Asian Market Update: Strong China data adds to upbeat sentiment
***Economic Data*** - (CN) CHINA JAN TRADE BALANCE: $31.9B V $23.8BE; Exports Y/Y: 10.6%; Adjusted* 9.4% v 0.6%e; Imports Y/Y: 10.0%; Adjusted* 9.3% v 4.0%e - (AU) AUSTRALIA FEB WESTPAC CONSUMER CONFIDENCE INDEX M/M: 100.2 V 103.3 PRIOR; M/M: -3.0% V -1.7% PRIOR (3rd straight decline) - (AU) AUSTRALIA DEC CREDIT CARD BALANCES (A$): 50.1B V 49.7B PRIOR; CREDIT CARD PURCHASES: 24.8B V 22.4B PRIOR - (NZ) NEW ZEALAND JAN RETAIL CARD SPENDING M/M: -0.5% V +0.6%E; TOTAL CARD SPENDING M/M: -0.1% V +1.0% PRIOR - (JP) JAPAN DEC CORE MACHINE ORDERS M/M: -15.7% V -4.0%E (largest decline since 1992); Y/Y: 6.7% V 17.4%E - (JP) JAPAN DEC TERTIARY INDUSTRY INDEX M/M: -0.4% V -0.3%E - (JP) JAPAN JAN MONEY STOCK M2 Y/Y: 4.4% (multi-year high) V 4.2%E; M3 Y/Y: 3.5% V 3.4%E - (KR) SOUTH KOREA JAN UNEMPLOYMENT RATE: 3.2% V 3.0%E (6-month high) - (KR) SOUTH KOREA JAN BANK LENDING TO HOUSEHOLD (KRW): 477.8T V 480.4T PRIOR - (KR) SOUTH KOREA DEC MONEY SUPPLY L M/M: 0.2% V 0.3% PRIOR; M2 M/M: 0.4% V 0.4% PRIOR; M2 Y/Y: 5.3% (10-month high) v 5.1% prior - (KR) SOUTH KOREA JAN EXPORT PRICE INDEX M/M: +0.2% V -0.3% PRIOR; Y/Y: -1.9% V -2.1% PRIOR; IMPORT PRICE INDEX M/M: -0.3% V +0.4% PRIOR; Y/Y: -3.0% V -3.5% PRIOR
***Highlights/Observations/Insights*** - As expected, US House of Reps passes the clean debt ceiling bill in a 221-201 vote with about two dozen Republicans crossing the isle; Democrat-controlled Senate expected to pass the bill on Wednesday. - Canada FY14/15 deficit seen narrower than previously forecasted; Canada expects return to surplus in FY15/16, with GDP growing to 2.5% for the next 2 years. - BOJ's Kiuchi concerned the side-effects from policy easing would outweigh the benefits and only condition the markets to expect more; NOTE Kiuchi is a regular dissenter to the policy statement, calling for BOJ to to aim to achieve price stability target of 2% in medium-long term and designate quantitative and qualitative easing as an intensive measure with a 2-year time frame" - Australia consumer confidence for February fell for the 3rd straight month; Households increasingly more worried about higher interest rates after the latest RBA decision to drop its easing bias, while the index for unemployment expectation is at its 2nd highest level since 2009 ahead of tomorrow's jobs data. - China trade surplus defies expectations for weaker terms of trade; Exports and Imports both rose over 10% on unadjusted and over 9% on holiday-adjusted basis. Iron ore imports and exports to EU particularly impressive, rising 33% and 15.6% respectively. Critics suggest trade data spike may be explained by "overinvoicing" to mask the slowdown.
***Fixed Income/Commodities/Currencies*** - (CN) China MOF sells CNY28B in 5-yr bonds; avg yield 4.1028% - (AU) Australia MoF (AOFM) sells A$800M in 2.75% 2024 Bonds; avg yield: 4.2041%; bid-to-cover: 4.41x - GLD: SPDR Gold Trust ETF daily holdings rise 1.8 tonnes to 798.9 tonnes (3-week high) - SLV: iShares Silver Trust ETF daily holdings rise to 10,090.7 tonnes from 10,045.8 tonnes - (US) API PETROLEUM INVENTORIES: CRUDE: +2.1M (4th consecutive build) v +2.5Me; GASOLINE: -480K v -0.5Me; Cushing inventory -2.5M v +1.56M w/w
- AUD hit 1-month high above $0.9060 and NZD reached 4-week highs above $0.8350 against the greenback in the wake of much better than expected China trade data, both rising about 50pips off their session lows. USD/JPY struggled to extend above 102.60 in spite of the modest risk-on sentiment that tracked US market rally, while GBP/USD was supported by US session lows just below $1.6440 ahead of the critical BOE inflation report in the European session. EUR/USD consolidated some of the late US-session weakness, trading in a 15-pip range below $1.3640.
***Speakers/Political/In the Papers*** - (CN) RBS economist: Concerned the latest China trade data suggests "overinvoicing" will sharply intensify this year - financial press - (CN) Goldman Sachs chief China strategist: sees China 2014 GDP target 7.6% v 7.7% prior; buying opportunity for Chinese stocks - financial press - (JP) BOJ Board member Kiuchi: Additional policy easing may do more harm than good - Japanese press - (JP) IMF dep director of Asia-Pacific Schiff: Does not see the need for further easing from BOJ as long as inflation and inflation expectations head toward 2% target - (JP) BOJ Gov Kuroda: Fiscal discipline needed for sustainable growth; BOJ needs to take action if inflation shows signs of stalling, especially in light of recent global market turbulence - addressing parliament - (KR) South Korea Fin Min Hyun: service industry to be major factor for economic growth
- (US) House of Representatives passes "clean" debt ceiling bill, raising the debt limit through March 15, 2015 with no conditions (passed as expected) - (US) Fed's Fisher (hawk, FOMC voter): Reiterates would see little efficacy from more QE - (CA) Canada Finance Ministry presents FY14/15 budget: Sees deficit C$2.9B vs prior forecast of deficit C$5.5B vs expected deficit of C$16.6B in FY13/14; To consider issue of 50-year bonds - (CA) Moody's: Canada planned fiscal consolidation supports Aaa rating, Stable Outlook
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +0.7%, S&P/ASX +0.9%, Kospi +0.4%, Shanghai Composite +0.1%, Hang Seng +1.1%, Mar S&P500 +0.1% at 1,814, Apr gold -0.4% at $1,285, Mar crude oil +0.1% at $100.37/brl
US markets: - DVA: Reports Q4 $1.10 (adj) v $0.98e, R$3.06B v $3.05Be; +8.0% afterhours - TRMB: Reports Q4 $0.43 v $0.37e, R$599.2M v $565Me; +6.7% afterhours - FOSL: Reports Q4 $2.68 v $2.44e, R$1.06B v $1.02Be; +3.4% afterhours - WU: Reports Q4 $0.31 v $0.32e, R$1.42B v $1.43Be; Approves $500M share repurchase program (5.7% of market cap); +0.1% afterhours - CLF: Cuts FY14 Capex to $375-425M vs $862M prior year; -1.0% afterhours
Notable movers by sector: - Consumer Discretionary: VODone 82.HK -13.3% (profit warning); Beijing Wangfujing Department Store Group 600859.CN +10.0% (strategic alliance with Tencent) - Consumer staples: Mengniu Dairy 2319.HK +1.8% (Danone raises stake) - Financials: Commonwealth Bank of Australia CBA.AU +0.1% (H1 results); Collection House CLH.AU +1.2% (H1 results); China Overseas Land 688.HK +6.0% (Jan results); Sunac China Holdings 1918.HK +4.0% (Jan results) - Materials: OZ Minerals OZL.AU +12.7% (FY13 results) - Industrials: Boral Ltd BLD.AU +9.3% (H1 results); Nissan Motor 7201.JP +2.6% (9M results); JGC Corp 1963.JP +0.4% (9M results) - Technology: MediaTek 2454.TW +4.1% (unveils new chip); Hikari Tsushin 9435.JP -2.8% (9M results)