Headlines/Economic Data
General Trend: Energy shares outperform
China Dec Trade Surplus above estimates amid lower than expected imports; China Customs Dept expresses caution regarding 2018 trade outlook
Japan 40 year JGB auction has highest bid to cover since 2014
Earnings expected in NY morning from BlackRock, JPMorgan, PNC and Wells Fargo
India’s Infosys due to report Q3 results
China/Hong Kong
Hang Seng opened +0.6%, Shanghai Composite flat
Hang Seng Energy Index +1.9%, Materials +1.3%, Consumer Goods +0.6%, Financials +0.5%
(CN) CHINA DEC TRADE BALANCE ($): 54.7B V 37.0BE (highest monthly surplus since Jan 2016); Exports Y/Y: 10.9% v 10.8%e; Imports Y/Y: 4.5% v 15.1%e
(CN) China Customs Dept Comments on drivers of 2017 Trade: For 2017, trade growth was driven by better than expected global recovery, domestic economic improvement, policies to boost imports, ‘Belt and Road Initiative’ and low comparison base.
(CN) China Customs Dept Comments on Trade Outlook: China Trade outlook ‘upbeat’ in 2018; will be difficult to maintain double digit trade growth in 2018; Dec Export Leading Index 41.1, down 0.7 m/m; Says data shows pressure facing Q1 exports.
(CN) China PBoC OMO: Injects CNY270B v CNY60B injected in 7, 14-day reverse repos prior: Net injects CNY180B v CNY30B drained prior; For the week, PBoC injects net of CNY40B v CNY510B drain w/w
(CN) PBoC sets yuan reference rate at 6.4932 v 6.5147 prior
(CN) China should keep its property controls continuous and stable
China press
(CN) Trust companies in China have placed limits on leveraged funds used for equities – China Securities Journal
Japan
Nikkei 225 opened flat; closed -0.2%
TOPIX Real Estate Index -0.7%, Information/Communications -1%
Fast Retailing +6% (Q1 results above ests; affirmed FY outlook)
Softbank -1%
Nikkei 225 Jan options said to settle at ~23,723
JAPAN NOV TRADE BALANCE BOP BASIS: ¥181.0B V ¥310.6BE
Japan Dec Bank Lending Ex-Trusts Y/Y: 2.4% v 2.7% prior; Incl Trusts Y/Y: 2.5% v 2.7% prior
JAPAN NOV BOP CURRENT ACCOUNT ADJUSTED: ¥1.70T V ¥2.17TE; CURRENT ACCOUNT: ¥1.35T V ¥1.84TE
Japan Dec Eco Watchers Survey Current: 53.9 v 55.1e; Outlook: 52.7 v 53.5e
Japan MoF sells ¥500B v ¥500B indicated in 0.90% 40-yr bonds, bid to cover 3.67x v 3.00x prior (highest bid to cover since 2014)
South Korea
Kospi opened +0.5%, has since pared gains
Samsung Electronics -3%: Shares remain weaker following release of prelim Q4 results earlier in week
South Korea Presidential Office officials to discuss measures related to cryptocurrencies – South Korea Press
South Korea and China to hold Finance Chief meeting on Friday, Feb 2nd
Australia/New Zealand
ASX 200 opened +0.2%: closed flat
ASX 200 Resources Index +1.5%, Energy +0.8%; Financials -0.1%, REIT -0.5%
(NZ) New Zealand Nov Building Permits M/M: +10.8% v -9.6% prior
North America
US equities markets closed higher: Dow Jones +0.8%, S&P500 +0.7%, Nasdaq +0.8%, Russell 2000 +1.7%
S&P 500 Energy Sector +2%, Consumer Discretionary +1.6%
(US) Pres Trump: will terminate NAFTA unless we reach a fair deal – press interview
(US) US Commerce Sec Ross: Submitted results of probe into national security impact of steel imports to President Trump; – President Trump now has 90-days to decide on any potential action based on the findings of the Section 232 Steel probe.
(US) Fed’s Dudley (dove, FOMC voter): worried growth overheating is a real risk in the next few years; Fed may have to press harder on the brakes at some point; Case for rate rises remains strong; A more aggressive Fed policy could increase risk of a hard landing; Fed forecast for 3 rate hikes this year is a reasonable starting point; We should try to achieve current 2% inflation target before talking about moving the goal higher;
Looking Ahead : US Dec CPI and Retail Sales due for release
Europe
(UK) PM May reportedly told bankers that their industry is a priority for her in Brexit talks – press
(UK) US President Trump said to cancel UK visit planned for Feb, expected to send US Sec of State Tillerson instead – UK Press; Trump was said to have been concerned about the welcome he would receive in the UK.
Levels as of 01:00ET
Hang Seng +0.4%; Shanghai Composite +0.1%; Kospi flat
Equity Futures: S&P500 flat; Nasdaq100 flat, Dax flat; FTSE100 -0.1%
EUR 1.2067-1.2029 ; JPY 111.06-111.35; AUD 0.7875-0.7905 ;NZD 0.7248-0.7277
Feb Gold +0.5% at $1,328/oz; Feb Crude Oil -0.3% at $63.62/brl; Mar Copper +0.3% at $3.237/lb
