Asia Market Update: Equities remain mixed, China records Jan trade surplus, encourages US to deal prudently with trade contentions
***Headlines/EconomicData***
General Trend: Asian equities trade mixed
- Chinese equities decline amid weaker than expected trade surplus
- China Jan imports jump as crude oil imports hit record high
- Yuan (CNY) declines over 1% versus USD, despite stronger PBoC fix
- Kiwi (NZD) under performs as RBNZ official commented on probability of rate cut
- Aussie traders look ahead to Friday's release of the RBA quarterly policy statement and forecasts
- RBA Gov Lowe expected to speak later today during the European morning
- BoJ’s Suzuki comments on recent declines in markets and possibility of ‘tweak’ in policy easing
Japan
-Nikkei 225 opened +0.4%; closed +1.1%
- Nissan [7201.JP] gains ahead of earnings report
- (JP) Japan Dec BoP AdjCurrent Account: ¥1.48T v ¥1.65Te; Current Account Balance: ¥797.2T v ¥1.06Te;Trade Balance BoP: ¥538.9B v ¥520.4Be; 2017 current account surplus¥21.874T, +7.5% y/y; largest since 2007
- (JP) BoJ Suzuki: Reiterates important to 'patiently' maintain 'powerful' monetary easing; does not rule out a chance of 'tweak' under powerful easing; BoJ may fine-tine YCC in future but that won't be big turnaround in its monetary policy or exit from easy policy; Impact of 'market rout' on policy may be limited
- (JP) Japan Chief Cabinet Sec Suga: No decision made on meeting between Abe and North Korea
-(JP) Japan MoF sells ¥800B v ¥800B indicated in 0.8% (0.8% prior) 30-yr bonds; Avg yield: 0.820% v 0.832% prior; Bid to cover: 4.27x v 3.77x prior
Korea
-Kospi opened +0.2%
- Chip makers Samsung Electronics and Hynix gain over 1%
- Daewoo Engineering & Construction [047040.KR]: Declines over 6%: Hoban said to be considering dropping its bid due to extra losses - Korean press
- (KR) North Korea: Will not use Winter Olympics aspolitical venue – KCNA
-(KR) South Korea Industry Ministry launchedproject to boost the country's semiconductor and display sectors through newtechnology development and localized production - Korean press
- (KR) Bank of Korea (BoK): Reiterates monetary policy to remain accommodative; Sees strong exports of memory chips and oil products
-(US) Vice President Pence: Will meet any use of nuclear weapons with rapidresponse; all options are on the table for North Korea - Speaking to troops inJapan
China/Hong Kong
-Hang Seng opened +0.8%, Shanghai Composite -0.9%
- Hang Seng Info Tech Index +1.6%, Services +1.5%, Financials +0.6%, Property/Construction+0.2%; Materials -1.8%, Energy -1.1%
-(CN) CHINA JAN FOREIGN RESERVES: $3.162T V $3.170TE (released after Shanghai closeyesterday)
- (CN) CHINA JAN TRADE BALANCE (CNY): 135.8B V 330.0BE; Exports YoY: 6.0% v 2.6%e, Imports YoY: 30.2% v 5.3%e
- (CN) CHINA JAN TRADE BALANCE (USD): $20.3B V $54.7BE; Exports YoY: 11.1% v 10.7%e, Imports YoY: 36.9% (fastest growth since Feb 2017) v 10.6%e
- ZTE Corp [763.HK] Senator's Tom Cotton and Marco Rubio introduce Defending US Govt Communications Act; legislation that would prohibit the United States government from purchasing or leasing telecommunications equipment and/or services from Huawei, ZTE, or any subsidiaries or affiliates
- (CN) China Economic Daily Commentary: One-waymove of yuan is unlikely in 2018
-(CN) China Jan excavator sales said to more than double - Chinese Press
-(CN) China Central Depository & Clearing annual report: Interbank holdingsof wealth management products CNY3.25T v CNY6.65T y/y
-(CN) Standard Chartered Economist Ding: Yuan could appreciate to 6.18/dollar bythe end of the year
-USD/CNY (CN) PBOC SETS YUAN REFERENCERATE AT 6.2822 V 6.2882 PRIOR (strongest CNY fix since Aug 11, 2015)
-(CN)PBOC Statement: To improve the framework of regulation underpinned by monetarypolicy and macro-prudential policy in 2018
-(CN) China FX Regulator SAFE: Will support "capable and qualified"businesses to invest overseas this year to advance cross-border investment
-(CN) China probe on US Sorghum imports is normal case; urges US to prudentlydeal with 301 probe
-USD/CNY Onshore yuan falls 0.7% to 6.3268/dollar, biggest decline in 13-months
-(CN) China has resumed an outbound investment scheme, under the Qualified Domestic Limited Partnership (QDLP) plan after a 2-yr break, granting licenses to ~12 global money managers - financial press
Looking Ahead: China Jan CPI and PPI expected to be released on Friday
Australia/New Zealand
-ASX 200 opened -0.2%; closed %
- ASX 200 Resources Index -1.2%, Energy -1.5%, Utilities -1.3%; Telecom +1.5%, Financial +0.8%
- (NZ) NEW ZEALAND CENTRALBANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED
-(NZ) RBNZ Gov Spencer: not concerned about the NZD, comfortable with where the currency is - post rate decision comments
-(NZ) RBNZ Assistant Gov McDermott: Drop in inflation expectations could trigger rate cut; currently RBNZ has neutral stance on rates
-(NZ) New Zealand Central Bank (RBNZ) Gov Spencer: Did not cut rates because inflation will come back – parliament
- (AU) Australia Q4 NAB Business Confidence: 6 v 8 prior
-Blackham Resources (+32%) BLK.AU Reports Jan gold production6.5K oz v 5.5K m/m
- AGL Energy[AGL.AU]: Declines over 1% as H1 underlying EBIT missed expectations
Looking Ahead: RBA Gov Lowe expected to speak during European morning
- RBA Quarterly Monetary Policy Statement due for release on Friday
Other Asia
- (PH) Philippines Central Bank (BSP) due to hold policy meeting later today
- Singapore bank DBS [DBS.SG] gains over 2% after reporting Q3 earnings
North America
- US equity markets closed mostly lower: Dow -0.1%, S&P500 -0.5%, Nasdaq -0.9%, Russell 2000 +0.1%
- S&P500 Energy Sector -1.7%, Technology -1.3%
- Costco [COST] Reports Jan SSS (ex-gas) 2.9%;US SSS (ex-gas) 3.6% v 2.1%e
- Victory Capital [VCTR ] Prices 11.7M share IPO at$13.00/shr v $17-19/shr range indicated
- SPDR Gold Trust ETF daily holdings -0.3% at 826.9 metric tonnes
- (US) White House aide: we have come to agreement on 2-year budget deal (agreement includes $300B boosts to defense and non-defense spending); Deal would extend reaching the debt ceiling until March 2019
- (US) Fed's Williams(moderate, voter): No strong view between 3 or 4 Fed hikes in 2018
- (US) Fed's Dudley (dove, FOMC voter): A sustained drop in stock market would impact my outlook; recent activity has no consequence for economic outlook
- (US) Fed’s Evans (non-voter, dove): there's a hint inflation pressures may be in train today; his dissent on Dec rate hike was a close call; Under an alternate scenario where inflation picked up more assuredly, would support 3 or even 4 rate hikes in 2018 - comments in Iowa-
- (US) TREASURY'S $24B 10-YEAR NOTE AUCTION DRAWS:2.811%; BID-TO-COVER RATIO: 2.34 V 2.48 PRIOR AND 2.33 OVER THE LAST 10 AUCTIONS (bid to cover lowest since Sept 2017)
- (US) DOE CRUDE: +1.9M V +2.5ME
- (CA) Canada Prime Min Trudeau: NAFTA needs to be updated and improved
Europe
- (EU) ECB's Nowotny (Austria): US Treasury is deliberately putting pressure on the dollar and wants to keep it low - press interview
- (DE) Germany SPD Leader Schulz: optimistic we can get SPD party members to agree to SPD-CDU coalition
- (DE) Germany's SPD leader Schulz to step down asp arty leader; says party leader should not be part of the govt cabinet (Schulz will become Foreign Minister under the coalition deal)
- (DE) Germany's SPD party to announce results of members ballot on supporting govt coalition deal on March 4th - press
- (UK) Citing UK Govt economic analysis: a no-deal Brexit would cost £80B in public finances, with the leave-voting heartlands of north-east England and West Midlands worst affected - Guardian
- Swiss Re [SREN.CH]: Softbank said to be in advanced talks to take as much as a 33% stake in Swiss Re - press
Looking Ahead: BoE rate decision and inflation report due later today
***Levels as of 01:00ET***
- Nikkei225 +1.1%, Hang Seng +0.6%; Shanghai Composite -1.5%; ASX200 +0.2%, Kospi +0.8%
- Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%,Dax +0.3%; FTSE100 -0.2%
- EUR 1.2286-1.2252; JPY109.68-109.12; AUD 0.7832-0.7803;NZD 0.7238-0.7181
- Apr Gold -0.1% at $1,313/oz; Mar Crude Oil -0.4%at $61.55/brl; Mar Copper +0.5% at $3.11/lb