Asian Mid-session Update: RBI cuts repo rate in intermeeting move; AUD rallies on strong Aussie employment; China loans and money supply miss estimates
***Economic Data***
- (CN) CHINA DEC NEW YUAN LOANS (CNY): 697.3B V 880.0BE
- (CN) CHINA DEC M2 MONEY SUPPLY Y/Y: 12.2% (9-month low) V 12.5%E; M1 MONEY SUPPLY Y/Y: 3.2% V 3.3%E
- (CN) CHINA DEC AGGREGATE FINANCING (CNY): 1.69T V 1.20TE
- (CN) CHINA DEC FOREIGN RESERVES: $3.84T V $3.90TE
- (IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 7.75% (Timing is a surprise in an intra-meeting decision)
- (AU) AUSTRALIA DEC EMPLOYMENT CHANGE: +37.4K (3rd straight month of double-digit gains) V +5.0KE; UNEMPLOYMENT RATE: 6.1% (4-month low) V 6.3%E; PARTICIPATION RATE 64.8% (5-month high) V 64.7%E
- (JP) JAPAN DEC CGPI (PPI) M/M: -0.4% V -0.3%E; Y/Y: 1.9% (9-month low) V 2.1%E
- (JP) JAPAN NOV MACHINE ORDERS M/M: 1.3% V 4.4%E; Y/Y: -14.6% V -6.3%E; Govt cuts machinery orders assessment
- (NZ) New Zealand REINZ Dec House Price Index: 4,076.6 v 4,118.7 prior; House Sales Y/Y: 24.2% v 6.5% prior
- (NZ) New Zealand Dec Food Prices M/M: +0.3% v -0.5% prior; 4-month high
- (UK) UK DEC RICS HOUSE PRICE BALANCE: 11% V 10%E; lowest level since May 2013
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +1.1%, S&P/ASX -0.4%, Kospi -0.2%, Shanghai Composite +1.0%, Hang Seng +0.1%, Mar S&P500 flat at 2,008
***Commodities/Fixed Income***
- Feb gold -0.3% at $1,231, Feb crude oil -0.6% at $48.17/brl, Mar Copper +1.0% at $2.55/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 0.2 tonnes to 704.6 tonnes
- SLV: iShares Silver Trust ETF daily holdings fall to 10,150 tonnes from 10,201 tonnes priors; Lowest since Aug 2014
- (CN) PBoC won't conduct open market operations (OMO) in today's session (14th consecutive halt); Net zero position this week (5th week of neutral position)
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1193 v 6.1205 prior setting (strongest Yuan setting since Dec 31st)
- (JP) BOJ offers to buy ¥400B in 1-3yr JGB, ¥400B in 3-5yr JGB, ¥240B in 10-25yr JGB, ¥140B in JGB with maturity over 25-yr
- (US) PIMCO: Raises Total Return Fund's holding of US Treasuries to 43% in Dec from 37% in Nov
***Market Focal Points/Key Themes/FX***
- Asian indices are trading mixed once again in spite of the 4th consecutive losing session on Wall Street, where safe haven flows into US Treasuries saw the long bond yield hit a record low of 2.4%. Oil prices rallied by over 5% above $48/brl going into the close ahead of the option expiry, and front-month copper also reversed its overnight decline, reclaiming some 5% from the lows.
- AUD/USD is an outsized mover among the dollar majors, rising as much as 80pips to $0.8220 after the much better than expected Aussie employment data. The economy has grown net new jobs by double-digits for 3 straight months, unemployment unexpectedly fell to 4-month lows, and participation rate rose to a 5-month high. Perhaps the only troubling component was the decline in the aggregate number of hours worked at -7.7M, the largest drop in 5 months and up from -4.4M m/m. AUD did lose some luster later in the session following the release of China lending and money supply figures, as M2 hit 9-month lows and New Loans undershot consensus by a sizable margin.
- In a surprise intra-meeting announcement, India Central Bank cut its Repo and Reverse Repo rates by 25bps to 7.75% and 6.75% respectively. This follows some improvement in inflation trends, as cooling of prices had been speculated to give the RBI some room to ease liquidity. INR firmed by about 0.5% on the easing on bets that easier monetary stance will spur higher growth rates and more external investment.
- Bank of Korea left rates on hold at 2.0% as expected in a unanimous decision, but also cut 2015 GDP target to 3.4% from 3.9% and CPI to 1.9% from 2.4%. BOK anticipates inflation to bottom and start rising by H2 of this year, pledging to monitor domestic household debt, capital flows, oil prices, and KRW rate against JPY. BOK added it would soon decide on whether to lower its inflation target to reflect the pressure from the oil price slump. KRW initially fell to 1,087 against the dollar, before bouncing to 1,082 later in the day.
- Economic data out of Japan remains disappointing, as shortfall in November machine orders forced the govt to cut its assessment to state the recovery is showing signs of stalling. Wholesale inflation was also underwhelming, with y/y 1.9% coming in as a 9-month low. BOJ Gov Kuroda reiterated he's prepared to adjust policy as needed to achieve 2% inflation target, adding the falloff in demand after sales tax rise is waning. USD/JPY was bit after 4 straight losing sessions, rising about 70pips from the lows to 117.80.
- In notable equity developments, both Samsung and BlackBerry have denied press speculation about a potential merger that sent shares of BBRY up 30% just before the close. BBRY was off its highs in extended session, while Samsung opened slightly lower despite calling the press report "groundless".
***Equities***
US markets:
- ADBE: Approves $2B buyback program by fiscal 2017 end (5.7% of market cap); +2.2% afterhours
- GEF: Reports Q4 $0.85 (adj) v $0.77e, R$1.05B v $1.15Be; -4.8% afterhours
- BBRY: Not in talk with Samsung; Aware of certain press reports published today with respect to a possible offer by Samsung to purchase BlackBerry; -14.4% afterhours
- RSH: Said to prepare to file for bankruptcy protection as soon as next month - financial press; -31.7% afterhours
- EHTH: Reports Q4 prelim -$0.56 to -$0.47 v -$0.12e, R$43-45M v $53.3Me; -44.7% afterhours
- FUL: Reports Q4 $0.64 v $0.64e, R$547.7M v $551Me (reported after extended session concluded)
Notable movers by sector:
- Consumer Discretionary: Chongqing Department Store 600729.CN -9.6% (FY14 results); OrotonGroup ORL.AU -20.0% (H1 guidance)
- Materials: Iluka Resources ILU.AU -2.6% (FY14 output results)
- Energy: Huadian Energy 600726.CN +10.0% (FY14 guidance); Woodside Petroleum WPL.AU -1.4% (Q4 output results)
- Technology: Wangsu Science & Technology 300017.CN +2.2% (FY14 guidance); NHN 035420.KR +4.3% (seeks online banking business)
- Healthcare: BY-Health 300146.CN -4.3% (FY14 guidance)