Asia Market Update: Chinese banks raise rates on mortgages in some cities; equities reverse on a better day in the US
***Headlines/Economic Data***
General Trend: Asian markets trade mixed after Tuesday’s sell off: Nikkei and Australian markets advance, while Chinese and South Korean equities pare gains.
- Kiwi (NZD) underperforms ahead of Thursday’s RBNZ rate decision
Japan
-Nikkei 225 opened +1.8%; closed +0.2%
- TOPIX Electric Appliances Index +1.7%, Real Estate +1.4%, Iron & Steel +1.5%
- Chip-related firm Sumco [3436.JP] gains over 12% after reporting FY results and guidance
- Toyota[7203.JP]: Trades higher by over 5% after raising guidance
- Softbank[9984.JP]: Trades higher by over 4% ahead of expected earnings report
- Kirin Holdings [2503.JP]: Trades higher amid earnings speculation
- (JP) Japan Dec Labor CashEarnings y/y: 0.7% v 0.5%e; Real Cash Earnings y/y: -0.5% v 0.1% prior
- (JP) BOJ announcement related to daily bond buyingoperation: raises 3-5-yr offer
-(JP) Japan Fin Min Aso: Cannot comment if Coincheck was hacked by North Korea at this point - Parliament
-(JP) Japan Dec Preliminary Leading Index: 107.9 v 108.1e; Coincident Index: 120.7 v 120.5e
Looking Ahead: BoJ board member Suzuki expected to comment on Thursday, along with 30-year JGB auction
Korea
-Kospi opened +1.2%, later pared gain
- Chip makers trade mixed: Samsung Electronics declines, while Hynix gains over 2%
- (KR) South Korea to take market stabilizingmeasures if needed
-Samsung, 005930.KR Considering building a 2nd chip line in South Korea, amid rising demandfor semiconductors - Korean Herald
-(KR) 7 out of 10 businesses in South Korea planning a Lunar New Year bonus; Avg bonus KRW1.161M v KRW1.129M y/y - Korean press
-(KR) ~30 subsidiaries of South Korea family-controlled conglomerates may benewly subject to a ban on inter-affiliate trading when antitrust watchdogtoughens a related rule - Korean press
-(KR) Bank of Korea (BOK) sells KRW2.41T in 2-yr monetary stabilization bonds(MSBs) at 2.16%
China/Hong Kong
-Hang Seng opened -0.3%, Shanghai Composite +0.1%
- Shanghai pares opening gains amid weakness in property sector
- Hang Seng Information Tech Index +3.5%, Consumer Goods +1.7%, Financials +1.7%, Materials +1.6%,Energy +1.6%
- (CN) China Ambassador to US Tiankai: despite misjudgment from some in the United States, China will remain confident in its path of development and those hoping otherwise should face the reality – CD
- (CN) China PBoC: Skips OMO (10th straightsession) v skipped prior; Net drain CNY100B v CNY80B prior
- USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.2882 V 6.3072 PRIOR
- (CN) China banks have raised mortgage rates in several cities - Chinese press
- (CN) China to probe fake information from listed companies - Xinhua
-(CN) China PBOC sells CNY120B in 3-month MOF Deposits at 4.50%
-(CN) China files new challenges on US tariffs on solar panels and washing machines at the World Trade Organization - financial press
Looking Ahead: China Jan FX Reserves due to be released later today
- China Jan Trade Balance may be released on Thursday
Australia/New Zealand
-ASX 200 opened +0.5%; closed %
- ASX 200 Resources Index+1.9%, Energy +1.7%, Consumer Discretionary +1.8%, Financials +0.2%; Utilities-0.8%
- Rio Tinto [RIO.AU]: Trades higher by over 3% ahead of later today earnings report
- Commonwealth Bank [CBA.AU]: Pares gain seen after H1 earnings report
- (NZ) NEW ZEALAND Q4UNEMPLOYMENT RATE: 4.5% V 4.7%E (Lowest Level Since Financial Crisis)
-(AU) Australia Jan Foreign Reserves (A$): 65.3B v 85.4B prior
- CBA.AU Reports H1 (A$) cash profit4.8B v 5.2Be; Net interest income 9.25B v 9.3Be; Rev 21.3B, +2% y/y
-(AU) Australia AOFM sells A$600M v A$600M indicated in Nov 2028 bonds, avgyield 2.8862%, bid to cover 5.43x
-(AU) Australia PM Turnbull: No plans to allow big 4 Australia bank mergers
-(AU) Australia Jan AIG Performance of Construction Index: 54.3 v 52.8 prior
Looking Ahead: Reserve Bank of New Zealand(RBNZ) rate decision due on Thursday
Other Asia
- (IN) Reserve Bank of India (RBI) policy meeting due later today (no changes expected)
North America
- US equity markets ended higher: Dow +2.3%, S&P500 +1.7%, Nasdaq +2.1%, Russell 2000+1.1%
- S&P500 Materials +3.2%, Technology +2.8%
- Wynn Resorts [WYNN]: Steve Wynn has resigned as CEO and Chairman; promotes Matt Maddox CEO and Boone Wayson Chairman; effective immediately
- Supervalu [SVU]: Activist investor Blackwells (~4.4% stake) said to urge board to explore either sale or breakup - US financial press
- (US) Treasury Sec Mnuchin: administration is monitoring markets situation but long-term fundamentals are very strong,markets are functioning normally in terms of liquidity; Correct to say that I support a strong Dollar; US debt plan hasn't impacted markets at the moment; debt market is one of the most liquid in the world
- (US) Pres Trump: if we don't get rid of immigration loopholes, 'let's have a shutdown'
-(US) Fed's Bostic (2018 voter, dove): See slow gradual pace of rate rise, if growth is robust
- (US) US House has votes to pass stopgap funding bill to fund government until March 23rd; final vote 245 to 182; The bill now moves to the senate, where lawmakers are expected to rewrite the measure to eliminate higher defense spending and potentially attach a bipartisan deal to raise budget caps.
- (US) Weekly API Oil Inventories: Crude: -1.1M v +3.2M prior
Looking Ahead: Fed’s Dudley due to speak during NY morning, Weekly DOE Crude Oil Inventories to be released
Europe
- (EU) European Commission wants to punish UK non-compliance during the Brexit transition by summarily cutting off the country’s access to parts of the single market - FT citing draft treaty
-(IE) Ireland is pushing for a settled “legal text” over the Brexit border question as early as next month in a move that threatens once again to derail the Brexit negotiations – Telegraph
-(UK) National Institute of Economic and Social Research (NIESR): Forecasts UK 2018 and 2018 GDP growth at 1.9% vs 1.7% in Nov
***Levels as of 01:00ET***
- Nikkei225 +0.2%, Hang Seng +0.4%; Shanghai Composite -1.5%; ASX200 +0.8%, Kospi -1.4%
- Equity Futures: S&P500 -0.8%; Nasdaq100 -0.9%,Dax -0.6%; FTSE100 -1.3%
- EUR 1.2393-1.2372; JPY 109.71-109.14; AUD 0.7909-0.7878;NZD 0.7346-0.7305
- Apr Gold +0.2% at $1,332/oz; Mar Crude Oil +0.8% at $63.88/brl; Mar Copper -0.2% at $3.21/lb