Nikkei Futures Decline Amid Focus On Coronavirus Impact On Japan

General Trend:

• Samsung Electronics declines over 1.5% after final Q4 earnings report, expects Q1 memory demand to decline on seasonality
• Foxconn drops over 7.5% in Taiwan amid concerns about possible impact of coronavirus on production
• Apple suppliers also drop in Hong Kong
• Gaming companies trade lower by over 2% in Hong Kong
• There are concerns that the coronavirus could impact the earnings reporting season in Hong Kong
• Decliners in Japan include Electric Appliance and Marine/Transportation companies; Canon Inc drops over 4% after its earnings and guidance
• Japanese companies expected to report earnings later today include Nintendo, Docomo, TEPCO, Tokyo Electron, Nomura, Fujitsu, Kyocera, Ana Holdings and Sumitomo Mitsui Financial
• Equity decliners in Australia include Resources companies; Iron ore producer Fortescue drops over 2% after production update, said operations in China have not been disrupted by coronavirus
• Aussie gold miner Newcrest drops over 3% after production update
• None of the major Aussie banks expect RBA rate cut at the Feb 4th policy meeting
• Bank of Korea (BOK) Official: Too early to say whether impact from virus should be addressed with policy rate cut
• GBP/USD trades generally flat ahead of upcoming BOE rate decision
• World Health Organization (WHO) is expected to reconvene its emergency committee later today, to consider the merits of declaring a global public health emergency related to the coronavirus
• Companies expected to report results during the NY morning include Biogen, Blackstone Group, Dupont, W.W Grainger , International Paper, Coca-Cola, Altria, Sherwin-Williams, UPS, Valero and Verizon

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.1%
• NCM.AU Reports Q2 gold production 551K oz v 511.6K q/q at AISC A$859/oz v $899 q/q; Papua New Guinea has withdrawn support for Wafi-Golpu JV
• (NZ) New Zealand Dec Trade Balance (NZ$): +0.5B v +0.1Be
• FMG.AU Reports Q2 Total Ore Mined 54.6Mt v 49.2Mt y/y; Ore shipped 46.4Mt v 42.4Mt y/y; launches $450M Pilbara generation project, next stage of Energy Connect program
• (AU) AUSTRALIA Q4 IMPORT PRICE INDEX Q/Q: 0.7% V 0.4%E; EXPORT PRICE INDEX Q/Q: -5.2% V -5.2%E

Japan

• Nikkei 225 opened -0.4%
• (JP) Japan PM Abe: Need to raise vigilance further due to new virus
• 5201.JP Confirms shipped some non-compliant products
• 8697.JP Reports 9M Net ¥33.3B v ¥38.4B y/y; Op ¥48.2B v ¥54.3B y/y; Rev ¥87.4B v ¥92.0B y/y; Affirms FY guidance
• 3103.JP Strength attributed to expectations for higher mask demand amid China coronavirus outbreak; shares are up over 23%
• (JP) Japan MoF sells ¥2.0T v ¥2.0T indicated in 0.10% 2-year JGBs, avg yield: -0.147% v -0.098% prior, bid to cover 4.49x v 4.69x prior

Korea

• Kospi opened -0.2%
• (KR) Bank of Korea (BOK) Official: Too early to say whether impact from virus should be addressed with policy rate cut; Too early to comment on impact from coronavirus on the economy and markets
• 005930.KR Reports final Q4 (KRW) Net 5.2T v 5.3Te; Op 7.2T v 7.1T prelim; Rev 59.9T v 59.0T prelim
• (KR) According to 38 North, North Korea missile site shows no signs of preparation for rocket or engine test – Korean press
• (KR) South Korea Feb Business Manufacturing Survey: 77 v 73 prior (largest monthly increase since March 2019); Non-Manufacturing Survey: 74 v 75 prior

China/Hong Kong

• Hang Seng opened -0.5%; Shanghai Composite closed
• (CN) China Hubei Corona virus update: 1,032 additional cases v 840 yesterday; additional deaths 37 v 25 yesterday
• (CN) China Academy of Social Sciences (CASS) economist Zhang Ming: Wuhan coronavirus outbreak could cut China’s Q1 GDP growth by ~1% to 5% or even lower as the virus impacts more sectors.
• (CN) China updates on Coronavirus: 7,711 confirmed cases v 5,974 yesterday; Deaths 170 v 132 yesterday
• (HK) Macau Tourism Office: 2020 Sixth Day of Lunar New Year, Jan 29th, Visitor Arrivals 21.6K, -89.1% y/y; Mainland China Visitors: 12.4K, -91.8% y/y
• (HK) Hong Kong Monetary Authority: Will maintain HK$ exchange rate stability; despite some volatility, exchange rate and interest rates have remained largely stable; will monitor coronavirus impact

North America

• TSLA Reports Q4 $2.14 v $1.62e, Rev $7.38B v $7.05Be; Guides initial FY20 deliveries comfortably exceed 500K units
• PYPL Reports Q4 $0.86 v $0.83e, Rev $4.96B v $4.94Be
• FB Reports Q4 $2.56 v $2.52e, Rev $21.4B v $20.9Be; Adds $10B increase to share buyback program
• MSFT Reports Q2 $1.51 v $1.32e, Rev $36.9B v $35.7Be
• (US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 1.50-1.75%; AS EXPECTED; EXTENDS REPO OPERATIONS AT LEAST THROUGH APRIL
• (US) Fed Chair Powell: change in wording around being ‘near’ inflation target was to make it clear that we are not comfortable with inflation consistently running below 2% target – post rate decision Q&A

Europe

• (UK) Jan Lloyds Business Barometer: 23 v 10 prior (14-month high)
• (DE) Germany Coalition has agreed to extend autoworkers jobless benefits
• (UK) Chancellor Javid to back HS2 High Speed Rail project that will link London to Northern England – press
• (US) White House econ adviser Kudlow: intensity of EU trade discussions will restart soon – Fox Business interview

Levels as of 12:15ET

• Hang Seng -2.2%; Shanghai Composite closed; Kospi -1.8%; Nikkei225 -2.1%; ASX 200 -0.3%
• Equity Futures: S&P500 -0.7%; Nasdaq100 -0.6%, Dax -0.6%; FTSE100 -0.5%
• EUR 1.1018-1.1007; JPY 109.06-108.84; AUD 0.6756-0.6731; NZD 0.6531-0.6505
• Commodity Futures: Gold +0.5% at $1,578/oz; Crude Oil -1.1% at $52.77/brl; Copper -1.3% at $2.53/lb