Asian Market Update: Hibor spikes again; Oil selloff gushing to new lows; Alcoa outlook tepid in earnings season debut
***Economic Data***
- (JP) JAPAN NOV CURRENT ACCOUNT BALANCE: ¥1.1T (17th straight surplus) V ¥0.9TE; ADJUSTED CURRENT ACCOUNT: ¥1.42T V ¥1.51TE; TRADE BALANCE: -¥272B V -¥159BE
- (JP) JAPAN DEC BANK LENDING (INCL TRUSTS) Y/Y: 2.2% V 2.3% PRIOR; BANK LENDING (EX- TRUSTS) Y/Y: 2.2% V 2.3%E; 20-month low
- (JP) JAPAN DEC CONSUMER CONFIDENCE: 42.7 V 42.5E
- (NZ) NEW ZEALAND DEC ANZ COMMODITY PRICE M/M: -1.8% V -5.6% PRIOR (2nd consecutive decline)
- (AU) AUSTRALIA NOV CREDIT CARD BALANCES: A$51.3B V A$50.6B PRIOR; CREDIT CARD PURCHASES: A$25.6B V A$24.8B PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 114.1 v 116.3 prior
- (UK) DEC BRC LFL SALES Y/Y: 0.1% V 0.5%E
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -2.3%, S&P/ASX -0.4%, Kospi +0.3%, Shanghai Composite +0.4%, Hang Seng +0.3%, Mar S&P500 -0.2% at 1,910
***Commodities/Fixed Income***
- Feb gold +0.1% at $1,097/oz, Feb crude oil -1.5% at $30.95/brl, Mar copper +0.1% at $1.98/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 2.1 tonnes to 651.7 tonnes; 3rd straigh increase, highest since Dec 1st
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.5628 V 6.5626 PRIOR
- (CN) PBoC to inject CNY80B in 7-day reverse repos
- (HK) Offshore overnight yuan HIBOR 66.82% (fresh record high) v 13.4% yesterday
***Market Focal Points/FX***
- Asian equity markets are trading mixed amid continued volatility across asset classes. Nikkei225 is the underperformer with catchup selling after Monday holiday, while Shanghai is marginally higher after yesterday's steep decline. PBoC has set Yuan little changed again, strengthening the fix relative to the close for the 3rd straight session, but the impact of that move is now more muted. Instead, fixed income traders are increasingly focused on the Hibor rate set at a new record high yet again. Analysts contend that the PBoC is trying to disarm Yuan sellers by boosting the cost of borrowing to short the currency prohibitively expensive. The spread between onshore and offshore Yuan has since moved to flat, the narrowest since October. In USD majors, USD/JPY is down about 60pips from the highs below 117.50, AUD/USD down about 30pips from the highs near 0.6970, and EUR/USD is in a 40pip range above 1.0840. EM commodity currencies were pressured lower again - USD/MXN rose to 17.94 and USD/ZAR up about 0.5% at 16.85. Electronic trade in commodities also continues to punish oil, with Feb WTI sliding over 2% from the highs to $30.60.
- Among notable speakers, NDRC's Li Pumin remarked that China economy has tracked to meet 2015 GDP target of 7% and added about 13M new jobs. China's financial sector saw more strain however, with reports of 2015 non-performing loans (NPLs) having doubled in 2015 vs 2014. China auto sector did get some welcome news however, with PCA reporting Dec sales rising 17% and 2015 sales up 8.5%.
- In Japan, Nikkei reported PM Abe anticipates FY16/17 tax revenue to be ¥21T higher than in FY11/12, targeting more spending to deal with population decline and bolstering govt finances while also offering some tax breaks. Fin Min Aso again indicated that Japan corporate fundamentals are not bad, but external risks need monitoring. Going into the spring negotiations period, Nikkei reported that Toyota Motor's labor union is set to request ¥3K rise in monthly base wages, which is only about half requested last year.
- Alcoa kicked off the unofficial start of the US earnings season with Q4 results largely in line with expectations. For 2016 AA's initial forecast of aluminum demand growth was set at 6%, which was below the 6.5% target for 2015 affirmed in last quarter's earnings. Shares fell slightly in the extended session.
***Equities***
US equities / ADRs:
- APOL: Reportedly Apollo Global in talks to buy Apollo Education Group in deal valued at around $1B - press; +22.3% afterhours
- ELOS: Guides Q4 R$78-79M v $74.7Me; +9.7% afterhours
- LULU: Guides Q4 higher $0.78-0.80 v $0.79e, R$690-695M v $680Me ($0.75-0.78, R$670-685M prior guidance); cites successful holiday season; +8.5% afterhours
- BURL: Narrows Q4 guidance $1.44-1.46 v $1.49e (prior $1.44-1.48), Rev +3.7% (prior 3.7-4.7%) SSS to be approximately flat (prior flat to +1%); +8.3% afterhours
- TWX: Investor Icahn reportedly building a stake; May result in a "shake-up" of company - financial press; +4.2% afterhours
- MSCC: To be added to S&P400 index, replacing ATW which moves down to the S&P600 index; +1.8% afterhours
- SAP.DE: Reports prelim Q4 non-IFRS Op profit €2.28B v €2.26Be; non-IFRS Total Rev €6.35B v €6.04Be; prelim FY15 non-IFRS op profit €6.35B; +0.7% afterhours
- AA: Reports Q4 $0.04 v $0.03e, R$5.25B v $5.22Be; -0.8% afterhours
- HAIN: Guides Q2 $0.53-0.56 v $0.57e, R$740-760M v $771Me; Lowers FY16 to $1.95-2.10 v $2.12e, R$2.90-3.04B v $2.97Be; -1.1% afterhours
- SKUL: Lowers Q4 to $0.25-0.27 v $0.37e, Rev to flat y/y (prior $0.38-0.40, Rev +5-7%); Guides FY16 Rev mid-high single digit growth; -22.9% afterhours
Key movers in Asia
- WHC.AU: Reports H1 ROM coal production 9.3M tonnes, +63% y/y; Coal sales 4.9M tonnes, +67% y/y; -5.3%
- WPL.AU -2.2%, STO.AU -3.7%, QAN +2.0% on lower oil prices; BPT.AU biggest decliner in Australia energy, down 11% after CEO change
- Aeon 8267.JP -9.4% (9-month results)
- Galaxy Entertainment 27.hk +2.1%, Sands China +1.4%; positive sectors comments from Morgan Stanley