Asia Market Update: China Caixin PMI assures markets of growth; BOJ's Kataoka reiterates calls for more easing to reach 2% CPI faster; Markets weaker ahead of Powell comments
***Headlines/Economic Data***
General Trend: Asian equity markets trade mixed after earlier declines in the US
- China Feb Caixin PMI Manufacturing index rises to 6-month high, despite decline seen in the official index
- Aluminum Corp of China (CHALCO) said there was no ‘major’ information to be disclosed following its share price declines
- Chinese aluminum and steel names under pressure as markets expect President Trump to announce 20 and 25% tariffs respectively
- President Trump said to plan emergency meeting with steel and aluminum execs on Thursday
- Meanwhile, China President Xi’s top economic adviser is expected to meet on Thursday with top Trump Administration officials, including Treasury Sec Mnuchin
- BoJ dovish dissenter Kataoka reiterates more easing is needed
- US dollar (USD) in focus ahead of Fed Chair Powell’s second day of testimony
Japan
-Nikkei 225 opened -0.8%; closed -1.6%
- TOPIX Iron & Steel Index -1.8%, Electric Appliances -1.6%
- Japan mega-banks trade broadly lower, track earlier declines in the US financial sector
Automakers decline after Wednesday’s gain in the Yen
- (JP) JAPAN Q4 CAPITAL SPENDING EX SOFTWARE: 4.7% V 2.7%E; CAPITAL SPENDING Y/Y: 4.3% V 3.0%E; Company Profits: 0.9% v 5.5% prior; Company Sales: 5.9% v 4.8% prior
- Kawasaki Heavy,[-5.5%], 7012.JP Confirms quality problem with N700-Series Shinkansen car undercarriages
- (JP) Japan final Feb PMI Manufacturing: 54.1 v 54.0 prelim
- (JP) BoJ Gov Kuroda: Reiterates BOJ's easing has contributed to growth – parliament
- (JP) BoJ Kataoka: Still 'quite distant' from mulling shift from easy policy, must ease more to achieve price goal quickly ; 2019 GDP likely to fall to 0.5-1.0%
- (JP) Japan PM Abe: BOJ Gov Kuroda's policies have not been wrong to date, want him to keep working towards 2% target - parliament
-(JP) Nikkei looks at how BOJ Gov Kuroda may not serve a full term after being reappointed
-(JP) Japan MoF sells ¥2.3T v ¥2.3T indicated in 0.1% (prior 0.1%) 10-yr JGB; avg yield 0.062% v 0.088% prior; bid to cover 4.53x v 4.58x prior
Looking Ahead: Japan Jan Unemployment rate due for release on Friday, along with the Tokyo Feb CPI data
-Fast Retailing [9983.JP] is scheduled to report Feb sales on Friday (prior figures came after the market close)
Korea
-Kospi closed for holiday
- SK Telecom, 017670.KR CEO Jung-ho: Working on wearable technology called “The Sleeve” that will be enabled by the fifth-generation telecom network with Nokia Bell Labs - Korean press
- (KR) South Korea has submitted a document rebutting US trade group representing its pharmaceutical industry that Korea’s drug pricing policies favor its domestic industry - Korean press
- (KR) South Korea Feb Trade Balance: $3.31B v $2.39Be; Exports y/y: 4.0% v 0.5%e; Imports y/y: 14.8% v 12.0%e
- According to KDB GM Korea may have FY17 Net loss of KRW900B (4th consecutive year of losses) - Korean press
China/Hong Kong
-Hang Seng opened -0.3%, Shanghai Composite +0.1%
- Hang Seng Info Tech Index +2%, Energy -0.9%
- Shanghai Composite Property index has moved between gains and losses
- ASM Pacific Technology [522.HK] rises over 3% after reporting Q4 earnings
- (CN) China National People’s Congress to start on March 5th, will set economic targets for the coming year; Expected to keep GDP growth near or above 6.5%; Proactive fiscal policy is expected to be maintained - Xinhua
- (CN) China PBoC Open Market Operation (OMO): injects CNY150B in 7-day, 28-day and 63-day reverse repos v skipped prior; Net drains CNY10B
- USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3352 V 6.3294 PRIOR
- (CN) CHINA FEB CAIXIN PMI MANUFACTURING: 51.6 V 51.3E (6-month high)
-(CN) China Securities Regulator (CSRC) said to have asked some funds to avoid net selling during National People's Congress, which may account for the selling seen this week - press
-(HK) Macau Feb Casino Rev (MOP) 24.3B v 26.3B prior; Y/Y: +5.7% v 9.0%e
Australia/New Zealand
-ASX 200 opened -0.4%; closed -0.7%
- ASX 200 Energy Index -2.2%, Utilities -1.6%, Resources -1.6%, Consumer Discretionary -0.8%, Financials -0.5%
- (NZ) New Zealand Q4 Terms of Trade Index Q/Q: 0.8% v 0.5%e
- (AU) Australia Feb AiG Perf of Manufacturing Index: 57.5 v 58.7 prior
- (AU) AUSTRALIA Q4 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -0.2% V 1.0%E; Equipment, plant, machinery investment +2.2% q/q; Buildings, structures investment -2.1% q/q; Sees 2017/18 Capex estimate +2.5% y/y; Australia companies plan to spend A$114.6B; Sees 2018/19 Capex estimate +3.5% y/y; Australia companies plan to spend A$84B
- (NZ) New Zealand sells NZ$100M in 2.5% 2040 inflation indexed bonds; avg yield 2.1987%
-(AU) Australia Prudential Regulatory Authority (APRA) Chairman Byres: 10% cap on bank lending to residential property investors was probably reaching the end of its useful life
- (AU) Australia ACCC exec general manager of specialized enforcement Bezzi: As a general matter we are concerned about potential collusion in forex markets and we do have some investigations, that I am not able to go into in any detail, that touch on some of these issues - AFR
-(AU) Australia Feb Commodity Index (AUD): 139.8 v 135.3 prior; Commodity Index SDR Y/Y: -1.0% v -0.6% prior
Other Asia
-(TW) Taiwan Central Bank Gov Yang: NT$ gains help ease import driven inflation pressures; will take appropriate monetary policy to keep inflation stable
North America
- US equity markets ended broadly lower: Dow -1.5%, S&P500 -1.1%, Nasdaq -0.8%, Russell 2000 -1.6%
- S&P500 Energy -2.3%, Materials -1.8%
-(VE) US Trump Administration Official: Does not rule out complete US oil embargo on Venezuela, says it would cause fairly strong shock to the oil market in the short-term
-(US) US said to plan announcement on Thursday, Mar 1st related to steel and aluminum imports - US press
-(US) SEC launches investigation into cryptocurrency, issued subpoenas and information requests to technology companies and advisers - financial press
- (US) DOE CRUDE: +3.0M V +2ME
Looking Ahead: US Feb ISM Manufacturing PMI to be released
Europe
- Carrefour [CA.FR]: Reports FY net -€531M v +€746M, Rev €88.2B v €85.7B y/y
Looking Ahead: UK Feb Manufacturing PMI due to be released
***Levels as of 01:00ET***
- Nikkei225 -1.6%, Hang Seng -0.4%; Shanghai Composite +0.0%; ASX200 -0.7%, Kospi -1.2%
- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.2%, Dax -0.6%; FTSE100 -0.5%
- EUR 1.2199-1.2184; JPY 106.87-106.55; AUD 0.7766-0.7717;NZD 0.7211-0.7187
- Apr Gold -0.2% at $1,315/oz; Apr Crude Oil +0.0% at $61.66/brl; May Copper +0.3% at $3.14/lb