Asian Market Update: AUD slides on RBA jawboning; BOK talks up KRW
***Economic Data***
- (JP) JAPAN DEC ALL INDUSTRY ACTIVITY INDEX M/M: -0.9% V -0.3%E
- (CN) China Jan forex sales CNY644.5B (2nd largest monthly sale) v CNY708.2B sales prior - PBoC
- (CN) China Association of Automobile Manufacturers (CAAM): China Jan vehicle sales 2.5M units, +7.7% y/y
- (KR) South Korea Jan PPI Y/Y: -3.3% v -4.0% prior
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -2.2%, S&P/ASX -0.9%, Kospi -0.2%, Shanghai Composite -0.5%, Hang Seng -0.6%, Mar S&P500 -0.1% at 1,913
***Commodities/Fixed Income***
- Apr gold +0.1% at $1,227/oz, Apr crude oil -1.1% at $32.57/brl, Mar copper flat at $2.07/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 2.6 tonnes to 713.6 tonnes
- (RU) Russia Deputy PM Dvorkovich: Does not expect oil prices to fall further after the latest agreement on freeze in output - financial press
- (CN) PBOC to inject CNY10B in 7-day reverse repos; Drains net CNY455B this week (3-year high)
- (CN) China MOF sells 6-month bonds, avg yield 2.1214%
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.5186 V 6.5152 PRIOR
- (HK) Offshore overnight yuan HIBOR 9.26% (highest since Jan 12th) v 4.45% prior
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥450B in 5-10yr JGBs
- JGB: (JP) Japan MoF cancels plans to offer 5-year retail bonds - financial press
***Market Focal Points/FX***
- Asian equity markets are modestly lower, tracking a more subdued session in the US hours, where investors expressed more caution in the consumer space after disappointing Wal-Mart results. Nikkei225 is leading the decline as Japanese Yen strengthened against the US dollar in line with Thursday's trend in the Treasury markets - US yields came in 5-6bps across the curve, as USD/JPY slid nearly 70 ticks to 112.70. AUD/USD was also volatile in the wake of yesterday's soft employment data, falling some 70pips below $0.71 handle. RBA board member Edwards noted AUD is too high, preferring the exchange rate to be around $0.65.
- In China, after yesterday's higher than expected CPI data, economist with ANZ downplayed the rise to temporary factors like volatile food prices and warned about the risks of rising deflationary pressures in coming months. Today's PBoC Yuan fix was slightly weaker after yesterday's stronger setting, as central bank appears to have backed away from a clearly defined trend. Meanwhile, China's January forex sales followed last month's record of CNY708.2B with CNY644B - 2nd highest on record - suggesting ongoing capital outflow pressures. Offshore Yuan market has remained fairly stable in CNH6.52-53 range, though analysts suspect intervention given another spike in the Hibor rate above 9%.
- BOJ Gov Kuroda continues his daily campaign promoting negative rate policy, stating the measures help boost the economy with pressure on the bond yields, though he did add that the central bank will not keep its easing policy in place "forever". Meanwhile, a study from the Nikkei found pretax profit growth at nearly 200 companies with FY-end in December slowing to just 2% from 12% last year.
- Elsewhere, this week's dovish hold by the Bank of Korea has bolstered expectations of more easing down the pike, with KRW selling off to its weakest level in about 5 years above 1,230. After that weaker open, there was a statement from the BOK calling volatility excessive and promising measures to counter "herd behavior."
***Equities***
US equities / ADRs:
- AMAT: Reports Q1 $0.25 v $0.25e, R$2.26B v $2.24Be; +7.2% afterhours
- AHS: Reports Q4 $0.47 v $0.42e, R$402.6M v $387Me; +6.2% afterhours
- EQIX: Reports Q4 $2.85 adj FFO v $3.57e, R$730.5M v $714Me; -3.7% afterhours
- JWN: Reports Q4 $1.00 v $1.22e, R$4.14B v $4.22Be; -8.3% afterhours
- TRN: Reports Q4 $1.30 v $1.07e, R$1.55B v $1.61Be; -12.5% afterhours
- TRUE: Reports Q4 -$0.06 v -$0.04e, R$63.6M v $64.8Me; -16.5% afterhours
Notable movers by sector:
- Consumer discretionary: China Foods 506.HK +3.6% (guidance); MGM China 2282.HK -7.7% (FY15 result); Air China 753.HK +1.0% (Jan result); Fairfax Media FXJ.AU -4.8% (H1 result)
- Industrials: James Hardie Industries JHX.AU +3.3% (9-month result)
- Technology: Semiconductor Manufacturing International Corp 981.HK -4.4% (Q4 result); Sharp Corp 6753.JP +1.2% (to discuss Hon Hai proposal); Asustek Computer 2357.TW -1.8% (lowers 2016 target)
- Materials: Iluka Resources ILU.AU -2.8% (FY15 result); Sims Metal Management SGM.AU -13.0% (H1 result)
- Energy: Santos STO.AU -5.4% (FY15 result)
- Telecom: NTT DoCoMo Inc 9437.JP +0.3% (said to be on track to reach medium-term profit 1 year early)