Asia Market Update: US and China exchange barbs on trade; China PMI falls on reduced holiday activity
***Headlines/EconomicData***
General Trend:
-Asian equity markets and financials generally track declines in the US
-Real Estate stocks decline after rise in US Treasury yields
- Hong Kong Exchanges [388.HK] FY17 results beat ests
-Asian currencies trade generally weaker after Tuesday’s gains in the US dollar
-China says Feb PMIs weighed down by Lunar New Year Holiday: Manufacturing PMI hits lowest since July 2016 and has biggest m/m drop in 6-years
-Japan Jan prelim industrial production has largest m/m decline since 2011
-BoJ trims purchases of over 25-year JGBs in daily operation
-Hong Kong issues initial 2018 GDP growth and inflation forecasts
- Q4 Capex data due out of Japan and Australia on Thursday
Japan
-Nikkei 225 opened -0.4%; closed -1.4%
- TOPIX Iron & Steel Index -2.3%, Real Estate -1.5%, Securities -1%
- Japanese mega banks trade broadly lower, track earlier declines in US financial sector
- Fast Retailing [9983.JP] Declines over 1% (scheduled to report Feb sales on Friday, March 2nd)
- (JP) JAPAN JAN PRELIM INDUSTRIAL PRODUCTION M/M: -6.6% V -4.0%E; Y/Y: 2.7% V 5.3%E
- (JP) JAPAN JAN RETAIL SALES M/M: -1.8% V -0.6%E;RETAIL TRADE Y/Y: 1.6% V 2.5%E
- (JP) Japan Jan Housing Starts Y/Y: -13.2% v -4.7%e; Construction Orders Y/Y: +0.9% v -8.1% prior
-(JP) BOJ announcement related to daily bond buying operation: Reduces buying in over 25-year JGBs
-(JP) Japan FY18 general budget bill is expected to pass the lower house as early as today, which would secure legislation by the end of the current fiscal year ending March
-(JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates BOJ easing is to reach price target
Looking Ahead: Japan Q4 Capex data due for release on Thursday
- (JP) BoJ Gov Kuroda said to give speech in the lower house on Friday March 2nd, which is expected to focus on his reappointment –Japanese Press
Korea
-Kospi opened -0.4%
- (KR) South Korea Mar Business Manufacturing Survey: 82 v 77 prior; Non-Manufacturing Survey: 82 v 78 prior
-(KR) According to analysts Bank of Korea (BOK) is expected to raise rates in May or July - Korean press
China/Hong Kong
-Hang Seng opened -0.7%, Shanghai Composite -0.9%
- Hang Seng Energy Index -2.9%, Information Tech -2.5%, Financials-1.7%, Services -1.5%, Property/Construction -1.6%
- Shanghai Composite Property index moves between gains and losses
- (CN) US President Trump:China and others take advantage of US in trade - China Daily
-(CN) China Commerce Ministry (MOFCOM): China will take necessary measures to protect legal (trade) rights
- (CN) China planning to reduce itsannual budget-deficit target to 2.9% of GDP, compared to the 3% set in the pasttwo years - financial press
- (CN) CHINA FEB GOVT OFFICIAL MANUFACTURING PMI:50.3 V 51.1E (lowest level since July 2016); NON-MANUFACTURING PMI: 54.4 V 55.0E (4-month low),Composite PMI: 52.9 v 54.6 prior
-(CN) China PBoC Open Market Operation (OMO): Skips v skips prior injection of reverse repo operations (2nd consecutive skip)
-USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3294 V 6.3146 PRIOR
-(CN) China said to cut gasoline and diesel prices for March
-(HK) Hong Kong Q4 GDP q/q: 0.8% v 0.7%e; 2017 GDP Y/Y: 3.8% v 3.7%e
-(HK) Hong Kong Financial Sec Chan: Gives initial 2018 outlook: GDP 3-4%; CPI 2.2%, underlying CPI 2.5% - budget address
-(CN) China Finance Ministry (MOF) sells 5-year bonds: avg yield 3.6566% v 3.69%e; bid to cover 3.13x
- China electric vehicle (EV) firm Nio said to hire bankers for planned 2018 IPO in the US, to raise up to $2.0B - financial press
Looking ahead: China Feb Caixin Manufacturing PMI due for release on Thursday
Australia/New Zealand
-ASX 200 opened -0.2%; closed -0.7%
- ASX 200 REIT Index -1.5%, Telecom -2.6%, Consumer Discretionary -1%, Resources -1.1%, Financials -0.6%
- Retailer Harvey Norman [HVN.AU] declines over 12% as H1 profits declined and revenues missed ests
-Virgin Australia, VAH.AU Reports H1 (A$) underlyingpretax 102.5M v 107Me; Rev 2.79B v 2.8Be; Confirms that there is no intentionto privatize the company, announces share buyback priced at A$0.30/share
-(AU) Australia Treasury Sec Fraser: Wage growth is starting to lift, a sharpcorrection in housing is not likely
-(NZ) RBNZ Deputy Gov Bascand: RBNZ initiatives will strengthen disclosureregime; insurance sector can improve disclosure performance (update)
-(AU) Australia sells A$1.0B v A$1.0B indicated in 2.25% Nov 21, 2022 bonds, avgyield 2.3582% v 2.2218% prior, bid to cover 4.10x v 3.53x prior
- (AU) Australia Jan Private Sector Credit M/M:+0.3% v 0.4%e; Private Sector Credit Y/Y: 4.9% v 5.0%e
- Pilbara Minerals, PLS.AU Enters into broad-based strategic relationship POSCO; includes long-term offtake and A$79.6M equity investment in Pilbara at A$0.97/shr
-(AU) NAB now sees RBA raising rates one time by 25bps in Q4 2018 (prior view of 2 rate hikes)
Looking Ahead: New Zealand Q4 Terms of Trade due for release on Thursday, along with Australia Q4 Capex
Other Asia
- (TH) Bank of Thailand Feb Policy Meeting Minutes: Reiterates policy should remain accommodative; Volatile movements are expected for Baht currency (THB)
- (ID) Indonesia Central Bank (BI): Have been intervening in the market since this morning; Rupiah has weakened on Fed Powell's hawkish comments
- (IN) India Feb PMI Manufacturing: 52.1 v 52.4 prior (7th month of expansion)
- State Bank of India [SBIN.IN]: Raises interest rates on term deposits below INR10M by 10-50bps; for bulk deposits+25-75bps
Looking ahead: India Q4 GDP due later today
North America
- US equity markets ended broadly lower: Dow -1.2%, S&P500 -1.3%, Nasdaq -1.2%, Russell 2000 -1.5%
- S&P500 Real Estate -2.1%, Consumer Discretionary -2.1%
- (US) Fed Chair Powell: Developments since the Dec meeting have increased his confidence that inflation is moving towards target; Further gradual increases in the federal funds rate will best promote attainment of both of our objectives;policy will remain data dependent
- (CA) Canada Fin Min Morneau: Have budget room for all eventualities, interest rates in Canada are still accommodative
- (US) OPEC reportedly schedules meeting with US shale producers in Houston next Monday – press
- (US) Weekly API Oil Inventories: Crude: +0.9M v-0.9M prior
Looking Ahead: US Q4 GDP revision due for release , along with Q4 Consumer Spending and Feb Chicago PMI, Weekly DoE Crude Oil Inventories
Europe
- (UK) Feb Lloyds BusinessBarometer: 33 v 35 prior
-(UK) Feb BRC Shop Price Index Y/Y: -0.8% v -0.6%e
Looking Ahead: Euro Zone Prelim Feb CPI due for release
***Levels as of 01:00ET***
- Nikkei225 -1.4%, Hang Seng -1.4%; Shanghai Composite -0.7%; ASX200 -0.7%, Kospi -1.1%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%,Dax -0.1%; FTSE100 -0.2%
- EUR 1.2215-1.2239; JPY107.53-107.07; AUD 0.7799-0.7781;NZD 0.7242-0.7220
- Apr Gold 0.0% at $1,318/oz; Apr Crude Oil -0.6% at $62.66/brl; May Copper -0.3% at $3.17/lb