Asian Market Update: Nikkei225 plunges to 4-month low below 14,000; Japan base wages fall for 19th consecutive month
***Economic Data*** - (JP) JAPAN DEC LABOR CASH EARNINGS Y/Y: 0.8% V 0.6% PRIOR (22-month high; 2nd consecutive increase) - (AU) AUSTRALIA JAN AIG PERFORMANCE OF SERVICES INDEX: 49.3 V 46.1 PRIOR (10-month high) - (NZ) NEW ZEALAND Q4 UNEMPLOYMENT RATE: 6.0% (lowest rate since Q1 of 2010) V 6.0%E; EMPLOYMENT CHANGE Q/Q: 1.1% V 0.6%E; Y/Y: 3.0% V 2.4%E; PARTICIPATION RATE: 68.9% (multi-year high) V 68.6%E - (NZ) NEW ZEALAND Q4 AVERAGE HOURLY EARNINGS Q/Q: 0.3% V 0.1%E; PRIVATE WAGES EX-OVERTIME Q/Q: 0.6% (2-year high) V 0.5%E; PRIVATE WAGES INCL OVERTIME Q/Q: 0.6% V 0.5%E - (KR) SOUTH KOREA JAN FOREIGN RESERVES: $348.4B V $346.5B PRIOR (record high for 7th month) - (TW) TAIWAN JAN HSBC/MARKIT MANUFACTURING PMI: 55.5 V 55.2 PRIOR (33-month high) - (PH) PHILIPPINES JAN CPI M/M: 0.7% V 0.5%E; Y/Y: 4.2% V 4.1%E; CORE CPI Y/Y: 3.2% V 3.1%E - (UK) UK JAN BRC SHOP PRICE INDEX Y/Y: -1.0% V -0.7%E (record high decline)
***Observations/Insights*** - Volatility continued in the Asia region despite the bounce in US indices on Tuesday. Nikkei225 briefly tested below the 14,000 level before bouncing higher in the afternoon session, S&P/ASX found support just above 5,050, while the Hang Seng saw bids come in at 21,300, reversing its late-morning selloff. - New Zealand Q4 unemployment rate fell to its lowest level since early 2010 - figures were particularly impressive given that labor participation rate hit a multi-year high. - Japan labor cash earnings headline figure hit a 22-month high, rising for the 2nd consecutive month. However, a closer look at the figures saw base wages falling 0.2% y/y, down for 19th consecutive month. Companies are still much more willing to hire on part time basis (+3.5% y/y increase in workers) and offering their employees overtime (+4.6% y/y; 9th consecutive increase) than take on new staff or offer higher salaries. Critics of Abenomics are likely to latch on to the latest instance of tepid wage gains which appears to support the case of rising inflation being of the cost-push rather than demand-pull variety.
***Fixed Income/Commodities/Currencies*** - (JP) BOJ offers to buy ¥250B in 1-3yr JGB, ¥250B in 3-5yr JGB and ¥400B in 5-10yr JGB as well as ¥400B in CP - JGB: (JP) Japan 30yr govt bond yield falls to 1.585%, lowest since Oct - (AU) Australia MoF (AOFM) sells A$800M in 2025 bonds; avg yield: 4.1550%; bid-to-cover: 5.06x - GLD: SPDR Gold Trust ETF daily holdings rise 3.9 tonnes to 797.1 tonnes (3rd consecutive rise; 2-week high) - (US) API PETROLEUM INVENTORIES: CRUDE: +385K (3rd consecutive build) v +2Me; GASOLINE: -1.2M v +1Me; DISTILLATE: -1.46M v -2Me
- USD majors reflect a more prevalent risk-off sentiment even though despite the rally on Wall St, even though a positive ADP/Services ISM on tap for early Wednesday could still turn the corner on the selloff. NZD/USD hit session highs above $0.8250 after employment data before falling below $0.8190, and AUD/USD is off some 60pips from its 180-pip post-RBA spike to fall below $0.8880. Japanese Yen is also bid across the board, with USD/JPY falling 50pips from the highs to ¥101.25, AUD/JPY retesting the downside of ¥90, and EUR/JPY down 70pips below ¥136.90
***Speakers/Political/In the Papers*** - (CN) Barclays: China coal sector 2014 growth may reach 6% y/y - financial press - (CN) Nikkei report questions the accuracy behind the employment data from China - (JP) Japan Chief Cabinet Sec Suga: it is ideal for Japan companies to rise base pay during spring wage talks - (JP) Tokyo Gubernatorial Election on Sunday Feb 9th; former minister Masuzoe currently ahead of the four major candidates - Japanese press - (AU) Australian PM Abbott: Aims to maximize Australian jobs, wages, and productivity increases - (KR) South Korea Fin Min Hyun: Govt to prepare for US tapering impact - (PH) Philippines Central Bank (BSP) Gov Tetangco: Room to keep rates steady may be narrowing; To see if adjustment to policy stance warranted; To continue to watch general price pressures
***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +1.1%, S&P/ASX -0.6%, Kospi +0.4%, Shanghai Composite closed, Hang Seng flat, Mar S&P500 -0.3% at 1,739, Apr gold +0.2% at $1,253, Mar crude oil +0.5% at $97.63/brl
US markets: - DATA: Reports Q4 $0.20 adj v $0.00e, R$81.5M v $66.6Me; +14.7% afterhours - MYGN: Reports Q2 $0.66 v $0.47e, R$204M v $178Me; To Acquire Crescendo Bioscience for $270M in cash; +14.5% afterhours - USNA: Reports Q4 $1.41 v $1.25e, R$186.3M v $179Me; +14.1% afterhours - BWLD: Reports Q4 $1.10 v $1.06e, R$341.5M v $345Me; +2.3% afterhours - MMM: Authorizes $12B (14.3% of market cap) Share Repurchase Program; +1.0% afterhours - CERN: Reports Q4 $0.39 v $0.39e, R$795.3M v $793Me; +0.7% afterhours - GILD: Reports Q4 $0.55 v $0.50e, R$3.12B v $2.85Be; -0.8% afterhours - CHRW: Reports Q4 $0.62 v $0.68e, R$3.15B v $3.26Be; -6.2% afterhours
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