Asia Mid-Session Market Update: China property price growth maintains momentum; PBoC adviser expects Yuan to rebound
***US Session Highlights***
- (UK) PM May: UK is leaving EU; will seek the best deal possible; not seeking partial or associate membership of EU (in-line with speculation); will be compromises in Brexit - Brexit speech
- (UK) PM May: Government will put the final Brexit deal to a vote in both Houses of Parliament (**Note: downplaying potential UK High Court decision)
- GBP/USD jumps nearly 3% for biggest one-day gain in more than a decade
- (US) JAN EMPIRE MANUFACTURING: 6.5 V 8.5E; new orders growth down m/m
- OPEC Sec Gen Barkindo: Seeks stability to secure current and future oil supply - comments from Abu Dhabi
- (US) Fed's Brainard (Dove, Voter): expansive fiscal policies could lead to higher inflation, interest rate increases
***US markets on close: Dow -0.3%, S&P500 -0.3%, Nasdaq -0.6%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Financials
- Biggest gainers: NBL +7.1%, PVH +6.2%, NRG +5.1%, MAT +4.7%, RL +3.8%
- Biggest losers: CMA -6.5%, NAVI -6.4%, RF -6.1%, CFG -6.0%, ZION -4.7%
- At the close: VIX 11.9 (+0.6pts); Treasuries: 2-yr 1.16% (-3bps), 10-yr 2.33% (-3bps), 30-yr 2.93% (-5bps)
***US movers afterhours***
- SHLO: Reports Q3 $0.11 (incl $0.16 impact from lower scrap metal pricing) v $0.49 y/y, R$275.2M v $216.4M y/y; +9.1% afterhours
- JAZZ: FDA approves generic of Jazz's Xyrem (sodium oxybate) with a REMS programThe U.S. Food and Drug Administration (FDA) has approved the first generic version of Xyrem; +1.3% afterhours
- UAL: Reports Q4 $1.78 adj v $1.65e, R$9.05B v $9.06Be; -1.7% afterhours
- IBKR: Reports Q4 $0.07 v $0.25 y/y, R$193M v $271M y/y; -3.1% afterhours
- CSX: Reports Q4 $0.49 v $0.49e, R$3.04B v $2.86Be; -4.0% afterhours
- NBIX: Primary endpoint not met in Phase II clinical study of VMAT2 Inhibitor INGREZZA (valbenazine) in adults with Tourette Syndrome; -5.4% afterhours
- GIMO: Reports prelim Q4 $0.35-0.37 v $0.38e, R$84.5-85.0M v $92.0Me (guided $0.36-0.38; Rev $91.0-93.0M prior); -22.4% afterhours
***Asia Key economic data:***
- (CN) CHINA DEC PROPERTY PRICES M/M: RISE IN 46 OUT OF 70 CITIES VS 55 PRIOR; Y/Y: RISE IN 65 OUT OF 70 CITIES V 65 PRIOR
- (AU) AUSTRALIA JAN WESTPAC CONSUMER CONFIDENCE INDEX: 97.4 V 97.3 PRIOR, M/M: +0.1% V -3.9% PRIOR
***Asia Session Notable Observations, Speakers and Press***
- Asia indices mixed; Nikkei is up marginally despite the broad reversal in Yen weakness, ASX200 sluggish despite the rally in mining names, Hang Seng led higher by energy and financials
- USD off its lows after extreme selling in US hours; USD/JPY bounces about 80pips toward 113.40, EUR/USD falls about 30pips toward 1.0680
- Shares of China property developers rise slightly following more bening property price data; Prices rose in 65 out of 70 cities y/y - unchanged from prior - while price growth across 70 top cities was little changed at 12.4% v 12.6% prior despite the recent govt curbs.
- Yuan fix was set at the strongest level in 2 months, but USD/CNY still jumped from 6.80 to 6.815 as the margin of strength did not sufficiently reflect USD drop in US session; Earlier, PBoC adviser Fan Gang also noted that he expects stronger CNY vs the greenback going forward since the recent depreciation was mainly due to Donald Trump's election and the possibility of more US interest rate rises.
- Australia Westpac Consumer Confidence index was up marginally in January, a slight rebound after falling to lowest level since April in the prior print. Resident economist notes the absence of a rebound however was a disappointment given a 10% rise in Australia stocks over the past month.
- Fed's Williams (non-voter) called December hike an appropriate small step, adding that more gradual hikes will be needed given that economy has reached full employment and inflation is approaching 2% target.
China:
- USD/CNY: (CN) PBoC adviser Fan Gang: Expect stronger yuan against USD - China Daily
Japan:
- (JP) Japan Chief Cabinet Sec Suga: Watching trends related to Brexit carefully; Hoping for minimal impact on economy - press
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei +0.1%, Hang Seng +1.2%, Shanghai Composite +0.3%, ASX200 -0.5%, Kospi flat
- Equity Futures: S&P500 +0.1%; Nasdaq +0.2%, Dax +0.2%, FTSE100 +0.3%
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0688-1.0715; JPY 112.55-113.15; AUD 0.7540-0.7565; NZD 0.7190-0.7215
- Feb Gold +0.1% at $1,214/oz; Feb Crude Oil +0.3% at $52.65/brl; Mar Copper +0.3% at $2.63/lb
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8525 V 6.8992 PRIOR; Strongest Yuan fix since Nov 15th
- (CN) PBOC to inject combined CNY460B in 7-day and 28-day reverse repos v CNY330B prior (largest net fund add since 2004)
- (CN) China MoF sells 3-yr bonds at 2.77% v 2.77%e, bid-to-cover 2.41x; Sells 7-yr bonds at 3.12% v 3.14%e; bid-to-cover 2.09x
- (JP) BOJ offers to buy ¥410B in 5-10yr JGBs, ¥190B in 10-25yr JGBs, and ¥110B in JGBs with maturity over 25-yr
- (KR) Bank of Korea (BOK) sells KRW2.3T in 2-yr bonds at 1.58%
***Asia equities / Notables / movers by sector***
- Consumer discretionary: China Eastern Airlines 670.HK +1.6% (Dec result); Yamada Denki 9831.JP +1.1% (partnership with U-next); Li Ning Co 2331.HK -1.2% (block share trade); Nippon Suisan Kaisha 1332.JP +3.5%
- Consumer staples: Bellamy's Australia BAL.AU -2.2% (Goldman Sachs cuts rating)
- Industrials: Baoxin Auto 1293.HK +19.4% (profit alert); Weichai Power 2338.HK +1.7% (profit alert); Orient Overseas International 316.HK +9.4% (receives bid); Bridgestone Corp 5108.JP -1.6% (Macquarie downgrades); Aurizon Holdings AZJ.AU -1.4% (Q2 result)
- Technology: Toshiba Corporation 6502.JP +1.7% (spinoff speculation)
- Materials: China Sunshine Paper Holdings Co 2002.HK -3.3% (profit alert); St Barbara SBM.Au +6.3% (Q2 result); Resolute Mining RSG.AU +6.8%, Saracen Mineral SAR.AU +1.0%; Northern Star NST.AU +0.9% (gold rises)
- Energy: China Coal Energy 1898.HK +1.0% (Dec result); Woodside Petroleum WPL.AU +1.2% (JPMorgan raises rating)