Japan CPI tracking in right direction
Asia Mid-Session Market Update: Japan CPI tracking in right direction; Investors contemplate risks of US protectionism
US Session Highlights
(US) DEC PRELIMINARY WHOLESALE INVENTORIES M/M: 1.0% V 0.1%E
(US) DEC ADVANCE GOODS TRADE BALANCE: -$65.0 V -$65.3BE
(US) INITIAL JOBLESS CLAIMS: 259K V 247KE; CONTINUING CLAIMS: 2.10MM V 2.04ME
(US) JAN PRELIMINARY MARKIT SERVICES PMI: 55.1 V 54.4E (highest since Nov 2015); composite PMI: 55.4 v 54.1 prior
(US) DEC NEW HOME SALES: 536K V 588KE
(GR) EU official: the Greek bailout review is not making progress; creditors have asked Greece for more austerity beyond 2018 – press
(MX) Mexico Pres Pena Nieto has canceled White House meeting over disagreement around border wall – press
US markets on close: Dow +0.8%, S&P500 -0.1%, Nasdaq flat
Best Sector in S&P500: Financials
Worst Sector in S&P500: Healthcare
Biggest gainers: URI +11.2%, RCL +9.1%, LUV +9.0%, SHW +7.6%, CHTR +7.4%
Biggest losers: MAT -17.7%, WHR -8.6%, MCK -8.3%, FFIV -8.3%, HP -7.4%
At the close: VIX 10.6 (-0.2pts); Treasuries: 2-yr 1.23% (-1bps), 10-yr 2.51% (-1bps), 30-yr 3.09% (-2bps)
US movers afterhours
SMCI Reports Q2 $0.48 v $0.47e, R$652M v $614Me; +9.8% afterhours
WYNN Reports Q4 $0.50 v $0.67e, R$1.30B v $1.25Be; CEO: occupancy in Macau is ‘right on target,’ even a little ahead of occupancy expectations at the Wynn Macau Palace; +6.8% afterhours
VMW Reports Q4 $1.43 v $1.40e, R$2.03B v $1.99Be; Adds $1.2B to buyback plan (3% of market cap); +3.9% afterhours
KLAC Reports Q2 $1.52 v $1.41e, R$877M v $838Me; +3.3% afterhours
MSFT Reports Q2 $0.83 v $0.79e, R$26.1B (adj) v $25.2Be; +1.4% afterhours
INTC Reports Q4 $0.79 v $0.76e, R$16.4B v $15.8Be; +0.1% afterhours
PYPL Reports Q4 $0.42 v $0.42e, R$2.98B v $2.97Be; -0.6% afterhours
GOOGL Reports Q4 $9.36 v $9.63e, R$26.0B (includes $4.85B TAC) v $25.2Be; Google ad Rev $22.4B v $19.1B y/y; -2.1% afterhours
SBUX Reports Q1 $0.51 v $0.52e, R$5.73B v $5.83Be; -4.0% afterhours
JNPR Reports Q4 $0.66 v $0.63e, R$1.39B v $1.36Be; Guides Q1 $0.38-0.44 v $0.46e; -8.2% afterhours
Asia Key economic data:
(JP) JAPAN DEC NATIONAL CPI Y/Y: 0.3% (10-month high) V 0.2%E; CPI EX FRESH FOOD (CORE) Y/Y: -0.2% V -0.3%E
(JP) JAPAN JAN TOKYO CPI Y/Y: 0.1% V 0.0%E; CPI EX-FRESH FOOD Y/Y: -0.3% (9-month high) V -0.4%E
(AU) AUSTRALIA Q4 PPI Q/Q: 0.5% (6-quarter high) V 0.3% PRIOR; Y/Y: 0.7% V 0.5% PRIOR
(AU) AUSTRALIA Q4 IMPORT PRICE INDEX Q/Q: 0.2% (5-quarter high) V 0.4%E; EXPORT PRICE INDEX Q/Q: 12.4% (6 1/2 year high) V 12.1%E
Asia Session Notable Observations, Speakers and Press
Asian indices trading mixed, tracking more neutral sentiment on Wall St, as investors contemplate the most adversarial and protectionist stance taken by the Trump White House against Mexico. Volumes are also lighter, with the mainland China and Korea’s Kospi closed ahead of the Lunar New Year. Australia is outperforming with a catch-up rally after yesterday’s holiday, though the losses in mining shares are keeping the rally contained.
FX majors are also flattish in narrow ranges with the exception of USD/JPY, which tested 115 handle after BOJ’s regular operation expanded the purchases of 5-10yr JGBs.
Going into next week’s BOJ decision, today’s CPI data should give the central bank some comfort that price pressure is moving in the right direction – National headline CPI and Tokyo core CPI saw 10-month and 9-month high prints – even though the 2% target remains distant. Speaking in Parliament, PM Abe is tempering optimism, stating Japan has not yet emerged from deflation; Abe also said he will impart the importance of TPP on US president Trump, but that he also would not rule out a bilateral trade deal.
Political transition will remain in focus on Friday, as Trump meets UK PM May; US initial Q4 GDP numbers and durable goods figures also on tap.
China
(DE) German Chancellor Merkel and China Premier Li call for resolution of investment accord between the two countries – financial press
(CN) NDRC: Profits of China’s 373 steel companies to reach CNY35B in 2016 v loss CNY84.7B – Chinese press
Japan:
(JP) Japan Chief Cabinet Sec Suga: to closely watch impact on local companies from US and Mexico relationship
(JP) Japan PM Abe: Japan not yet emerged from deflation
Australia
(AU) Goldman Sachs economist Toohey: Australia Q4 CPI implies that price pressures have troughed – AFR
Asian Equity Indices/Futures (23:30ET)
Nikkei +0.3%, Hang Seng -0.1%, Shanghai Composite closed, ASX200 +0.7%, Kospi closed
Equity Futures: S&P500 -0.1%; Nasdaq flat; Dax -0.1%; FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (23:30ET)
EUR 1.0660-1.0690; JPY 114.40-115.00; AUD 0.7525-0.7545; NZD 0.7230-0.7250
Feb Gold -0.5% at $1,183/oz; Mar Crude Oil flat at $53.78/brl; Mar Copper +0.1% at $2.67/lb
iShares Silver Trust ETF daily holdings fall to 10,420 tonnes from 10,494 tonnes prior; lowest since July 2016
(JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥450B (¥410B prior) in 5-10yr JGBs and ¥1.25T in T-bills
(AU) Australia MoF (AOFM) sells A$700M in 2.25% 2028 Bonds; avg yield: 2.8995%; bid-to-cover: 2.91x
Asia equities/Notables/movers by sector
Consumer discretionary: 1128.HK Wynn Macau +2.6% (Q4 result); 3099.JP Isetan Mitsukoshi +0.2% (9-month result)
Consumer staples: WOW.AU Woolworths +2.2% (JPMorgan raises rating)
Financials: 966.HK China Taiping Insurance -0.1% (profit warning); CHC.AU Charter Hall Group +1.9% (Citi raises rating); 8616.JP Tokai Tokyo Financial Holdings Inc -1.7% (9-month result)
Industrials: 232.HK AVIC International Holding -3.9% (profit warning); 6501.JP Hitachi -0.1% (9-month result); 7312.JP Takata Corp -7.6% (momentum)
Technology: 6502.JP Toshiba Corporation +2.3% (confirms to split memory chip business)
Materials: 2168.HK Yingde Gases +0.2% (removal of directors); EVN.AU Evolution Mining -7.1%, NST.AU Northern Star Resources -4.8%, MIN.AU Mineral Resources -4.7% (gold declines); PRU.AU Perseus Mining -20.2% (Q2 result)
