, Shanghai Composite -0.3%, Hang Seng -0.3%, Jun S&P500 -0.1% at 2,040
***Commodities/Fixed Income***
- Apr gold -0.4% at $1,243/oz, May crude oil -1.0% at $41.05/brl, May copper -0.1% at $2.29/lb
- (US) Weekly API Oil Inventories: Crude: +8.8M v +1.5M prior; 5th straight week of build; largest build in 3 weeks
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.4936 V 6.4971 PRIOR
- (CN) China MOF sells 3-year bonds at 2.24% - financial press
- (CN) PBOC to inject CNY80B in 7-day reverse repos
- (AU) Australia MoF (AOFM) sells 2026 Bonds; avg yield: 2.6511%; bid-to-cover: 2.57x
***Market Focal Points/FX***
- Asian equity markets are slightly lower after a mixed session overnight, with geopolitical tensions back in the forefront after another ISIS attack in Europe. Australia mining names are softer after several notable downgrades, while Hong Kong financials and tech underperformed relative to energy. In FX, USD/JPY traded in a 30pip range below 112.50, AUD/USD remained in 0.76-0.7650 range, while NZD/USD traded about 20ticks on either side of 0.6750 without much momentum despite the optimistic outlook from Fonterra in its earnings release.
- China Premier Li said the economy will rely on reform to achieve 6.5-7.0% GDP target range, calling for greater cooperation in developing new energy vehicles. On the flip side, China Securities Regulator had reportedly compiled a list of 30-40 Shanghai Exchange listed troubled companies for potential delisting and started talks with local officials to push toward exclusion from the exchanges. Yuan fix was less notable today - little changed from overnight setting.
- BOJ Gov Kuroda chimed in on the debate about sales tax hikes, stating the 2nd round will have a small impact on the economy while also reiterating CPI will reach 2% in H1 of FY17. Japan's latest inflation data will be released tomorrow. Separately, Fin Min Aso echoed overnight comments from Ishihara overnight, noting it will take as long as 3 months to evaluate impact of negative interest rates.
- Philadelphia Fed's Harker, who is not known for sharing his views frequently, revealed himself as one of the more hawkish "dots" on the Policy Board. Harker said he was not the "two dot" official - the median view from the latest FOMC meeting suggesting 2 more rate hikes this year - adding he would like to see at least 3 policy tightening moves given the strong case to continue raising rates.
***Equities***
US equities / ADRs:
- CTAS: Reports Q3 $1.05 v $0.95e, R$1.22 v $1.20Be; +2.9% afterhours
- MRK: Jury upholds one Merck Hepatitis C patent; jury could order Gilead to pay royalties to Merck in damages phase - press; +2.2% afterhours
- RHT: Reports Q4 $0.52 v $0.47e, R$544M v $536Me; -3.8% afterhours
- SHLX: Offers 8.5M common units (10% of outstanding); -4.2% afterhours
- NKE: Reports Q3 $0.55 v $0.48e, R$8.03B v $8.20Be; -6.0% afterhours
- KKD: Reports Q4 $0.22 (adj) v $0.22e, R$130.4M v $132Me (1 est); Raises share repurchase authorization by $100M (10% of outstanding) to $255M; -8.9% afterhours
Notable movers by sector:
- Consumer discretionary: China Yurun Food Group 1068.HK -2.3% (guidance)
- Consumer staples: Mengniu Dairy 2319.HK -0.2% (FY15 result)
- Industrials: Zhong Wang Group 1333.HK -2.8% (spin-off proposal); Kajima Corp 1812.JP -1.7% (raises guidance); Nufarm NUF.AU +1.0% (H1 result)
- Technology: Sharp Corp 6753.JP +1.6% (speculation on terms of Hon Hai bailout)
- Materials: Jiangxi Copper Company 358.HK +0.9% (FY15 result)
- Energy: China Coal Energy 1898.HK -2.1% (FY15 result); Huaneng Power International 902.HK +0.3% (FY15 result); Sinopec Kantons Holdings 934.HK -6.9% (FY15 result); Woodside Petroleum WPL.AU -0.8% (JV not to progress with development); GCL New Energy Holdings 451.HK -2.2% (FY15 result)
- Healthcare: Sigma Pharmaceuticals SIP.AU +3.0% (FY15 result)