Asian Market Update: Australia CPI rises to top half of RBA target range; BOJ on hold with policy/assessment and more modest CPI and GDP expectations
***Economic Data*** - (JP) BANK OF JAPAN (BOJ) POLICY STATEMENT: REITERATES TO INCREASE MONETARY BASE AT ANNUAL PACE OF ¥60-70T (AS EXPECTED); Maintains overall economic assessment (5th straight month) - (AU) AUSTRALIA Q4 CONSUMER PRICES (CPI) Q/Q: 0.8% V 0.4%E; Y/Y: 2.7% V 2.4%E; CPI Trimmed Mean Q/Q: 0.9% (10-quarter high) v 0.6%e ; Y/Y: 2.6% v 2.3%e - (AU) AUSTRALIA JAN WESTPAC CONSUMER CONFIDENCE INDEX M/M: 103.3 V 105.0 PRIOR; M/M: -1.7% V -4.8% PRIOR (2nd consecutive decline) - (JP) JAPAN NOV FINAL LEADING INDEX CI: 111.1 V 110.8 PRELIM; COINCIDENT INDEX: 110.7 V 110.5 PRELIM - (JP) JAPAN DEC TOKYO CONDOMINIUM SALES Y/Y: 6.1% V 22.3% PRIOR - (JP) JAPAN NOV ALL INDUSTRY ACTIVITY INDEX M/M: +0.3% V +0.3%E - (TW) TAIWAN DEC UNEMPLOYMENT RATE: 4.1% V 4.2%E
***Observations/Insights*** - Texas Instruments down 1% following better than expected earnings and announcement of 1.1K in job cuts; IBM down 2.6% after missing on the bop line. - BHP quarterly output of iron ore flat q/q; Maintains FY production targets, but shares slump over 1% amid decline in the iron ore price. - Australia quarterly CPI tops estimates, with most notable price inflation in food, alcohol/tobacco, and recreation components following recent weakness in AUD. Aussie dollar spikes as investors backtrack from expectations of more RBA policy easing. - Bank of Japan on hold in terms of policy as expected; Keeps overall economic assessment unchanged despite an upgrade from the cabinet office last week; Board member Shirai adds a dissent to risks component, looking for more pressing language on lagging employment/income trends. BOJ also lowers FY14/15 GDP target by a decimal to 1.4%, maintains all CPI targets, but also warns inflation may remain around 1.25% for some time.
***Fixed Income/Commodities/Currencies*** - (CN) China MOF sells 10-yr bonds; avg yield 4.4483% - USD/CNY: (CN) PBoC sets yuan mid point at 6.1087 v 6.1066 prior setting (Weakest setting since Jan 9th) - Goldman Sachs: Sees lower prices in copper and iron ore in 2014; iron ore price to fall to $108/ton in 2014, $80/ton in 2015 - press
- AUD and JPY are the most notable movers among the dollar majors in the FX space, both rising against the greenback following the respective announcements of Australia CPI and BOJ policy statement. AUD/USD spiked up about 80pips to test $0.8870 after the quarterly inflation print vastly reduced expectations for more RBA easing, particularly in the wake of that disappointing employment report last week. AUD/NZD was up 90pips, hitting NZ$1.0660, while AUD/JPY saw a high of ¥92.50 - up 85pips from the lows. USD/JPY pair fell about 30pips below the ¥104 handle after the BOJ statement, where the central bank lowered its forecast for next year's GDP and also noted inflation would remain around 1.25% for some time.
***Speakers/Political/In the Papers*** - (CN) China National Development and Reform Commission (NDRC): Continue to implement prudent monetary policy and proactive fiscal policy - financial press - (CN) China Financial Futures Exchange (CFFEX) currently studying 3% 10-yr govt bond futures - Chinese press - (CN) China may take two years to pass property tax law; Likely to implement more tax trials in 2014 - financial press - (CN) PBoC and CSRC to jointly evaluate China financial market facilities - financial press - (AU) Commsec economist: Today's CPI data likely to bring RBA to a more neutral stance from debating the merits of more easing - Australian press - (AU) According to swaps market data, RBA rate cut probability at its Feb meeting has been reduced to 12% from 17% following Q4 inflation data - financial press - (JP) Japan LDP deputy policy chief Shiozaki: Corporate tax 25% is natural level for consideration
- (US) CEO and Co-Chief Investment Officer Mohamed El-Erian has resigned from PIMCO; To remain at Allianz International Executive Committee
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 -0.7%, S&P/ASX -0.4%, Kospi -0.1%, Shanghai Composite +1.7%, Hang Seng +0.1%, Mar S&P500 flat at 1,837, Feb gold +0.1% at $1,243, Mar crude oil +1.1% at $95.36/brl
US markets: - SMCI: Reports Q2 $0.35 v $0.26e, R$356.4M v $332Me; +17.0% afterhours - NUAN: Guides Q1 higher $0.23-0.24 v $0.20e; R$487-491M v $484Me; Names new head of ww sales; +8.3% afterhours - HURN: Guides FY13 higher to $2.92-2.96 v $2.68e, R$718-720.5M v $695Me ($2.60-2.72, R$685-700M prior guidance); provides initial FY14 outlook; +4.2% afterhours - CA: Reports Q3 $0.84 v $0.72e, R$1.16B v $1.14Be; Names new head of sales; +3.0% afterhours - CREE: Reports Q2 $0.46 v $0.39e, R$415M v $413Me; +1.9% afterhours - BBRY: Announces Plans to Divest Canadian Real Estate Holdings for over 3M sqf of space; Terms not disclosed; +1.6% afterhours
- TXN: Reports Q4 $0.49 (ex $0.03 charge) v $0.47e, R$3.03B v $2.99Be; To eliminate about 1.1K jobs (about 3% of workforce) BOBE: Guides FY14 EPS lower to $2.20-2.30 v $2.60e (prior guided $2.60-2.65 on Dec 3rd); No longer to provide mid-quarter updates to oulook starting this quarter - conf call; -1.0% afterhours - FE: Guides FY13 $2.95-3.05 v $2.96e ($2.90-3.10 prior), Guides initial FY14 $2.45-2.85 v $2.79e, Cuts quarterly dividend by 34.5% to $0.36 from $0.55 prior; -1.3% afterhours - IBM: Reports Q4 $6.13 v $6.01e, R$27.7B v $28.3Be; Exec: challenges in hardware business persist - conf call; -2.6% afterhours - XLNX: Reports Q3 $0.61 v $0.53e, R$587M v $601Me; -3.6% afterhours - IBKR: Reports Q4 $0.07 v $0.15e, R$262.9M v $317Me; -4.7% afterhours - AMD: Reports Q4 $0.06 adj v $0.06e, R$1.59B v $1.54Be; -12.0% afterhours
Notable movers by sector: - Consumer Discretionary: FAW Car 000800.CN +3.9% (FY13 guidance) - Consumer staples: Warrnambool Cheese & Butter WCB.AU +1.3% (update on Saputo's stake in company) - Financials: CITIC Securities 6030.HK +3.9% (prelim FY13 result) - Materials: BHP Billiton BHP.AU -1.0% (Q2 production result); Angang Steel 347.HK +5.2% (FY13 guidance); Jiangsu Yangnong Chemical 600486.CN +6.9% (FY13 guidance) - Technology: Renesas Electronics Corp 6723.JP -5.1% (to reduce workforce) - Energy: China Shenhua Energy 1088.HK +0.9% (2013 sales result); Shanghai Tonva Petrochemical 1103.HK +26.7% (issues positive profit alert) - Industrials: Sany Heavy Equipment International Holdings 600031.CN +3.3%, Zoomlion Heavy Industry Science and Technology 000157.CN +2.6% (Hunan Province on mechanization of agricultural production); Beijing Jiaxun Feihong Electrical 300213.CN +4.9% (special dividend proposal); Dalian Zhiyun Automation 300097.CN +5.8% (FY13 guidance) - Healthcare: Guangzhou Improve Medical Instruments 300030.CN +4.7% (prelim FY13 result)