Asian Mid-session Update: NZD falls to 4-year lows as RBNZ replaces tightening bias with "up or down" rate policy option; Samsung reports mixed Q4
***Economic Data***
- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT 3.50%, AS EXPECTED
- (NZ) NEW ZEALAND DEC TRADE BALANCE (NZD): -159M V +75ME; 6th month of deficit
- (JP) JAPAN DEC RETAIL SALES M/M: -0.3% V 0.3%E (3rd consecutive decline); RETAIL TRADE Y/Y: 0.2% (6-month low) V 0.9%E
- (JP) JAPAN DEC LOANS & DISCOUNTS CORP Y/Y: 3.1% V 2.9% PRIOR
- (AU) AUSTRALIA Q4 IMPORT PRICE INDEX Q/Q: 0.9% V 1.4%E; EXPORT PRICE INDEX Q/Q: 0.0% V -1.0%E
- (AU) Australia Nov Conference Board Leading Index m/m: +0.1% v -0.2% prior (1st increase in 4 months)
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -0.2%, S&P/ASX +0.2%, Kospi -0.2%, Shanghai Composite -1.1%, Hang Seng -1.2%, Mar S&P500 +0.2% at 1,995
***Commodities/Fixed Income***
- Feb gold -0.1% at $1,281, Mar crude oil flat at $44.53/brl, Mar copper flat at $2.46/lb
- TLT: Yield on the 30-year Treasury bond falls below 2.30%; Record low
- (CN) PBoC to inject CNY45B in 28-day reverse repos (3rd consecutive injection); Injects net CNY55B this week v injected CNY50B prior (2nd week of injection)
- JGB: (JP) Japan MoF sells ¥2.56T in 0.1% 2-yr notes, Avg Yield: 0.006% v -0.003% prior; bid to cover: 4.25x v 5.66x prior
- (NZ) RBNZ sold net NZ$16M in Dec vs bought net NZ$3M in Nov
- (JP) Japan investors net bought ¥45.6B in foreign bonds v sold ¥395.1B in prior week; Foreign investors net bought ¥466.9B in Japan stocks v sold ¥577.1B in prior week
***Market Focal Points/FX***
- US stocks fell sharply for the 2nd consecutive session despite the seemingly innocuous FOMC policy statement. As widely expected, the Fed maintained the "patient to normalize" policy stance despite the improving labor markets and prospects for growth, but also expressed some further caution about inflation, referencing the troubling message sent by the TIPS markets. The yield on the long bond fell to new record low below 2.3%, even though the greenback strengthened against the European currencies.
- Bearish sentiment has carried over from Wall Street to Asia and was most acutely felt in the mainland indices, where reports of another CSRC probe into margin trading in nearly 50 firms continued to weigh on financials. Recall last Monday, Shanghai Composite fell nearly 8% on regulators' scrutiny into leveraged trading practices. Separately in China, local press speculated 2015 lending growth would be slow - to the tune of just over CNY10T vs CNY9.78T in 2014.
- As central banks in Asia-Pacific continue to err on the side of accommodation, Reserve Bank of New Zealand did not disappoint in taking a more cautious stance. Not only did RBNZ drop its tightening bias entirely in its 4th straight pause, it also introduced the possibility of a rate cut as its next policy move. RBNZ explained that lower oil will have a significant impact on prices, traded goods inflation continues to be very weak, and headline CPI would be "below the target band through 2015, and could become negative for a period before moving back towards 2%." NZD/USD cratered about 140pips toward 0.7310 - the lowest level since early 2011 - just as RBNZ added it expects to see further significant depreciation in the exchange rate. Separately, New Zealand trade remained in deficit for the 6th month, as exports to China and overall shipments of dairy fell over 25% y/y
- Samsung Electronics initially popped but then ceded those gains after posting mixed Q4 final results. Op profit of KRW5.3T was above KRW5.2T prelim estimate but still down 36.4% y/y, while Rev came in at KRW52.7T - also up from KRW52.0T prelim and down 11.0% y/y. Mobile business struggled from intensifying competition (i.e. larger smartphones from Apple), even as profits in the chip business enjoyed a solid pace of growth. Looking ahead, Samsung forecasted CAPEX would rise in 2015 and LCD TV shipments would grow, but offered little hope for recovery in global demand as well as its IT/Mobile segment.
***Equities***
US markets:
- FLEX: Reports Q3 $0.30 v $0.26e, R$7.0B v $6.63Be; +5.6% afterhours
- CTXS: Reports Q4 $1.10 v $1.04e, R$851.5M v $845Me; +3.9% afterhours
- MCD: Board elects new CEO upon retirement of Don Thompson, effective Mar 1st; promotes CFO to CAO post; names new CFO; +3.4% afterhours
- LVS: Reports Q4 $0.92 v $0.81e, R$3.42B v $3.55Be; +3.2% afterhours
- POT: Raises dividend by 9% to $0.38 from $0.35; +0.1% afterhours
- LRCX: Reports Q2 $1.19 v $1.12e, R$1.23B v $1.23Be; -0.4% afterhours
- STLD: Reports Q4 $0.40 v $0.42e, R$2.52B v $2.60Be; -0.6% afterhours
- TSCO: Reports Q4 $0.81 v $0.76e, R$1.58B v $1.57Be; -0.9% afterhours
- FB: Reports Q4 $0.54 v $0.49e, R$3.85B v $3.79Be; -1.8% afterhours
- CRUS: Reports Q3 $0.97 v $0.77e, R$299M v $276Me; -2.7% afterhours
- QCOM: Reports Q1 $1.34 v $1.25e, R$7.1B v $6.92Be; Snapdragon 810 processor will not be in the upcoming design cycle of a large customer's flagship device; -8.3% afterhours
- CLB: Reports Q4 $1.54 v $1.53e, R$279M v $280Me; -12.4% afterhours
Notable movers by sector:
- Consumer Discretionary: Ningbo Huaxiang Electronic 002048.CN -6.3% (FY14 guidance)
- Materials: Fortescue Metals FMG.AU +8.8% (Q2 results); PanAust PNA.AU +2.9% (Q4 production results); Northern Star Resources NST.AU -3.2% (Q2 production results)
- Energy: Oil Search OSH.AU -2.4% (Q4 production results)
- Industrials: Komatsu Ltd 6301.JP -7.6% (9-month results); Shenzhen Expressway 548.HK +2.0% (FY14 guidance); Guodian Nanjing Automation 600268.CN -1.4% (FY14 guidance)
- Technology: Canon Inc 7751.JP -4.6% (FY14 results); Samsung Electronics 005930.KR -0.5% (final Q4 results); FujiFilm Holdings Corp 4901.JP +4.3% (9-month results); NHN 035420.KR +0.5% (Q4 results)
- Telecom: SK Telecom 017670.KR +0.7% (Q4 results)