Headlines/Economic Data
General Trend: Asian equities trade mixed amid rise in global interest rates
Asian yield curves track steepening seen in the US
Japan 10-yr JGB yield hits highest since Oct 2017
Korea 10-year yield hits highest intraday level in 3-years
China sells 1 and 10-year bonds at lower than expected yields
Australia REIT sector underperforms amid rise in interest rates
Samsung Electronics extends losses seen post Q4 guidance
China 2017 CPI misses target as food prices decline for first time since 2003
Japan
Nikkei 225 opened -0.1%; closed -0.3%
Chip related companies decline following guidance from Samsung: Tokyo Electron -1.9%, SUMCO -1.5%
Fast Retailing -0.8%: Expected to report Q1 results on tomorrow’s session
Automakers outperform: Honda +2%, Toyota +1.7%
Mega banks track gains in the US financial sector: Sumitomo Mitsui +2.2%, Mitsubishi UFJ +1.7%, Mizuho +1%
JGB (JP) Japan MoF sells ¥2.24T v ¥2.3T indicated in 0.1% (prior 0.1%) 10-yr JGB; avg yield 0.078% v 0.059% prior; bid to cover 3.74x
(JP) Japan Financial Services Agency (FSA) said to be preparing scenarios for the ailing regional banks, including the possibility of injecting public funds and overseeing the integration of management between institutions – Nikkei
Korea
Kospi opened +0.2%, later trades lower
Continued weakness in chip sector: Samsung Electronics -2.8% (follow-through declines after Q4 guidance), Hynix -5%
Hyundai Heavy (010140.KR ) +7.5%: Said to plan to cut 2,500 jobs – South Korean Press
Financials gain amid steeper yield curve: KB Financial +1%, Woori Bank +1.7%
042660.KR May report Q4 Net loss due to cost increases and KRW – Korean press
(KR) South Korea President Moon: An increase in minimum wage is meaningful reform to economy
(KR) Moody’s comments on recent inter-Korea talks: Says the talks don’t lower the probability of a conflict for now
China/Hong Kong
Hang Seng and Shanghai Composite opened flat
Hang Seng Energy Index +1.5% (On Tuesday oil prices rose by over 2.5%), Financials +0.7%, Property/Construction +0.6%
Chow Tai Fook Jewellery +2.7%: Q3 China SSS +5% y/y
Parkson Retail Group +10% (no relevant news seen)
Great Wall Motor: -4.5%: Dec sales -16.6% y/y
(CN) PBOC may resume open market operations (OMO) soon – China Securities Journal
(CN) China PBoC OMO: Injects CNY120B combined in 7, 14-day reverse repos v skips prior; Net drains CNY0B v CNY130B prior
USD/CNY (CN) China PBoC sets yuan reference rate at 6.5207 v 6.4968 prior
(CN) CHINA DEC CPI M/M: 0.3% V 0.3%E; Y/Y: 1.8% V 1.9%E; PPI Y/Y: 4.9% V 4.8%E
China bond market remains weak in the early parts of 2018, volatility has ebbed since the beginning of November and the trend may begin to reverse – CSJ
China said to suspend ‘counter-cyclical’ factor in yuan (CNY) fix – US financial press
China Finance Ministry sells 1 and 10-year bonds at lower than expected yields
Australia/New Zealand
ASX 200 opened +0.1%, has since pared gains; closed -0.6%
ASX 200 REIT Index -1.3%, Telecom Services -1.1%, Energy -0.9%, Utilities -0.7%, Resources -0.5%, Financials -0.2%
(AU) Australia Nov 3-month Job Vacancies: 2.7% v 6.0% prior
(AU) China demand for Australian property is expected to moderate this year amid the impact of new state and federal taxes – Australian
Looking Ahead: Australia Nov Retail Sales due for release on Thursday
Other Asia
(PH) Philippines Budget Sec Diokno: Q4 GDP growth can be around 7% or higher (vs 6.9% in Q3)
(PH) Philippines Nov Trade Balance: -$3.8B (multi-year high for the deficit) v -$2.7Be
Taiwan Semi, 2330.TW Reports Dec Rev NT$89.9B v NT$93.2B m/m v NT$78.1B y/y, 2017 Rev NT977.5B, +3.1% y/y
North America
US equity markets ended mostly higher: Dow +0.4%, S&P500 +0.1%, Nasdaq +0.1%, Russell 2000 -0.1%
S&P500 Health Care Sector +1.2%, Financials +0.8%; Real Estate -1.1%, Utilities -1%
(US) Fed’s Kashkari (dove, non-voter): inflation that’s too low is a bigger concern than inflation that’s too high; Economic recovery has been frustratingly slow; believes slow pace of recovery is due to psychological scarring from the financial crisis
(US) Trump Administration said it will not permit drilling off of the coast of Florida – US press
(US) Weekly API Oil Inventories: Crude: -11.2M v -5M prior
Looking Ahead: US weekly DOE Crude Oil Inventories due for release
Europe
(UK) Prime Min May reportedly has scrapped plan to create cabinet post for a no-deal Brexit situation – UK press
(UK) EU Chief Brexit Negotiator Barnier: the integrity of the single market is crucial in Brexit; risk of a disorderly Brexit has decreased; Future trade relationship with UK will not be frictionless
(UK) UK Brexit Ministry: proposes three-month window after Brexit to begin court cases under general principles of EU law
(UK) According to the EU companies in the UK may not have automatic access if there is no Brexit deal – financial press
(UK) UK Chancellor of the Exchequer Hammond and Brexit Sec Davis wrote a joint article in the German Press suggesting close cooperation between the EU and UK regulators following Brexit, as part of an expansive trade agreement that covers goods and financial services (Note: Both Davis and Hammond are expected to be in Germany on Wed)
(UK) Germany is said to show opposition to Brexit trade deal plan proposed by the UK – UK Press
(UK) British Chambers of Commerce (BCC): Survey shows UK services and manufacturing companies less confident about 2018 revenues
(IT) Five Star Party says its no longer time for Italy to leave the euro zone – Italian press
(CN) EU Ambassador to China Schweisgut: EU hopes for full China market access with reciprocity
World Bank raises global economic growth outlook at +3.1% (prior +2.9% forecasted)
Continental [CON.DE]: Reports Prelim FY17 Rev €44B v €43.9Be; Guides initial FY18 Rev ~€47B, +6.8% y/y, adj EBIT margin 10.5%
Akzo Nobel [AKZA.NL]: Shortlist of bidders for chemical unit reportedly include Carlyle Group and Bain – press
Looking Ahead: UK Nov Industrial Production, Manufacturing Production and Trade data due for release
Levels as of 01:00ET
– Nikkei225 -0.3%, Hang Seng +0.3%; Shanghai Composite -0.3%; ASX200 -0.6%, Kospi -0.4%
Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.0%; FTSE100 -0.1%
EUR 1.1949-1.1928; JPY 112.79-112.17; AUD 0.7831-0.7808;NZD 0.7173-0.7140
Feb Gold -0.2% at $1,310/oz; Feb Crude Oil +0.8% at $63.45/brl; Mar Copper +0.2% at $3.23/lb
