Asian Mid-session Update: PBoC renews liquidity injections for the first time in a year; Euro steady ahead of ECB
***Economic Data***
- (AU) AUSTRALIA NOV HIA NEW HOME SALES M/M: 2.2% V 3.0% PRIOR
- (AU) AUSTRALIA JAN CONSUMER INFLATION EXPECTATION: 3.2% V 3.4% PRIOR (5-month low)
- (NZ) NEW ZEALAND JAN ANZ CONSUMER CONFIDENCE INDEX: 128.9 V 126.5 PRIOR; M/M: +1.9% v 3.9% prior
- (NZ) NEW ZEALAND DEC BUSINESS MANUFACTURING PMI: 57.7 V 55.6 PRIOR
- (NZ) NEW ZEALAND DEC ANZ JOB ADVERTISEMENTS M/M: +0.8% V -0.3% PRIOR
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 flat, S&P/ASX +0.4%, Kospi +0.1%, Shanghai Composite -0.2%, Hang Seng +0.4%, Mar S&P500 +0.2% at 2,029
***Commodities/Fixed Income***
- Feb gold -0.1% at $1,292, Mar crude oil -0.7% at $47.45/brl, Mar Copper -0.4% at $2.60/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.7 tonnes to 740.5 tonnes
- SLV: iShares Silver Trust ETF daily holdings fall to 9,899 tonnes from 10,108 tonnes priors; Lowest since Jan 2014
- (US) API PETROLEUM INVENTORIES: CRUDE: +5.7M (2nd consecutive build; largest build since Oct 15th) v +2.5Me, GASOLINE: +2.1M v +1Me, DISTILLATE: -1.8M v +0.5Me
- (CN) PBoC to inject CNY50B in 7-day reverse repos (1st injection since Jan 2014, 1st operations after 15 halts)
- JGB: (JP) Japan's MoF sells ¥1.10T in 1.2% (1.2% prior) 20-year JGBs; Avg yield: 0.905% v 1.145% prior; bid-to-cover: 3.26x v 3.71x prior
- (JP) Japan investors sold net ¥397B in foreign bonds v bought ¥465B in prior week; Foreign investors sold net ¥577B in Japan stocks v sold ¥680B in prior week
***Market Focal Points/FX***
- Shanghai Composite is underperforming in the region, falling for the first time in 3 days in spite of the rally on Wall Street and other Asian bourses. PBoC has surprised the markets with its first open market operation in 7 months and also the first net injection via reverse report since January 2014, but the move is backfiring, presumably on interpretation that a cosmetic policy move reduces the likelihood of straight interest rate cuts. Yuan was also slightly firmer offshore after the injection, even though PBoC also lowered the offered yield on the repo by 25bps to 3.85% from 4.10%. Separately, report out of Moody's noted shadow financing activities are shifting to new areas, such as e-financing platforms and margin financing in the equity market, as flows of investment into speculative housing market slowed. Moody's also warned that "maturity mismatches, and the potential for contagious runs, remain key risks for the shadow banking system", adding the risks from property sector exposure are still elevated givan an ongoing downturn in the sector and slowing GDP growth.
- Brazil central bank eschewed "competitive easing" that was on display earlier with the surprise Bank of Canada cut, raising its SELIC target rate for the 2nd straight meeting by the anticipated 50bp margin. In a unanimous decision, BCB cited unfolding economic outlook and perspectives for inflation, while subsequent analyst commentary suggested another rate hike might be in the cards next time as well. Bank of Korea Governor Lee foreshadowed lower inflation target, but also noted the risk of deflation are limited because of positive consumption effects of lower oil prices. Lee promised to take preemptive action when global market risk detected, adding there are upside risks, along with downside, for 2015.
- In USD majors, the dollar was bid higher against JPY, AUD, and NZD, but conspicuously steady against the Euro after a volatile US session. USD/JPY is up about 40pips above 118.20, while AUD/USD and NZD/USD are down 60pips below 0.8060 and 0.7520 respectively. ANZ strategist has forecasted AUD to fall as low as 0.76 by Q2, just as Westpac has pushed back its expectations for RBNZ rate hike to mid-2016. EUR/USD was in a tight 40-pip range around $1.16 going into the ECB decision following today's press speculation the ECB would propose around €50B in QE bond purchases per month, with program continuing for at least one year for minimum total purchases of €600B.
***Equities***
US markets:
- BGG: Reports Q2 adj $0.26 v $0.14e, R$444.3M v $452Me (only 2 est.); Authorizes $50M shares repurchase (6.0% of shares outstanding); +6.4% afterhours
- BBRY: Samsung Electronics said to continue to pursue to take over or acquire significant stake in BlackBerry - financial press; +5.5% afterhours
- EBAY: Reports Q4 $0.90 (adj) v $0.89e, R$4.92B v $4.93Be; exploring strategic options for eBay "Enterprise"; signs standstill with Icahn; approves $2B buyback program (3% of market cap); +3.5% afterhours
- ENDP: To be added to S&P500 index, SAM to be added to S&P400 after the close of trading on Jan 26th; +2.9% afterhours
- URI: Reports Q4 $2.19 v $2.07e, R$1.56B v $1.51Be; +1.6%
- KMI: Reports Q3 $0.08 v $0.36e, R$3.95B v $4.43Be; To acquire premier Midstream Position in Bakken for $3B; -1.8% afterhours
- AXP: Reports Q4 $1.39 v $1.38e, R$9.11B v $8.46Be; -1.9% afterhours
- DFS: Reports Q4 $1.19 (adj) v $1.30e, R$2.04B v $1.81Be; -3.1% afterhours
- XLNX: Reports Q3 $0.62 v $0.60e, R$593.5M v $617Me; -6.5% afterhours
- SNDK: Reports Q4 $1.30 v $1.35e, R$1.74B v $1.75Be; authorized a $2.5B increase in share repurchase program (14.1% of market cap); -7.1% afterhours
- SLM: Reports Q4 $0.03 v $0.05e, R$162.9M v $154Me; -7.7% afterhours
- FFIV: Reports Q1 $1.55 v $1.48e, R$462.8M v $466Me; Announces $750M buyback; -15.4% afterhours
Notable movers by sector:
- Consumer Discretionary: Skilled Group Ltd SKE.AU -5.0% (rejects merger offer)
- Financials: China Taiping Insurance 966.HK +3.2% (FY14 guidance); Haitong International Securities Group 665.HK +1.5% (FY14 guidance); Huafa Industrial 600325.CN +5.5 % (private placement plan)
- Materials: Evolution Mining EVN.AU +4.2% (Q2 production results)
- Energy: Beach Energy BPT.AU +4.4% (speculation on acquisition)
- Technology: Japan Display 6740.JP +5.9% (issues 5-yr Rev target)