Asia Market Update: Dollar remains at multi-year lows, bond yield higher with equities cautious ahead of FOMC
***Headlines/Economic Data***
General Trend: Asian equities trade generally lower following negative leads out of the US
- Energy shares underperform vs outperformance seen on Monday
- Japan Dec Jobless Rate rises for the first time since May 2017; job-to-applicant ratio highest since Jan 1974
- US Treasury Futures extend losses during Asian session
- PBoC sets yuan weaker for first time in 8 sessions
Japan
-Nikkei 225 opened -0.3%; closed -1.4%
- TOPIX Securities Index -1.2%, Electric Appliances -1.7%
- Hitachi Metals [5486.JP]: Declines over 5% (9-month profits declined y/y)
- Fuji Electric [6504.JP]: Trades lower by over 1% (affirmed FY net profit forecast)
- Hitachi Construction [6305.JP]: Gains over 7% (Raised FY18 guidance)
- Canon Electronics [7739.JP]: Gains over 9% (FY profit rose by ~38%)
- (JP) Japan's Topix passes 1,900 for the first time since 1991
- (JP) Japan Dec Overall Household Spending Y/Y: -0.1% v 1.5%e
- (JP) JAPAN DEC JOBLESS RATE: 2.8% V 2.7%E; JOB-TO-APPLICANT RATIO: 1.59 (highest since Jan 1974) V 1.57E
- (JP) Japan PM Abe Adviser Hamada: Yen could 'firm' in short-term on factors such as US currency policy
- (JP) Japan Econ Min Motegi: Will closely watch FX rates as they have impact on Japan economy
- (JP) Japan Fin Min Aso: Coincheck event is very regrettable; if needed authorities will search crypto exchanges
- (JP) JAPAN DEC RETAIL SALES M/M: +0.9% V -0.2%E; RETAIL TRADE Y/Y: 3.9% V 2.2%E
- JSR, 4185.JP Reports 9M Net ¥27.7B v ¥22.3B y/y; Op ¥37.2B, 44.5% y/y; +14.4%
- (JP) Japan MoF sells ¥2.2T v ¥2.2T indicated in 0.10% (prior 0.10%) 2-yr JGBs; avg yield -0.130% v -0.136% prior; bid to cover 5.02x v 4.32x prior
-(JP) Japan 10-yr JGB yield trades above 0.09% (highest since July)
Looking Ahead: Japan Dec Prelim Industrial Production due on Wednesday, along with comments from BoJ official Iwata
Korea
-Kospi opened -0.3%
- Chipmakers trade broadly lower: Hynix and Samsung Electronics decline over 2%
- (KR) South Korea customs data shows washing machine exports have nearly halved over the past 5-yrs; with more declines likely from new US safeguard measures - Korean press
- (KR) According to Korea Financial Investment Association, the Korea stock market has seen the number of participants pass 25M for the first time - Korean press
- (KR) South Korea Feb Business Manufacturing Survey: 77 v 82 prior; Non-Manufacturing Survey: 78 v 78 prior
- Samsung, LG open new logistics facilities in US over safeguard measures - Korean press
-(KR) South Korea Dec Department Store Sales y/y: 3.2% v 8.5% prior; Discount Store Sales y/y: 2.2% v 0.0% prior
-(KR) North Korea armed forces have reportedly scaled back their winter military exercises due to shortages of fuel and food - press
Looking Ahead: South Korea Dec Industrial production due for release on Wed
China/Hong Kong
-Hang Seng opened -0.7%, Shanghai Composite -0.3%
- Hang Seng Materials Index -2.6%, Energy -2.5%, Info Tech -1.5%, Financials -1.4%, Property/Construction -0.9%
- Wynn Macau, 1128.HK Forms special committee following recent sexual misconduct allegations related to Steve Wynn; -5.5% (declined 6.5% Monday)
- (CN) Some China banks said to have been ordered to curb overnight lending - Chinese press
- (CN) China Premier Li: China will properly manage the timing, pace and intensity of macroeconomic controls to achieve higher quality growth – CD
- (CN) PBoC: Skips OMO (4th straight session) v skipped prior; Net drain CNY240B v CNY140B drain prior
- (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3312 V 6.3267 PRIOR (1st weaker setting in 8 sessions)
-(CN) China targeting to meet crude steel capacity cut target early
-(CN) China province of Shanxi (2nd largest coal producer) has asked coal miners to shorten or eliminate Spring Festival holiday - press
Looking Ahead: China Jan Official Manufacturing and Non-Manufacturing PMIs due on Wed
Australia/New Zealand
-ASX 200 opened -0.1%; closed -0.9%
- ASX 200 Energy Index -1.3%, Resources -1.4%, Utilities -1%, Financials -0.6%
- (NZ) NEW ZEALAND DEC TRADE BALANCE (NZD): +640M V -125ME; YTD -2.84B V -3.44BE
-Fortescue, FMG.AU Reports Q2 ore mined 47.5 Mt v 50.1 Mt y/y; ore shipped 40.5 Mt v 42.2 Mt y/y
-Village Roadshow, VRL.AU Reports H1 substantially lower y/y
Looking Ahead: Australia Q4 CPI due for release on Wed
-(AU) Wholesale energy prices more than doubled in last 12 months in Victoria and S. Australia - AMEO data
-(NZ) S&P affirms New Zealand sovereign rating at AA; outlook stable
Other Asia
- (PH) Philippines Central Bank Gov Espenilla: Peso is broadly stable over medium term
-(TH) Thailand Central Bank: GDP may grow 4% in 2018; interest rate to remain accomodative to help economy
North America
- US equity markets ended broadly lower: Dow -0.7%, S&P500 -0.7%, Nasdaq -0.5%, Russell 2000 -0.6%
- S&P500 Energy Sector -1.5%, Utilities -1.3%, Real Estate -1.2%
- Maxim Integrated Products [MXIM]: Declines over 8% in the afterhours, as Japan’s Renesas denied media report related to $20B merger.
- MetLife [MET]: Declines over 6% in the afterhours: Reports prelim Q4 $0.61-0.66 v $1.10e; discovered material weakness in internal control over financial reporting; to see $135-165M FY17 net income impact; to increase reserves by $525-575M; to postpone earnings
- Thomson Reuters [TRI] Confirms Advanced Discussions with Blackstone Regarding Financial & Risk (F&R) Business; no terms disclosed yet
- Callidus Software [CALD]: To be acquired by SAP for $36.00/shr for $2.4B (~10% premium to closing price)
- (US) FBI Deputy Director McCabe reportedly plans to step down effective today, sooner than expected - NBC News
- (US) Treasury Sec Mnuchin comments before Tuesday's Senate Banking Committee Testimony: Reiterates Treasury can fund government into Feb
- (US) Treasury quarterly financing estimates: to borrow $441B in Jan-Mar quarter (v $512B prior projection); Treasury to borrow $176B in Apr-Jun quarter; Treasury borrowed $282B in Oct-Dec quarter v $275B estimate
Looking Ahead: Weekly US API Crude Oil Inventories due for release
Corporate earnings are expected from companies including AK Steel, AMD, Aetna, Corning, Electronic Arts, Harley-Davidson, Juniper, McDonald’s, Pfizer, Robert Half
Europe
- (EU) Reportedly ECB officials are assuming the QE program will wind down over about 3 months (rather than suddenly halting the program); Even the hawkish members of the council are said to support a short taper period rather than a sudden halt to QE ; There has still not been a decision made on QE after the nominal end date in Sept - press
- (UK) EU Chief Brexit Negotiator Barnier: EU institutions and govts are united in Brexit talks; Brexit transition to take 21 months
- (UK) PM May spokesperson: "there remains some distance" between the UK and EU on more than one issue over the UK's transition deal - Sky News
- (UK) Unreleased UK Brexit analysis: UK would be worse off outside the EU under every scenario modeled - Buzzfeed
- (UK) Moody's: UK corporate credit quality to remain stable in 2018 despite Brexit uncertainty
- (DE) Germany govt to raise 2018 GDP forecast to 2.4% from 1.9% prior - press
- Luxottica [LUX.IT]: Reports Q4 Rev €2.09B v €2.07Be
- Telecom Italia [TIT.IT]: CEO expected to announce plan for network spin off proposal on Monday
Looking Ahead: Euro Zone Q4 prelim GDP and Germany Jan Prelim CPI due for release
***Levels as of 01:00ET***
- Nikkei225 -1.4%, Hang Seng -1.0%; Shanghai Composite -0.6%; ASX200 -0.9%, Kospi -1.1%
- Equity Futures: S&P500 -0.5%; Nasdaq100 -0.7%, Dax -0.7%; FTSE100 -0.5%
- EUR 1.2388-1.2361; JPY 109.20-108.66; AUD 0.8100-0.8066;NZD 0.7338-0.7314
- Feb Gold -0.4% at $1,334/oz; Mar Crude Oil -1.0% at $64.88/brl; Mar Copper -0.9% at $3.17/lb