Asian Market Update: Yen, Yuan volatile ahead of US jobs data; Korea in focus after threats by the North
***Economic Data***
- (AU) AUSTRALIA JAN RETAIL SALES M/M: 0.3% V 0.4%E
- (JP) JAPAN JAN LABOR CASH EARNINGS Y/Y: 0.4% V 0.4%E; REAL EARNINGS (EX-INFLATION) Y/Y: +0.4% V -0.2% PRIOR
- (PH) PHILIPPINES FEB CPI M/M: -0.3% V +0.2%E; Y/Y: 0.9% V 1.3%E
- (NZ) New Zealand Govt 7-month Financial Statement: Budget is NZ$724M larger than forecast
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -0.1%, S&P/ASX +0.3%, Kospi -0.1%, Shanghai Composite -0.5%, Hang Seng +0.6%, Mar S&P500 flat at 1,990
***Commodities/Fixed Income***
- Apr gold +0.4% at $1,263/oz, Apr crude oil +0.6% at $34.79/brl, May copper +0.5% at $2.22/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 4.7 tonnes to 793.3 tonnes; Highest since Sept 2014
- (CN) PBOC to inject CNY50B in 7-day reverse repos
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.5284 V 6.5412 PRIOR; strongest setting since Feb 23rd
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥260B in 10-25yr JGBs and ¥180B in JGBs with maturity over 25-yr
- (AU) Australia MoF (AOFM) sells A$800M in 1.75% Bonds; avg yield: 2.0717%; bid-to-cover: 3.63x
***Market Focal Points/FX***
- Asian equity markets are mixed in a pre-NFP session that is typically less volatile, as investors this month in particular look to consider whether the case for more tightening will remain on the table with a strong number or fizzle entirely with a miss. FX side was uncharacteristically more active on comments out of Japan and China Yuan fix.
- USD/JPY plunged about 30pips to 113.20 after BOJ Gov Kuroda said he is not considering lowering rates further into negative territory at this time, reiterating the central bank remains open to take appropriate policy steps in the future if needed. On inflation target, Kuroda remarked that while he is confident the 2% goal will be reached, he could assign a "high chance" of achieving the target by the intended H1 timeframe. JPY weakened heading into the close as Japan govt nominated Makoto Sakurai to BOJ board to replace board member Shirai whose term is expiring. The shift could weaken the opposition to negative interest rates with the departure of Shirai, who was one of the dissenters. Subsequent comments from an LDP party official suggested that Sakurai's policy preference would be in line with the majority of Gov Kuroda, thereby augmenting the likelihood of deeper cuts in rates. On the political side, reports citing PM Abe's aide indicated there is a 90% chance that a general election will be called this year. This would be interpreted as a move to justify Abe's controversial push to amend the constitution and expand the military.
- Chinese Yuan was set firmer going into the CPPCC in Beijing this weekend that will also feature the release of FX reserves and 2016 economic forecasts, as offshore Yuan strengthened by 0.2% to 6.50 handle. Official with China FX regulator SAFE also promised to rely on market forces in development of the offshore market, stating that macro controls in FX would not be necessary. Separately, PBoC Dep Gov Yi Gang said he expects stabilization in FX reserves and decline in volatility, adding future monetary policy would depend on data. A survey of economists posted today anticipate another 50bp cut in rates in the wake of this week's RRR adjustment.
- Australia retail data is typically a high impact event but did not see much reaction with a slight miss - AUD/USD plunged 20pips below 0.7340 and then hit a 3-month high toward 0.7380.
- Korean peninsula tensions escalated further heading into the weekend after reports that Kim Jong Un had ordered the military to prepare its nuclear weapons for potential use. This follows some saber rattling overnight when the North also fired some short-range missiles into East Sea, and also prompted chatter of talks between Seoul and Washington about deployment of THAAD missile defense system.
***Equities***
US equities / ADRs:
- CKEC: AMC confirms to acquire Carmike Cinemas for $30/shr or about $1.1B; +15.5% afterhours
- AVGO: Reports Q1 $2.41 v $2.28e, R$1.77B v $1.75Be; +7.2% afterhours
- HPE: Reports Q1 $0.41 v $0.39e, R$12.7B v $12.7Be; +5.9% afterhours
- SWHC: Reports Q3 $0.59 v $0.41e, R$210.8M v $182Me; +5.3% afterhours
- PLNT: Reports Q4 $0.17 v $0.15e, R$105.8M v $95.9Me; +3.0% afterhours
- TUMI: Samsonite confirms to acquire Tumi at $26.75/shr or $1.82B; -0.3% afterhours
- MENT: Reports Q4 $0.63 v $0.47e, R$337.3M v $336Me; -3.5% afterhours
- HRB: Reports Q3 -$0.34 v -$0.26e, R$475M v $505Me; -6.1% afterhours
- AMBA: Reports Q4 $0.64 v $0.47e, R$68.0M v $64.8Me; -7.3% afterhours
- NMBL: Reports Q4 -$0.12 v -$0.12e, R$90.1M v $88.4Me; -8.5% afterhours
Notable movers by sector:
- Consumer discretionary: Samsonite 1910.HK +2.3% (acquisition of Tumi); McDonald's Holdings Co Japan 2702.JP -0.8% (FY15 result); Nine Entertainment Co NEC.AU +4.1% (Fairfax not consider stake)
- Financials: China Vanke Co 2202.HK +0.7% (Feb result); China Aoyuan Property Group 3883.HK +2.0% (Feb result)
- Technology: Sharp Corp 6753.JP +8.7%, Hon Hai 2317.TW +2.7% (Hon Hai chairman Gou is in Japan holding late-stage talks to close the Sharp purchase)