Japan trade balance in deficit on rising imports
Asia Mid-Session Market Update: Beijing voices opposition to US carrier presence in South China Sea; Japan trade balance in deficit on rising imports
Friday US markets on close: Dow flat, S&P500 +0.2%, Nasdaq +0.4%
Best Sector in S&P500: Telecom
Worst Sector in S&P500: Energy
Biggest gainers: KHC +10.7%; VFC +4.6%; CL +4.3%
Biggest losers: CPB -6.5%; fls -4.8%; GIS -3.8%
At the close: VIX 11.5 (-0.3pts); Treasuries: 2-yr 1.19% (-2bps), 10-yr 2.43% (-3bps), 30-yr 3.03% (-2bps)
Weekend US/EU Corporate Headlines
ULVR.NV: Kraft Heinz withdraws $143B offer for Unilever
RBS: UK Treasury has brokered a new deal with EU over the £46B bailout received by RBS in 2008 amid Brexit fears; new measures will cost RBS £750M, to be written off as a cost in this week’s annual results – UK press
SAZ.DE: Bain Capital said to have submitted competing €3.6B takeover bid at €58/shr – press
Politics
(JP) Japan PM Abe’s cabinet approval rating rises 5pts to 66% – Yomiuri
(US) Homeland Security Secretary (DHS) Kelly said to consider a new "streamlined" version of Executive Order on immigration – press
Key economic data:
(JP) JAPAN JAN TRADE BALANCE: -¥1.09T (first deficit in 5 months) V -¥626BE; ADJ TRADE BALANCE: ¥155B (1-year low) V ¥276BE
(NZ) NEW ZEALAND Q4 PPI INPUT Q/Q: 1.0% V 1.5% PRIOR; PPI OUTPUT Q/Q: 1.5% V 1.0% PRIOR
(NZ) NEW ZEALAND JAN PERFORMANCE OF SERVICES INDEX: 59.5 (16-month high) V 58.5 PRIOR
(KR) SOUTH KOREA JAN PPI M/M: 1.3% V 0.9% PRIOR; Y/Y: 3.7% (5-year high) V 1.8% PRIOR
Asia Session Notable Observations, Speakers and Press
Asian equity markets trading mixed to start the week, with Australia dragged down by disappointing earnings from Brambles and WorleyParsons, while Shanghai Composite is faring better despite the rising geopolitical risks. Overall trading sentiment is somewhat muted by the US holiday on Monday, as investor also await this week’s FOMC policy minutes for further hints of just how close the Fed is to another policy tightening. Ahead of that release, Fed’s Mester (hawkish, non-voter) stated she sees the US economy on solid footing, but also added it will take some time to for Fed to shed MBS from its balance sheet.
Weekend security summit in Munich, Germany yielded some more conciliatory and less isolationist rhetoric from US govt officials, including VP Pence. However, some focus also turned to China, and US Sen Lindsay Graham said there may be bipartisan Congressional support if Pres Trump decides to name Beijing a currency manipulator. In the mean time, China defense officials expressed displeasure to US aircraft carrier USS Carl Vinson beginning patrols in the South China Sea.
In economic data, Japan trade balance was the most notable event with a much wider deficit than anticipated. Exports growth was slower than expected at 1.3% v 5.0%e, while imports growth of 8.5% v 4.8%e marked the first monthly rise in 2 years. Some of the slower exports can be attributed to stronger JPY, as USD/JPY came in about 5 handles from early January highs. Shipments to US and Europe were down 6.6% and 5.6% respectively, while exports to Asia rose 6%. Elsewhere, South Korea PPI spiked up to a 5 year high.
China
(US) According to US Sen Lindsey Graham (R-SC), Pres Trump would have bipartisan support to label China a "currency manipulator" – press
(CN) Chinese Academy of Social Sciences (CASS) Researcher Zhang Yunling: China plans to have growth depend more on domestic consumption and less on exports amid rising labor costs and weak external demand – Chinese press
(CN) US Nimitz-class aircraft carrier USS Carl Vinson started patrols in the South China Sea despite this week’s opposition from China Foreign Ministry against US meddling in the region – Nikkei
(CN) China plans to have growth depend more on domestic consumption and less on exports amid rising labor costs and weak external demand – Chinese press
Japan
(JP) Japan PM Abe’s cabinet approval rating rises 5pts to 66% – Yomiuri
Australia/New Zealand:
(AU) CBA Business Sales indicator sees Australia growth of business spending for January rising 0.5pts m/m to 5.8% – press
(NZ) ASB chief economist: New Zealand property market expectations have retreated – NZ press
Asian Equity Indices/Futures (23:30ET)
Nikkei +0.1%, Hang Seng +0.3%, Shanghai Composite +0.8%, ASX200 -0.3%, Kospi flat
Equity Futures: S&P500 +0.1%; Nasdaq flat, Dax flat, FTSE100 flat
FX ranges/Commodities/Fixed Income (23:30ET)
EUR 1.0600-1.0635; JPY 112.80-113.20; AUD 0.7660-0.7680; NZD 0.7170-0.7195; GBP 1.2405-1.2440
Apr Gold -0.3% at 1,235/oz; Mar Crude Oil +0.1% at $53.83/brl; Mar Copper +0.3% at $2.72/lb
GLD: SPDR Gold Trust ETF daily holdings fall 2.3 tonnes to 841.2 tonnes; first fall since Jan 25th
(CN) PBOC SETS YUAN MID POINT AT 6.8743 V 6.8456 PRIOR; biggest margin of decline since Jan 9th
(CN) PBOC to inject combined CNY170B v CNY150B prior in 7-day, 14-day and 28-day reverse repos
(KR) South Korea sells 10-yr Treasury bonds; avg yield 2.155%
Asia equities/Notables/movers
Australia
NHF.AU NIB Holdings +7.2% (H1 result)
BSL.AU Bluescope +4.0% (H1 result)
AMP.AU AMP Capital -1.3% (FY result)
BXB.AU Brambles -9.6% (H1 result)
WOR.AU WorleyParsons -14.2% (H1 result)
Hong Kong
611.HK China Nuclear Energy Technology +2.2% (FY16 profit alert)
827.HK Ko Yo Chemical Group +2.0% (FY16 guidance)
1060.HK Alibaba Pictures Group Ltd -4.3% (FY16 profit warning)
3322.HK Win Hanverky Holdings -6.8% (FY16 profit warning)
1219.HK Tenwow International Holdings -10.7% (FY16 profit warning)
Japan
5101.JP Yokohama Rubber +3.4% (FY16 result)
9984.JP Softbank +3.2% (reportedly preparing to approach Deutsche Telekom’s T-Mobile US about a possible merger with Sprint)
6502.JP Toshiba +1.3% (Speculation about chip unit sale)
5423.JP Tokyo Steel -2.4% (Maintains prices of hot-rolled coil and H-beam steel after 3 months of increases)
