RBA on hold with slightly rosier view of domestic economy
Asia Mid-Session Market Update: RBA on hold with slightly rosier view of domestic economy; THAAD system components start to arrive in Korea
US Session Highlights
(US) Trump trade adviser Navarro: Questions Chinese, Japanese, German and Indian trade fairness; Can reduce trade deficit through negotiations
(MX) Mexico central bank begins auction of $1B in non-deliverable forwards (start of $20B program to bolster the peso)
(MX) MEXICO FEB CONSUMER CONFIDENCE: 75.7 V 68.6E
(US) JAN FACTORY ORDERS: 1.2% V 1.0%E
IEA Chief Economist Birol: beginning to see a second wave of US shale growth, the size of which will determine the oil price direction
US markets on close: Dow -0.2%, S&P500 -0.3%, Nasdaq -0.4%
Best Sector in S&P500: Energy
Worst Sector in S&P500: Materials
Biggest gainers: RRC +4.1%, COG +3.5%, SWN +3.0%, NFLX +2.0%, MRO +1.8%
Biggest losers: ENDP -6.9%, CSRA -4.3%, FTR -3.8%, FSLR -3.7%, RIG -3.6%
At the close: VIX 11.2 (+0.3pts); Treasuries: 2-yr 1.31% (flat), 10-yr 2.49% (flat), 30-yr 3.10% (+1bps)
US movers afterhours
MEET: Reports Q4 $0.19 v $0.19e, R$29.2M v $28.7Me; +18.5% afterhours
WFT: Names Mark A. McCollum new CEO effective in late April; +14.6% afterhours
ASNA: Reports Q2 -$0.07 v -$0.10e, R$1.75B v $1.75Be; +7.8% afterhours
DISH: To be added to S&P500 Index, effective at the open on March 13th; +5.3% afterhours
PIR: Guides Q4 $0.32-0.34 v $0.30e; Rev -2.6%; SSS +0.2% – We are raising our estimates for earnings per share and adjusted earnings per share for the fourth quarter and full year as a result of a number of key factors; +5.0% afterhours
CRM: IBM and Salesforce announce global strategic partnership centered on artificial intelligence; +2.1% afterhours
THO: Reports Q2 $1.23 v $1.26e, R$1.59B v $1.51Be- Q2 Consolidated RV backlog $1.38B v $1.21B q.qq; -2.5% afterhours
CASY: Reports Q3 $0.58 v $0.88e, R$1.77B v $1.82Be; To repurchase up to $300M in common stock (6.7% of market cap); -4.6% afterhours
PCRX: Files to sell $300M aggregate principal amount of convertible senior notes due 2022; -4.9% afterhours
KTWO: Reports Q4 -$0.30 v -$0.26e, R$61.8M v $61.5Me- Guides initial FY17 R$263-270M v $270Me – Guides initial FY17 adj EBITDA $6-10M; -8.0% afterhours
Politics
(US) House releases text of Obamacare replacement bill: To include refundable tax credits tied to age and income
Asia Key economic data:
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)
(AU) AUSTRALIA FEB AIG PERFORMANCE OF CONSTRUCTION INDEX: 53.1 V 47.7 PRIOR (1st expansion in 5-months)
(TW) TAIWAN FEB CPI Y/Y: 0.0% V 0.7%E; WPI Y/Y: 2.2% V 3.0%E
Asia Session Notable Observations, Speakers and Press
Asia indices are mixed as investors shrugged political drama in Washington. Energy led other sectors in US session despite lower oil prices, while Financials and Materials slumped. Nikkei225 put in a modest drop as USD/JPY sank back below ¥114. AUD/USD was also volatile, with RBA delivering a modest upgrade of economic conditions, but not enough to materially shift expectations for a rate hike this year.
AUD rose going into the decision to session highs of 0.7630 on expectations of hawkish language and then fell back below 0.76 on release of another neutral statement. Most notably, RBA added that "exports have risen strongly and non-mining business investment has risen over the past year" and also acknowledged better Q4 GDP by noting that "consumption growth was stronger towards the end of the year". However, RBA also reiterated that inflation remains quite low and cheered depreciating exchange rate in assisting economy transition from its mining boom. Fixed income markets were pricing in about a 30% chance of a rate hike this year going into the statement, and after the decision those odds rose only about 3pts.
Tensions on the Korean peninsula continued to simmer as White House released a statement that President Trump spoke with leaders of Japan and South Korea. Trump said the North Korea launch is a violation of UN resolutions and poses a "serious threat". On a related note, US commander in the region said the launch justifies THAAD deployment which started today and may begin operating as soon as next month. Recall that China has been a vocal opponent of THAAD deployment in the region, cancelling joint exercises with South Korea and urging termination of the system.
China
(CN) China NDRC: Sees coal prices falling steadily, coal supply is sufficient
(CN) UBS Economist Hu: Sees PBOC cutting RRR 4x in 2017; benchmark rate hike unlikely this year
(CN) PBOC Dep Gov Yi Gang: Will seek to prevent systemic risk and moral hazard in markets – Chinese press
Japan
(JP) Japan Fin Min Aso: China needs to address overcapacity and debt issues
(JP) Japan Center for Economic Research (JCER): Japan Jan GDP estimated at -0.5% m/m v -0.5% prior – Nikkei
Australia
(AU) AMP’s Oliver: RBA to remain on hold until H2 of 2018 – SMH
(NZ) IMF: New Zealand household debt continues to be a risk to financial stability
Korea
(KR) Commander of US Pacific Command: North Korea’s latest missile launch confirms the need for THAAD deployment; some equipment, including 2 launch pads for Thaad US missile defense system, has arrived in South Korea; Thaad may start operating as soon as April
(KR) White House: Pres Trump spoke to Japan PM Abe and South Korea acting Pres Hwang; North Korea poses a "serious threat" and latest missile launch is a clear violation of UN resolutions – press
(KR) South Korea govt think tank (KDI): Modest economic recovery losing momentum due to faltering consumption – Korean press
Asian Equity Indices/Futures (00:00ET)
Nikkei -0.2%, Hang Seng +0.4%, Shanghai Composite -0.1%, ASX200 +0.2%, Kospi +0.7%
Equity Futures: S&P500 flat; Nasdaq flat; Dax +0.3%; FTSE100 +0.2%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.0570-1.0595; JPY 113.85-114.10; AUD 0.7575-0.7630; NZD 0.6980-0.7020
Apr Gold flat at $1,225/oz; Apr Crude Oil flat at $53.20/brl; May Copper +0.1% at $2.66/lb
(IQ) Iraq energy min: Iraq would participate if OPEC decides to extend the cut agreement past June 30th, but too soon to say if it should be extended – Ceraweek conf comments
(AU) Australia Port Hedland Feb Iron Ore Exports 35.7Mt v 40.3Mt m/m
GLD SPDR Gold Trust ETF daily holdings fall 3.8 tonnes to 836.8 tonnes; lowest since Feb 10th; 2nd straight decline
(CN) PBOC SETS YUAN MID POINT AT 6.8957 V 6.8790 PRIOR; weakest CNY setting since Jan 17th
(CN) PBOC to inject combined CNY30B v CNY40B prior in 7-day, 14-day and 28-day reverse repos
(JP) Japan MoF sells ¥723B in 0.8% (0.6% prior) 30-yr bonds; Avg yield: 0.821% v 0.907% prior; Bid to cover: 3.14x v 3.23x prior
(KR) South Korea sells 30-yr Govt bonds at 2.369%
Asia equities/Notables/movers by sector
Consumer discretionary: 848.HK Maoye International Holdings -1.3% (profit warning); 7956.JP Pigeon Corp +1.5% (FY16/17 result)
Financials: 6030.HK CITIC Securities +1.6% (Feb result); 1918.HK Sunac China Holdings +3.4%, 688.HK China Overseas Land +1.3% (Feb result); WFD.AU Westfield Corp -1.5% (Credit Suisse cuts rating)
Industrials: 2333.HK Great Wall Motor +0.8% (Feb result); 4005.JP Sumitomo Chemical Co +2.3% (to triple OLED screen capacity); 6103.JP Okuma Corp +2.4% (Goldman Sachs raises rating); 7211.JP Mitsubishi Motors -1.5% (Nomura cuts rating)
Technology: 066570.KR LG Electronics Inc +5.0% (strong preorders of G6 smartphone); 7751.JP Canon +2.1% (efforts to form profit structure); 7974.JP Nintendo Co +1.9% (Switch device sales)
Materials: RRL.AU Regis Resources -3.5%, RSG.AU Resolute Mining -3.6%, SBM.AU St Barbara -1.5% (gold declines)
Utilities: 5803.JP Fujikura -2.5% (Nomura cuts rating)
