Asia Mid-Session Market Update: China sells US Treasuries for 6th straight month; Australia net employment rises for 3rd month as participation rate improves
***US Session Highlights***
- (US) DEC CPI M/M: 0.3% V 0.3%E; CPI EX FOOD AND ENERGY M/M: 0.2% V 0.2%E; CPI INDEX NSA: 241.432 V 241.508E
- (US) Dec Real Avg Weekly Earnings Y/Y: 0.2% v 0.5% prior
- (US) DEC INDUSTRIAL PRODUCTION M/M: 0.8% V 0.6%E; CAPACITY UTILIZATION: 75.5% V 75.4%E
- (US) Fed's Kaplan (moderate, 2017 voter): Sees 2017 US growth at about 2.3%, underpinned by the US consumer; US households have the capacity to spend - comments in Dallas
- (CA) BANK OF CANADA (BOC) LEFT INTEREST RATES UNCHANGED AT 0.50%; AS EXPECTED
- (US) JAN NAHB HOUSING MARKET INDEX: 67 V 69E; prior revised slightly lower
- (US) NOV TOTAL NET TIC FLOWS: $23.7B V $18.8B PRIOR; NET LONG-TERM TIC FLOWS: $30.8B V $9.4B PRIOR
***US markets on close: Dow -0.1%, S&P500 +0.2%, Nasdaq +0.3%***
- Best Sector in S&P500: Industrials
- Worst Sector in S&P500: Utilities
- Biggest gainers: AA +6.7%, FAST +5.8%, MJN +5.3%, NUE +3.7%, URI +3.5%
- Biggest losers: MNK -5.9%, TGT -5.8%, NTRS -4.7%, HBI -3.7%, UA -3.2%
- At the close: VIX 12.5 (+0.6pts); Treasuries: 2-yr 1.22% (+5bps), 10-yr 2.39% (+6bps), 30-yr 2.99% (+6bps)
***US movers afterhours***
- CSX: Departing Canadian Pacific CEO Hunter Harrison and Paul Hilal said to potentially target CSX - financial press; +12.5% afterhours
- OCLR: Reports prelim Q2 R$153.5-154M v $151Me (prior guidance $146-154M)- Reports prelim Q2 gross margin ~40% (prior guidance 33-36%); +8.9% afterhours
- NFLX: Reports Q4 $0.15 v $0.13e, R$2.48B v $2.47Be- Guides Q1 $0.37 v $0.18e, total streaming Rev $2.52B v $1.81B y/y, domestic streaming Rev $1.47B; +7.9% afterhours
- FMC: Positive Mad Money mention - CNBC; +2.2% afterhours
- KMI: Reports Q4 $0.08 v $0.18e, R$3.39B v $3.32Be; -2.0% afterhours
- PLXS: Reports Q1 $0.82 v $0.76e, R$635M v $649Me; -2.3% afterhours
- ZYNE: Reportedly plans to price share offering at $18-19/shr - press; -8.7% afterhours
- RCII: Guides Q4 -$0.30 to -$0.20 v $0.11e; Q4 SSS down ~-14%; -12.7% afterhours
***Asia Key economic data:***
- (AU) AUSTRALIA DEC EMPLOYMENT CHANGE: +13.5K (3rd straight increase) V +10.0KE; UNEMPLOYMENT RATE: 5.8% (6-month high) V 5.7%E
- (AU) AUSTRALIA JAN CONSUMER INFLATION EXPECTATION: 4.3% V 3.4% PRIOR (32-month high)
- (NZ) NEW ZEALAND JAN ANZ CONSUMER CONFIDENCE INDEX: 128.7 V 124.5 PRIOR; M/M: +3.4% V -2.1% PRIOR (21-month high)
- (NZ) NEW ZEALAND NOV BUILDING PERMITS M/M: -9.2% V +2.0% PRIOR (first decline in 3 months, biggest decline since Mar 2013)
- (NZ) NEW ZEALAND DEC BUSINESS MANUFACTURING PMI: 54.5 V 54.5 PRIOR (remains at lowest level since Oct 2015)
- (KR) South Korea DEC PPI Y/Y: 1.8% v 0.7% prior (2nd straight increase, 4-year high)
- (UK) DEC RICS HOUSE PRICE BALANCE: 24% V 30%E (first m/m decline in 5 months)
***Asia Session Notable Observations, Speakers and Press***
- Asian equities mixed again; Nikkei225 with an outsized gain on reversal in Yen strength following some hawkish comments by Fed Chair Yellen late in the US session; Hang Seng underperforms on weakness in Energy and property developers
- USD consolidating gains in late US session that followed Yellen signaling continued commitment to policy tightening with the Fed close to its dual goals; US rates also rise across the curve; AUD/USD briefly falls below $0.75 on mixed jobs data.
- US TICS flow showing China reducing its holdings of US debt for the 6th straight month and by the biggest margin in 5 years; China Commerce Ministry official nonetheless reiterates China prepared to cooperate with the new US govt on trade.
- Nikkei previews next BOJ decision with expectation of a 2nd consecutive upgrade in overall economic assessment amid improvements in exports, production, and consumption; Separate report however notes the headwinds from lower rents as NIRP BOJ policy stimulates investment housing supply.
- Australia jobs data come in mixed - net employment tops forecast but growth is smallest in 3 months; Unemployment rises to 6-month high, though participation rate also ticks up for its best 2-month stretch since mid-2015.
- South Korea defence officials monitoring for potential ICBM test by the North.
China:
- (CN) China National Energy Administration (NEA): China aims to cap coal consumption at 4.1B MT by 2020; Share of coal in China energy mix should fall below 58% - Chinese press
- (CN) China MOFCOM spokesperson Jiwen: China will cooperate with new US govt on economy and trade
- (CN) Some China banks have asked staff to be more careful on IPO due diligence - HK press
Japan:
- (JP) Falling rents in Japan seen as another obstacle in the way for BOJ's 2% inflation target - Nikkei
- (JP) BOJ said to consider another upward revision to its economic assessment at the upcoming Jan 31st meeting - Nikkei
Australia
- (AU) Goldman Sachs chief economist Toohey: Next RBA policy move is up amid global economic recovery and rising incomes - press
- (AU) Capital Economics: Australia labor market is still fragile - AFR
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei +1.0%, Hang Seng -0.6%, Shanghai Composite -0.2%, ASX200 +0.2%, Kospi +0.1%
- Equity Futures: S&P500 flat; Nasdaq flat, Dax flat, FTSE100 +0.1%
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0620-1.0645; JPY 114.40-114.90; AUD 0.7490-0.7525; NZD 0.7115-0.7145
- Feb Gold -0.9% at $1,202/oz; Feb Crude Oil +0.8% at $51.49/brl; Mar Copper +0.5% at $2.63/lb
- (US) Weekly API Oil Inventories: Crude: -5.0M v +1.5M prior (largest draw since Jan 4th)
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8568 V 6.8525 PRIOR
- (CN) PBOC to inject combined CNY250B in 7-day and 28-day reverse repos v CNY460B prior
- (JP) Japan investors bought net ¥332B in foreign bonds v bought ¥208B in prior week; Foreign investors bought net ¥247B in Japan stocks v bought ¥347B bought in Japan stocks in prior week
- JGB: (JP) Japan MoF sells ¥2.18T in 0.1% 5-year JGB bonds; avg yield -0.116% v -0.063% prior; bid-to-cover 3.66x v 4.48x prior
- (NZ) New Zealand sells NZ$200M 2.75% in 2025 bonds; avg yield 3.133%
***Asia equities / Notables / movers by sector***
- Consumer discretionary: TCL Multimedia Technology 1070.HK -0.3% (profit alert); Luk Fook Holdings 590.HK -0.7% (Q3 result); Bega Cheese BGA.AU +17.2% (agrees to buy Vegemite and other brands); Sapporo Holdings 2501.JP -0.8% (FY17 result speculation); KT & G Corp 033780.KR +3.0% (Q4 result)
- Financials: ANZ Bank ANZ.AU -1.0% (Macquarie cuts rating)
- Industrials: Japan Aviation Electronics Industry 6807.JP -4.6% (NEC becomes parent); Laox Co 8202.JP +2.0% (business revamp)
- Technology: Toshiba Corporation 6502.JP -23.9% (writedown speculation) ; Samsung Electronics 005930.KR +1.4% (court decision); Japan Display Inc 6740.JP -0.3% (exclusive supplier for Nintendo's Switch)
- Materials: Sims Metal Management SGM.AU +3.0% (raises forecast); South32 S32.AU -1.3% (Q2 result)
- Energy: Woodside Petroleum WPL.AU -1.1% (Q4 result)
- Healthcare: CSL CSL.AU +12.4% (raises guidance)
- Telecom: Softbank Corp 9984.JP +1.0% (Deutsche Bank raises rating)