Asia Mid-Session Market Update: Nikkei falls over 1% amid Yen short-covering; South Korea lowers GDP targets
***US Session Highlights***
- Stock markets reversed course today with a bout of profit taking as the year comes to a close; lack of new data and a strengthening US dollar all converging to weigh on market valuations. The S&P dropped 20 points to close at a 12-day low of 2249.92.The DJIA also followed suit with a slightly smaller loss with a drop of 33 points to close the day at 19,833.68.
- US Pending Home Sales M/M showed an unexpected decline of 2.5%, with a forecast of +0.5%, with a prior increase of 0.1%. Sales on Y/Y were also down by 0.4% after last month's +1.8%.
- The US dollar continued to rally today against most currencies, Majors and Minors. In a boost for importers, the DXY reaching levels not seen in 14 years.
***US markets on close: Dow -0.6%, S&P500 -0.8%, Nasdaq -0.9%***
- Best Sector in S&P500: Basic Materials
- Worst Sector in S&P500: Utilities/Industrials
- Biggest gainers: COH +2.2%; AGN +1.7%; STZ +0.9%
- Biggest losers: NVDA -6.8%; CHK -4.7%; MNK -4.1%
- At the close: VIX 13.0 (+1.0pts); Treasuries: 2-yr 1.25% (-1bps), 10-yr 2.51% (-6bps), 30-yr 3.08% (-6bps)
***US movers afterhours***
- FBIO: Publishes case study on MB-101 (IL13Ra2-specific CAR T cells) for recurrent glioblastoma that demonstrates MB-101 achieved complete remission in patient; +42.8% afterhours
- PHH: Enters into sale and subservicing agreements for its entire non-GNMA mortgage servicing rights portfolio for total proceeds of ~$912M; +0.5% afterhours
- S: US President elect Trump: Sprint to hire 5,000 positions in the US; satellite startup OneWeb to hire 3,000 workers in US; -0.7% after hours
***Key economic data***
- (KR) SOUTH KOREA NOV INDUSTRIAL PRODUCTION M/M: 3.4% V 0.8%E; Y/Y: 4.8% V 1.5%E
- (KR) SOUTH KOREA NOV CYCLICAL LEADING INDEX CHANGE: 0.0 V 0.1 PRIOR
- (KR) South Korea Jan Business Manufacturing Survey: 71 v 72 prior; Non-Manufacturing Survey: 72 v 72 prior
- (KR) South Korea Nov Department Store Sales Y/Y: -2.8% v 6.0% prior; Discount Store Sales Y/Y: -6.1% v +0.9% prior
***Asia Session Notable Observations, Speakers and Press***
- Asia indices mixed with Nikkei225 the biggest loser; Tokyo stocks tracking much stronger Yen on overall USD retreat that followed disappointing US Pending Home sales data in US hours. US Treasury yields fell, particularly on the long-end of the curve, while USD/JPY came within an earshot of 2-week lows around 116.55.
- PBoC board member Fan Gang advocates for implementation of a property and capital gains taxes to ease widening wealth gap; MOFCOM (Commerce Ministry) spokesperson Shen worried about the impact of future Fed rate hikes in their impact on global financial markets, but less so over hikes weighing on China trade and FDI.
- BOJ summary of opinions from most recent meeting warns against expecting a big boost to inflation from weaker JPY, though also notes core CPI may still accelerate; Also cautions the Trump rally may fizzle and produce a considerable market adjustment.
- As speculated, South Korea Finance Ministry lowers 2016 GDP target to 2.6% from 2.8%; Lowers 2017 GDP target to 2.6% from 3.0%; Fin Min Yoo says 2017 fiscal policies may turn more expansionary, while BOK is reported to hold accommodative monetary policy as private spending and construction slowdown overshadow recovery in exports.
***Asian Equity Indices/Futures (23:30ET)***
- Nikkei -1.5%, Hang Seng -0.1%, Shanghai Composite +0.2%, ASX200 +0.1%, Kospi flat
- Equity Futures: S&P500 flat; Nasdaq flat, Dax flat, FTSE100 +0.1%
***FX ranges/Commodities/Fixed Income (23:30ET)***
- EUR 1.0408-1.0458; JPY 116.55-117.24; AUD 0.7174-0.7212; NZD 0.6915-0.6940
- Feb Gold +0.8% at 1,150/oz; Feb Crude Oil -0.5% at $53.80/brl; Mar Copper +0.5% at $2.52/lb
- (US) Weekly API Oil Inventories: Crude: +4.2M v -4.2M prior
- (CN) PBOC to inject combined CNY100B in 7-day, 14-day and 28-day reverse repo operation vs. CNY100B prior
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.9497 V 6.9495 PRIOR
***Asia equities / Notables / movers by sector***
- Industrials: Takata Corp. 7312.JP +16.5% (speculation of settling criminal case with DOJ)
- Technology: Sharp Corp 6753.JP +0.4% (to book one-time gain); Toshiba Corporation 6502.JP -16.9% (Moody's and S&P cuts rating); Sinosoft Technology Group 1297.HK -17.2% (to resume trading following shortseller report); BlueFocus Communication Group Co 300058.CN +10.0% (earnings guidance); Inventec Corp 2356.TW +1.2% (Mega Securities raised to buy)
- Materials: Peace Map Holding 402.HK % (profit warning); Shin-Etsu Chemical Co 4063.JP % (raise wafer prices); Northern Star NST.AU +4.8%, Evolution Mining EVN.AU +5.0% (Gold extends rally)
- Healthcare: Hanmi Pharmaceutical Co. 128940.KR -8.4% (to return payment to Sanofi); Askul Corp.2678.JP -4.7% (Mitsubishi cuts to equalweight)