Asian Mid-session Update: China Dec manufacturing PMI ends the year on low note
***Economic Data***
- (CN) CHINA DEC OFFICIAL MANUFACTURING PMI: 50.1 V 50.0E (lowest since June 2013)
- (CN) CHINA DEC NON-MANUFACTURING PMI: 54.1 V 53.9 PRIOR (4-month high)
- (AU) AUSTRALIA DEC RPDATA/RISMARK HOUSE PRICE INDEX M/M: 0.9% V -0.3% PRIOR; 2014: +7.9 v 9.8% y/y
- (KR) SOUTH KOREA DEC HSBC MANUFACTURING PMI: 49.9 V 49.0 PRIOR; 4th month of contraction, highest since Aug 2014
- (SG) SINGAPORE Q4 ADVANCED GDP Q/Q: 1.6% V 3.0%E; Y/Y: 1.5% V 1.8%E
- (ID) INDONESIA DEC CPI M/M: 2.5% v 1.5% PRIOR; Y/Y: 8.4% v 6.2% PRIOR; CORE CPI Y/Y: 4.9% V 4.2% PRIOR
- (ID) INDONESIA NOV TRADE BALANCE: -$425M v $23M PRIOR
- (ID) Indonesia Dec HSBC Manufacturing PMI: 47.6 v 48.0 prior; lowest level since Apr 2011 and 3rd month of contraction
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 closed, S&P/ASX +0.4%, Kospi +0.2%, Shanghai Composite closed, Hang Seng +0.8%, Mar S&P500 +0.5% at 2,061
***Commodities/Fixed Income***
- Feb gold +0.1% at $1,185, Feb crude oil +1.2% at $53.90/brl, Mar Copper +0.5% at $2.84/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 3.3 tonnes to 709.0 tonnes; Lowest level since Sept 2008
***Market Focal Points/Key Themes/FX***
- Hong Kong is leading regional indices higher, while Nikkei225 and Shanghai Composite remain on extended New Year holiday break. China December official PMIs saw Manufacturing index hit its lowest level since mid-2013, even though non-manufacturing recovered to a 4-month high of 54.1. Manufacturing PMI components New Orders and Output were at 2014 lows, and inventories and employment were at 10-month lows. NDRC economist Zhang said the PMI data "indicate that industrial growth is still in a downward trend, but the pace of declines is slowing." Similarly, ANZ economists noted the decline of both official and HSBC PMIs suggests that Chinas manufacturing sector is still struggling due to sluggish domestic demand.
- USD/JPY is up over 60pips above 120.40 amid the overall USD strength. BOJ Gov Kuroda noted the central bank has plenty of tools left to ease policy further, adding he would be opposed to loosen commitment on inflation target since "that in itself will make it impossible to meet the price target." Separately, Business Federation (Keidanren) chairman Sakakibara said 2015 is likely to be better than upper 1.0% estimated by think tanks, adding he believes this to be the year when Japan undeniably escapes deflation and gets on track to economic recovery. Sakakibara also said all efforts will be made to persuade corporations to raise wages by a similar amount after a 2% increase for the first time in 15 years in fiscal 2014.
- In Australia, December RPData house prices rose 0.9% m/m after falling 0.3% last month. For the year, price growth was 7.9%, down from 9.8% in 2013. RPData economist said the figures present "further evidence that the housing market is losing some steam", while CommSec economist noted that "growth rate of Australia home prices is easing to more sustainable levels, not a boom and not a bust". AUD/USD was down over 50pips from the 2014 close, falling below $0.8130.
- North Korea leader Kim gave another clear hint of wishing to reduce tensions with the South, stating "there is no reason not to hold the highest-level talks." Seoul offered a noncommittal response, noting South Korea is open to all kind of talks with North Korea. Separately, trade data for South Korea saw 2014 surplus at its record level of $47.4B, as exports rose 2.4% and import rose 2%. Dec Exports to US were up 21.5%, to China +1.7%, and to EU +5.6%, and forecasts for 2015 are for exports to rise 3.7% and imports to rise 3.2%.
- Over the holiday, Handelsblatt feature citing ECB Pres Draghi noting the risk of ECB failing its mandate is higher than 6 months ago and that sovereign bond purchases remain among the central bank options. Draghi added that the risk of deflation in the eurozone cannot be ruled out but is limited, adding he was confident that all eurozone economies will grow in 2015. Note that Lithuania also formally became the 19th state to use the euro currency. EUR/USD fell another 50pips below $1.2050 in the Asian trading hours - a new 2 1/2 year low that was also within 15pips of its 4 1/2 year low.
***Equities***
US markets:
- GM: Announced three new recalls affecting more than 92K SUVs and pickup trucks - financial press
Notable movers by sector:
- Materials: Chinalco Mining Corp International 3668.HK -5.1% (provides operating update); Fortescue Metals +4.4%, BC Iron BCI.AU +16.0%, Atlas Iron AGO.AU +39.4% (iron ore futures trading higher)
- Energy: Buru Energy BRU.AU -3.5% (terminates acquisition agreement)