Asia Market Update: Dollar slightly weaker, markets stall on US govt shutdown
***Headlines/Economic Data***
General Trend: Asian markets trade mixed as US government shutdown approaches 3rd day
- US dollar (USD) trades broadly weaker following start of US government shutdown
- South Korea 10-year bond yield rises over 5bps amid debt sale and gov’t considering issuance of 50-year bond; MSCI said the previously proposed capital gains tax on foreigners may hurt the South Korean equity market
Japan
-Nikkei 225 opened -0.7%; closed %
- TOPIX Securities +1%; Iron & Steel -1.2%
- Nippon Paint +10% [4612.JP]: Largest shareholder Wuthelam Group is seeking more seats on board
- Toshiba [6502.JP]: +3%: Considering IPO of memory chip business if sale falls through or fails to get regulatory approval by the end of March – FT
- Kawasaki Heavy [7012.JP]: +1% (Expected to win a large order for subway cars in NYC – Nikkei)
- Tokyo Steel [5423.JP] -1.3%: To raise Feb H-beam prices to ¥89K/t from ¥87K, hot-rolled oil price to ¥74K/ton from ¥73K
-Nippon Steel [5401.JP] President: Want to raise steel prices again this year to reflect rising costs of raw materials and transportation
Looking Ahead: Bank of Japan (BoJ) decision and quarterly outlook report due for release on Tuesday
- Tokyo Steel to report FY results after close on Tuesday
Korea
-Kospi opened -0.2%
- Chipmakers decline: Samsung Electronics -2%, Hynix -2.2%
- Steelmakers trade weaker: Posco -3.5%, Hyundai Steel -0.5%
- Banks trade generally weaker: Hana Financial -1.9%, Industrial Bank of Korea -1%, Woori Bank -1.1%,
- Lotte Chemical [011170.KR]: +4.5% (positive broker commentary)
- (KR) South Korea Dec PPI M/M: 0.1% v -0.1% prior; Y/Y: 2.3% v 3.1% prior
- (KR) South Korea Jan 20-day Exports y/y: 9.2% v 16.4% prior; Imports y/y: 14.1% v 19.5% prior
- (KR) South Korea Govt to mandate banks and exchanges to keep records of cryptocurrency transactions, in a potential move to impose taxes on the largely covert deals, financial authorities
- (KR) South Korea Financial Services Commission: will tighten capital regulations on high-risk household lending
- (KR) South Korea Finance Ministry: 'Positively' considering issuance of 50-year government bond
China/Hong Kong
-Hang Seng opened +0.1%, Shanghai Composite -0.3%
- Hang Seng Services Index +1.6% (strength in airlines and gaming firms), Materials +1.3%, Property/Construction +0.6%; Telecom -0.2%
- HSBC -0.5% (~10.3% weighting of Hang Seng Index)
- Units of China conglomerate HNA Group trade lower: HNA Infrastructure and HNA Innovation each decline by over 9%
- Pou Sheng International [3813.HK] +27% (received takeover offer from Taiwan based parent company)
- (CN) PBOC Adviser: Reiterates there is no need for PBoC to raise benchmark interest rates – China Daily
- (CN) China PBOC OMO: Injects CNY110B v CNY230B injected in 7,14 and 63-day reverse repos prior: Net injection CNY20B v CNY80B injected prior
- USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.4112 v 6.4169 PRIOR (strongest CNY fix since Dec 8, 2015)
- (CN) China Energy Administration: 2017 power consumption 6,307.7B KwH. +6.6% y/y
-(CN) China forex market-making banks have voluntarily changed the counter-cyclical adjustment factor to the neutral stance in the pricing mechanism of the yuan's central parity rate in response to weakened yuan depreciation prospects.
-(CN) China NDRC Spokesperson: Reiterates confident economy will maintain steady and good momentum in 2018; End 2017 outstanding corporate bonds CNY4.9T
Australia/New Zealand
-ASX 200 opened +0.1%; closed -0.2%
- ASX 200 REIT Index -0.5%, Financials -0.4%, Energy -0.4%
- Commonwealth Bank [CBA.AU] -1.3% (cautious broker commentary)
- SDL.AU To sell 51% stake in Cam Iron to Tidfore under MOU, no terms disclosed yet; +67%
- YAL.AU Reports Q4 saleable coal production 8.65Mt, +92% y/y; +10%
- DHG.AU Guides H1 digital revenue growth +22% y/y; total revenue growth +13% y/y; CEO Anthony Catalano to resign -12%
-(AU) Australia PM Turnbull affirms next election won’t be held until 2019 - AFR
-(AU) ANZ sees RBA raising rates in May this year as inflation picks up - local press
Other Asia
- (TW) Taiwan may include Bitcoin in anti-money laundering rules - local press
- Taiwan Dollar (TWD) gains 0.6% (highest level since Jan 2013)
- (TH) Thailand Dec Customs Trade Balance: -$280M v $1.1Be (1st deficit since July 2017)
North America
- US government shutdown: On Sunday, the US government shutdown entered its second day
- (US) Senator Majority Leader Mcconnell (R): Set next Senate procedural vote on 3-week stopgap spending bill for noon EST Monday (vs prior reports that a vote could occur at 1 am EST on Monday); If DACA is not resolved by Feb 8th and government is open, he would allow a vote.
- (US) Senator Flake (R-AZ):; Bipartisan meeting to be held on Monday at 10 am EST to discuss continuing resolution (CR)
- (US) US Senate minority leader Schumer (D): Yet to reach agreement on path forward
Xerox [XRX]: Shareholders Icahn and Deason said to call for possible sale of the company - US financial media
Bioverativ [BIVV]: Sanofi said to be near deal to acquire the company for more than $11.5B; shareholders could receive $105/share (~64% premium) - US financial press
Looking ahead: Corporate earnings are expected from companies including Haliburton, Netflix, Steel Dynamics, TD Ameritrade
Europe
- (DE) Today Germany Social Democrats (SPD, center-left) in a part conference agreed to support the opening of formal coalition talks with Chancellor Merkel’s conservative bloc
- (ES) Fitch raises Spain sovereign rating one notch to A- from BBB+; outlook to Stable from Positive (from Jan 19th)
-(GR) S&P raises Greece sovereign rating one notch to B from B-; maintains outlook Positive (from Jan 19th)
- Barclays: Tiger Global has built more than a $1.0B stake in Barclays - FT
Looking Ahead: World Economic Forum due to be held in Davos, Switzerland from Jan 23-26th
- Corporate earnings are expected from companies including UBS
***Levels as of 01:00ET***
- Nikkei225 0%, Hang Seng +0.3%; Shanghai Composite +0.0%; ASX200 -0.2%, Kospi -0.9%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax +0.0%; FTSE100 -0.2%
- EUR 1.2274-1.2214; JPY 110.89-110.53; AUD 0.8003-0.7978;NZD 0.7289-0.7268
- Feb Gold -0.1% at $1,331/oz; Mar Crude Oil +0.2% at $63.41/brl; Mar Copper +0.6% at $3.20/lb