Asia Market Update: China media speculates PBOC could raise reverse repo rates following next Fed hike
***Headlines/EconomicData***
General Trend: Asian equity markets trade generally higher after US gains
- Shanghai Property Index declines over 1.5%
- IMF’s Lagarde affirms 2018 and 2019 global growth forecasts
- PBoC may again raise open market operation (OMO) rates after Fed hike, says Chinese press
- South Korean Won (KRW) declines amid no near-term rate hike signal from Bank of Korea(BoK)
- Kiwi (NZ$) under performs. Jan Trade Deficit was the widest since 2007
- Currency traders look ahead to the first day of Fed Chairman Powell’s Congressional testimony on Tuesday (also due to testify on Thursday, March 1st)
- China Feb Official PMIs due for release on Wed
Japan
-Nikkei 225 opened +1.1%; closed +1.1%
- TOPIX Electric Appliances Index +2.4%, Securities +0.9%
- Japanese automakers generally track Monday’s gains in US carmakers
- NTT Data [9613.JP]: Rises over 1% amid press speculation that FY18 op profits may exceed its guidance
- (JP) Japan Financial Services Agency (FSA) is examining how to change the legal framework so that all providers of financial services are subject to the same rules
- (JP) Japan MoF sells ¥1.78T v ¥2.2T indicated in 0.10% (prior 0.10%) 2-yr JGBs; avg yield -0.160% v -0.130% prior; bid to cover 5.84x v 5.02x prior
Korea
-Kospi opened +0.7%
- Chip makers gain.
- (KR) Critics question the relevance of the SouthKorea Gvot plan to draw up a supplementary budget this year to cope with thecountry’s deteriorating unemployment problem - Korean press
-Samsung, 005935.KR CTO Jin-hyo: made significant progress in its 5G technologies, expect toproduce a 5G phone in the “not so distant” future - Korean press
- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATEUNCHANGED AT 1.50%; AS EXPECTED
-(KR) South Korea Jan Department Store Sales Y/Y: -9.6% v 3.2% prior; DiscountStore Sales Y/Y: -20.2% v 2.2% prior
-(KR) South Korea Prosecutor said to seek 30-year term and KRW118.5B fine for former President Park - South Korea Press
China/Hong Kong
-Hang Seng opened +0.9%, Shanghai Composite +0.1%
- Hang Seng Materials Index -2%, Property/Construction -1%, Financials -0.4%; Industrial Goods +0.7%
- AIA Group, 1299.HK Reports FY17 Op $4.65B v$3.98B y/y; Annualized new premiums $6.09B v $5.12B y/y
- (CN) According to China Securities Journal the PBOC is likely to raise its reverse repo rates in response to a Fed rate hike expected in March; increases will probably be small ~5bps
-(CN) China Securities Regulator (CSRC) is review more companies forrestructuring - China Securities News
-(CN) China to face tight balance in liquidity in March - China SecuritiesJournal
-(CN) China PBoC Open Market Operation (OMO): Skips v CNY150B prior injection in7-day, 28-day and 63-day reverse repos prior
-USD/CNY(CN) PBOC SETS YUAN REFERENCE RATE AT 6.3146 V 6.3378 PRIOR
Looking Ahead: China Feb Official Manufacturing and Non-Manufacturing PMIs due to be released on Wed
Australia/New Zealand
-ASX 200 opened +0.1%; closed +0.2%
- ASX 200 Financials Index +0.4%; Utilities -0.5%, Telecom -0.9%
- (NZ) NEW ZEALAND JAN TRADEBALANCE (NZD): -566M V 0ME; YTD -3.22B V -2.7BE
-(NZ)New Zealand Jan milk production -7.4% y/y
- Caltex,[+6%], CTX.AU Reports FY17 (A$) RCOP Net621M v 619Me; RCOP EBIT 935M v 945Me; Rev 21.4B v 19Be
-(AU) Reserve Bank of Australia (RBA) Paper: Data suggests medium to long-termexpectations for real interest rates have declined in recent years
-(NZ) New Zealand sells NZ$100M in 1-yr bills at 1.84%
-(AU) Australia sells A$150M v A$150M indicated in Aug 21, 2040 1.25% indexedbonds, avg yield 1.0266%, bid to cover 2.37x
North America
- US equity markets ended higher: Dow +1.1%, S&P500 +0.7%, Nasdaq +0.7%, Russell 2000+0.3%
- S&P500 Technology +1.6%, Financials +1.5%
- Apple[AAPL]: Reportedly plans to announce 3 new iPhones this fall: its largest ever high-end phone, an update of the iPhone X, and a lower priced model – press
- Qualcomm [QCOM]: US CFIUS said to have started review of Broacom's bid; Senator Cornyn (R) said to favor the review before Qualcomm's proxy vote on March 6 - financial press
- MicrosemiCorp [MSCC]: M Microchip Technology said to be near agreement to acquire the company in deal worth in the 'mid$60s/share' - US financial press
- ProShare to reduce target exposure to certain VIX ETFs
- (US) Fed's Quarles (hawk, FOMC voter): expects further gradual rate hikes will be appropriate
- (US) Treasury Sec Mnuchin: Reiterates long term a strong dollar is good for the US and we do not set policy to impact the dollar
- IEA chief Birol: Do not expect decline in US oil production in the next 4-5 years
-MSCC Microchip Technology said to be near agreement to acquire the company in deal worth in the 'mid $60s/share' - US financial press
Looking Ahead: US Jan Durable Goods and first day of Fed Chair Powell’s Testimony expected later today, along with the Weekly US API Crude Oil Inventories
Europe
- (EU) Spain Fin Min de Guindos (potential ECB VP): forward guidance is highly effective in lowering rates
- (GR) Greece Economy Min Papadimitriou said to resign - local media
- (UK) BOE's Cunliffe: Does not discuss monetary policy in prepared remarks
- Standard Chartered [STAN.UK] Reports FY17 adj Pretax $3.0B v $3.1Be; Op $14.3B v $13.8B y/y; Resumes dividend of $0.11
-Luxottica [LUX.IT]: ReportsFY17 €2.45 v €1.96 y/y, net €970M v €950Me, rev €9.2B v €9.1B y/y; Guides initial FY18 Rev +2-4%, adj Op 0.8-1.0x sales, Adj Net 1-2x sales, net debt/EBITDA 0.3-0.4x
- Philips Lighting [LIGHT.NL]: Share offering said to price at €32.10/share
Looking Ahead: Feb Prelim CPI data due to be released for Germany and Spain
***Levels as of 01:00ET***
- Nikkei225 +1.1%, Hang Seng -0.2%; Shanghai Composite -1.3%; ASX200 +0.2%, Kospi +0.2%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.2%,Dax -0.2%; FTSE100 -0.1%
- EUR 1.2309-1.2342; JPY107.10.-106.78; AUD 0.7868-0.7840;NZD 0.7305-0.7274
- Apr Gold +0.2% at $1,334/oz; Apr Crude Oil -0.1%at $63.83/brl; May Copper +0.1% at $3.22/lb