Asian Market Update: Markets in a holding pattern ahead of the Yellen testimony; AUD boosted by rising business confidence
***Economic Data*** - (AU) AUSTRALIA JAN NAB BUSINESS CONDITIONS: 4 (3-year high) V 3 PRIOR; NAB BUSINESS CONFIDENCE: 8 V 6 PRIOR (1-year high) - (AU) AUSTRALIA Q4 HOUSE PRICE INDEX Q/Q: 3.4% (highest since Q2 of 2010) V 3.0%E; Y/Y: 9.3% V 8.6%E - (AU) AUSTRALIA DEC HOME LOANS M/M: -1.9% V 0.7%E; INVESTMENT LENDING: 2.9% V 2.0% PRIOR; OWNER-OCCUPIER LOAN VALUE: -1.5% V 2.2% PRIOR - (AU) Australia ANZ-Roy Morgan Consumer Confidence index in week ended Feb 9th: 116.0 v 115.2 prior - (NZ) NEW ZEALAND JAN ANZ TRUCKOMETER HEAVY M/M: 1.7% V 1.4% PRIOR - (KR) South Korea Jan Dept Store Sales y/y: +7.2% v -0.3% prior (strongest reading in 10 months); Discount Store Sales y/y: +18.4% v -5.7% prior (strongest reading in 3 years) - (PH) PHILIPPINES DEC EXPORTS: $4.6B V $4.3B; Y/Y: 15.8% V 10.4%E - (UK) UK JAN BRC SALES LFL Y/Y: 3.9% V 0.8%E (highest reading since Apr 2011)
***Observations/Insights*** - Asian indices modestly higher and USD tracking softer as investors anticipate the incoming Fed chair Yellen to tilt toward the dovish side in her first semiannual testimony to the House Financial Services Committee on Tuesday, particularly in the wake of two soft non-farm payrolls reports and taper-driven volatility in the EM space. - Australian currency continued to outperform among the majors, boosted by a 3-year print in the NAB business assessment for the month of January as well as rising prices in the property sector, supporting the case for less accommodation from the RBA. - China central bank on the sidelines in terms of operations for the 2nd consecutive session, opting to drain some of the vast amounts of liquidity injected ahead of the Lunar New Year break. Despite the passive stance, shibor rates fall for 2nd trading day, with overnight hitting a 2-week low.
***Fixed Income/Commodities/Currencies*** - (CN) Daily Shibor fixings: O/N: 4.1370% v 4.3035% prior (2nd consecutive decline; 2-week low); 1-week: 5.2010% v 5.2990% prior (2nd consecutive decline) - (CN) PBoC won't conduct open market operations (OMO) in today's session (2n consecutive session of halted operations) - (AU) Australia MoF (AOFM) sells A$200M in 2.0% 2035 indexed Bonds; avg yield: 2.1635%; bid-to-cover: 3.74x
- AUD tested the upside of the $0.90 handle following a strong print from NAB Business Conditions/Confidence metrics, marking a 4-week high, as short-covering reversal in the aussie continues to run its course. NZD was also higher with a 40pip jump above the $0.83 level, while EUR/USD rose some 30pips toward $1.3680 presumable on anticipation of a dovish Fed chair Yellen testimony. USD/JPY is trading in a 20pip range, supported by the ¥102 handle.
***Speakers/Political/In the Papers*** - (CN) China Academy of Social Sciences (CASS) Institute of Economics researcher Zhang Ping: Rising borrowing costs pose a major risk to China GDP; China companies will be hard pressed to cover the cost of debt, since loan rates are now exceeding 9% and growth momentum is slowing - China Daily - (CN) China State researcher Wu: Chinese economy will be very difficult in 2014 - Chinese press - (CN) Credit Agricole economist Kowalczyk: PBoC quarterly policy statement was "unusually hawkish"; Expects elevated levels of market rate volatility to persist - Shanghai Daily - (CN) According to Deovolente Realty Co, Shanghai pre-owned home sales for Jan: 14.3K units , -21% m/m; Avg price rose 4.7% m/m to CNY20.4K/sqm - Shanghai Daily - (CN) Follow-up: China Development Bank (CDB) denies speculation on credit line postpone - financial press - (CN) China big four banks Jan new loans CNY350B v CNY180B m/m, v CNY376.7B y/y - financial press - (KR) South Korea Finance Ministry (MOF) January report: Domestic demand recovery is not firm - (KR) South Korea Fin Min Hyun: South Korea more resilient to fx swings - FT interview - (KR) Upcoming BOK rate decision on Thursday, Feb 13th has analysts unanimous that rate will be kept unchanged at 2.50% - financial press - (US) Goldman Sachs chief economist Hatzius: Does not expect Fed Chair Yellen to signal pause of taper - financial press - (US) OBAMA ADMINISTRATION TO DELAY 2015 OBAMACARE PENALTIES AN ADDITIONAL YEAR FOR SOME BUSINESS - financial press
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 closed, S&P/ASX +0.6%, Kospi +0.5%, Shanghai Composite +0.4%, Hang Seng +1.6%, Mar S&P500 +0.3% at 1,800, Apr gold +0.7% at $1,284, Mar crude oil -0.1% at $100.05/brl
US markets: - MOH: Reports Q4 -$0.20 v -$0.02e, R$1.59B v $1.80Be; +0.5% afterhours - URBN: Reports Q4 R$905.9M v $926Me; SSS +1%; -1.8% afterhours - WBMD: Guides Q4 $0.23-0.25 v $0.18e, R$145.5-146.5M v $145Me; increases buyback by $50M (2.6% of market cap); -2.6% afterhours - NUAN: Reports Q1 $0.24 v $0.21e, R$490M v $485Me; Guides Q2 $0.21-0.25 v $0.25e, R$476-490M v $496Me - conf call slides; -2.9% afterhours - RAX: Reports Q4 $0.14 v $0.14e, R$408M v $405Me; CEO retires effective immediately; Co-Founder and Executive Chairman Graham Weston Appointed CEO While Board Searches for Long-Term Successor; Guides Q1 Rev +2-3.5% (q/q implies R$416-422M v $420Me) - conf call; -11.4% afterhours - BLOX: Reports prelim Q2 $0.10-0.12 v $0.11e, R$60-61M v $66Me (previously guided $0.09-0.11, R$65-66M); -31.6% afterhours
Notable movers by sector: - Consumer Discretionary: Cochlear Ltd COH.AU -10.0% (H1 results); Xi'an Catering 000721.CN +10.1% (special dividend proposal); Jiangsu Yanghe Brewery Joint-Stock 002304.CN +3.5% (share repurchase) - Consumer staples: China Agrotech Holdings 1073.HK -8.8% (profit warning) - Financials: Macquarie Group Limited MQG.AU -3.5% (trading update); ANZ Bank ANZ.AU +2.4% (Q1 results); Greentown China 3900.HK +3.9% (Jan results) - Industrials: Guangdong Europol Steel Logistics 002711.CN +4.8% (launches e-commerce service); Shenzhen O-film Tech 002456.CN +5.3% (R&D update); Great Wall Motor 2333.HK +4.4% (Jan production results); China State Construction Holdings H-Shares 3311.HK +1.8% (Jan results) - Technology: SIM Technology Group 2000.HK -7.1% (Jan results); Beijing SuperMap Software 300036.CN +10.0% (Alibaba acquires map service provider Autonavi); Hon Hai Precision Industries 2317.TW -1.7% (Jan results)