Asian Indices Trade Mixed After Signing Of Phase 1 Trade Deal (As Expected), Shanghai Lags In Early Trading

General Trend:

• Some press headlines continue to focus on what happens next now that the US/China phase 1 deal has been signed; Trump said all tariffs will come off when we finish the ‘Phase 2’ deal
• Trump and members of his administration said the Phase 2 deal talks will start shortly; China Global Times however noted the signing of a phase one trade deal may not lead to phase two talks any time
• Trump administration officials noted the phase 2 talks will focus on areas including technology transfers and Chinese subsidies
• Consumer and Financial firms are among the gainers in Australia, Resources index underperforms ahead of Rio Tinto’s quarterly production update (expected on Jan 17th)
• Decliners in Shanghai include financials and telecom companies
• Beijing Shanghai High Speed Railway rises over 40% in Shanghai debut
• Hang Seng flat in early trading, property shares rise while tech names trade generally lower
• Nio Inc [NIO]: Guangzhou Auto noted talks with Nio on financing are in early stage
• Taiwan Semi declines ahead of expected quarterly results and guidance
• Yuan continues to be fixed stronger amid recent phase1 deal
• China PBOC continues to use reverse repos to inject liquidity ahead of Lunar New Year holiday
• China Commerce Ministry (MOFCOM) sometimes holds its weekly press conferences on Thursdays (comments generally seen during the early European morning)
• China Q4 GDP and Dec data due on Friday (Jan 17th); China Vice Premier Liu He said China 2019 GDP will be above 6.0% [vs 6.0-6.5% target], Jan data indicates better than expected outlook (Xinhua)
• Japan confirmed the spread of new coronavirus to Japan from China
• US companies expected to report earnings during Thursday NY morning include Bank of NY, Morgan Stanley, PPG and Charles Schwab

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.1%
• (AU) AUSTRALIA NOV HOME LOANS M/M: 1.8% V 1.4%E; INVESTMENT LENDING: 2.2% V 1.0%E
• (NZ) New Zealand Dec Card Spending Retail M/M: -0.8% v +0.1%e; Card Spending Total M/M: -0.6% v +0.9% prior
• CTX.AU In confidentiality agreement with Couche-Tard; no certainty that the discussions between Caltex and ATD will result in ATD improving its indicative cash price or in ATD making a binding proposal – filing
• WHC.AU Reports Q2 managed ROM coal production: 3.1Mt v 7.4Mt y/y; managed ROM coal production: 4.42Mt v 3.62Mt y/y 4.5Mt v 5.4Mt y/y; Cuts FY20 production
• WPL.AU Reports Q4 production 25.7 MMBOE v 24.1 y/y; Rev $1.3B v $1.4B y/y
• (NZ) New Zealand Dec REINZ House Sales y/y: +12.3% v -1.9% prior
• (AU) Australia Dec RBA Govt FX Transactions (A$): -2.1B v -756M prior

Japan

• Nikkei 225 opened +0.2%
• (JP) JAPAN NOV CORE MACHINE ORDERS M/M: 18.0% V 2.9%E (1st increase in 5-months, largest rise on record); Y/Y: +5.3% V -5.3%E
• 6256.JP Toshiba Machine to sell 1.8M shares (16% stake) in NuFlare to Toshiba at ¥11,900/shr
• (JP) Japan confirms 1 patient in Japan tests positive for new pneumonia virus – Japanese press
• 6502.JP CEO: No additional funds for more share buybacks; have mostly addressed demand from foreign shareholders

Korea

• Kospi opened 0.0%
• (KR) North Korea Rodong Sinmun newspaper calls for increased efforts to achieve wealth and prosperity without outside help, “self-reliance” is the “best policy” to neutralize hostile forces’ sanctions
• (KR) South Korea and US wrapped of defense sharing costs without reaching an agreement, talks to continue – Yonhap
• (KR) South Korea President Moon, Ruling Party approval rating 45.1% v 48.8% prior

China/Hong Kong

• Hang Seng opened +0.1%; Shanghai Composite opened +0.2%
• (CN) US and China successfully sign phase 1 trade deal
• (CN) China Finance Ministry (MOF) issues statement on Phase 1 trade deal: Publishes Chinese text of the agreement; China agrees to buy additional $32.0B in US agricultural products over 2 years (vs $40B speculated) (see headline at 21:35:26 for details)
• (CN) China Vice Premier Liu He: (chief negotiator on trade): US/China Phase 1 trade deal will benefit both nations and the world with peace, stability and prosperity – Chinese press
• (CN) China’s Global Times tweets: “The signing of a phase one trade deal may not lead to phase two talks any time soon, while trade tensions, additional tariffs and US investment restrictions on China will become the ‘new normal’: source told GT”
• (CN) China Vice Premier Liu: will use results of ‘Phase 1’ deal to prove our negotiations are working to improve the economy
• 763.HK Entered into subscription agreement related to proposed issuance of 381.1M A-shares, the offering to price at CNY30.21/share; sees net proceeds of CNY11.5B
• (CN) China Vice Premier Liu He: China 2019 GDP will be above 6.0%; Jan data indicates better than expected outlook – Xinhua
• (CN) China PBoC Open Market Operation (OMO): Injects CNY300B via 14-day reverse repos v injects CNY100B in 14-day prior; Net injection CNY300B v injects CNY100B prior
• (CN) China PBOC sets Yuan Reference Rate: 6.8807 v 6.8845 prior (strongest fix since July 26, 2019)
• (CN) CHINA DEC NEW HOME PRICES M/M: 0.3% V 0.3% PRIOR; Y/Y: 6.6% V 7.1% PRIOR
• (CN) China PBOC: FX agreement in Phase 1 US/China deal is good for market stability

North America

• (US) TRADE REP LIGHTHIZER: IT’S NOT ADMINISTRATION INTENTION TO WAIT UNTIL AFTER NOV ELECTION FOR ‘PHASE 2’ AGREEMENT WITH CHINA
• (US) Treasury Sec Mnuchin: USMCA and China trade deal will add 50-70bps to US GDP; have data on china subsidies and that will be addressed in Phase 2 talks – Fox
• NKE Vaporfly shoe is reportedly set to be banned by World Athletics due to allegations that its unique design provides an unfair advantage to runners – press
• (US) US Vice President Pence: Already started discussions on a Phase 2 deal following signing of Phase 1 US/China trade accord

Europe

• (DE) Germany Chancellor Merkel: Brexit is a wake-up call for the EU – FT interview
• (UK) Dec RICS House Price Balance: -2% v -8%e; Agreed home sales positive for the first time since May

Levels as of 12:15ET

• Hang Seng 0.0%; Shanghai Composite -0.3%; Kospi +0.4%; Nikkei225 0.0%; ASX 200 +0.7%
• Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 +0.2%
• EUR 1.1159-1.1148; JPY 110.00-109.86; AUD 0.6919-0.6901; NZD 0.6637-0.6616
• Commodity Futures: Gold +0.1% at $1,555/oz; Crude Oil +0.7% at $58.23/brl; Copper -0.2% at $2.86/lb