Court unanimous in upholding South Korea President Park impeachment
Asia Mid-Session Market Update: Court unanimous in upholding South Korea President Park impeachment; PBOC officials justify use of reserves to prop up CNY
US Session Highlights
(US) FEB IMPORT PRICE INDEX M/M: 0.2% V 0.1%E; Y/Y: 4.6% V 4.4%E
(US) INITIAL JOBLESS CLAIMS: 243K V 238KE; CONTINUING CLAIMS: 2.06M V 2.06ME
ECB leaves rates and QE targets unchanged, as expected
(EU) ECB’s Draghi: Reiterated view that interest rates to stay low or lower for extended period; Signs that the cyclical recovery may be gaining momentum; risks surrounding euro zone growth outlook have become less pronounced but remain tilted to the downside
ECB raises 2017/2018 GDP and inflation forecasts (inflation stays below 2% target)
US markets on close: Dow flat, S&P500 +0.1%, Nasdaq flat
Best Sector in S&P500: Healthcare
Worst Sector in S&P500: Real Estate
Biggest gainers: SIG +8.7%, MRO +8.1%, FTR +4.4%, NRG +4.0%, EW +3.9%
Biggest losers: SPLS -5.3%, PPG -3.7%, AAL -3.5%, RIG -3.1%, SPG -3.1%
At the close: VIX 12.3 (+0.4pts); Treasuries: 2-yr 1.38% (+1bps), 10-yr 2.60% (+5bps), 30-yr 3.18% (+4bps)
US movers afterhours
PAY Reports Q1 $0.21 v $0.21e, R$457M v $449Me; +0.8% afterhours
ALR Loses in effort to immediately regain Arriva’s Medicare billing rights – press; -3.2% afterhours
LOCO Reports Q4 $0.12 v $0.13e, R$92.5M v $90.8Me- Guides initial FY17 $0.65-0.69 v $0.69e, SSS 0-2%; -4.4% afterhours
ULTA Reports Q4 $2.24 v $2.13e, R$1.58B v $1.54Be; Adds $425M to buyback plan (2.5% of market cap); Guides Q1 $1.75-1.80 v $1.80e; R$1.24-1.27B v $1.28Be; -5.0% afterhours
SGRY Reports Q4 $0.35 v $0.20e, R$306.0M v $298Me; Guides initial FY17 EBITDA +10-15% y/y, Rev +9-11% y/y, implies $1.25-1.27B v $1.29Be; -9.8% afterhours
ZUMZ Reports Q4 $0.74 v $0.66e, R$263.6M v $262Me- Guides Q1 -$0.21 to -$0.17 v -$0.03e, R$178-182M v $185Me, SSS 0% to +2%; -14.3% afterhours
FNSR Reports Q3 $0.59 v $0.61e, R$380.6M v $389Me; Guides Q4 $0.50-0.56 v $0.57e, R$360-380M v $389Me; -16.5% afterhours
Politics
(US) Washington State joining Hawaii in requesting that US federal judge bans the latest Executive Order restricting travel from the Middle East – US press
(US) Jon Huntsman accepts Pres Trump’s offer to become ambassador to Russia – NY Times
Asia Key economic data:
(JP) JAPAN Q1 BUSINESS SURVEY INDEX (BSI) LARGE ALL INDUSTRY Q/Q: 1.3 V 3.0 PRIOR; BSI LARGE MANUFACTURING Q/Q: 1.1 V 7.5 PRIOR
(AU) AUSTRALIA JAN HOME LOANS M/M: 0.5% V -1.0%E; 3rd straight increase
(NZ) NEW ZEALAND FEB CARD SPENDING M/M: -0.6% (first decline in 6 motnsh; biggest decline in 22 months) V -0.4%E; TOTAL M/M: -1.0% V 2.5% PRIOR
Asia Session Notable Observations, Speakers and Press
Asian equity indices are markedly higher as more positive sentiment has resurfaced in Asia; Nikkei225 is the best performer, as higher US yields continue to support the greenback at the expense of the Yen; Risk-on flows have also put a bid in US equity futures going into tomorrow’s NFP report, as traders bet the risk of a strong print following blow-out ADP numbers earlier this week. USD/JPY was up over 40pips above 115.30, a fresh 6-week high. In other FX majors, AUD/USD and NZD/USD are also higher by some 25pips from the lows, reversing some of the USD-strength driven weakness.
Among key speakers, PBoC Gov Zhou and Dep Gov Yi Gang covered a range of topics at a local conference. Zhou forecast more stability in CNY this year, calling the recent volatility as normal, while also advocating for more open bond market to foreign investment. Zhou also said FX reserves had grown too fast over the past 15 years, and the recent use of funds in normalizing Yuan is acceptable. Dep Gov Yi added China will not devalue Yuan to stimulate exports after this week’s surprise trade deficit.
South Korea has taken a big step in normalizing its political situation at a time when extra vigilance is needed to deal with North Korea provocations. South Korea Court Justices unanimously uphold Pres Park’s impeachment, and a new election is expected to be held in the next 60 days. Finance officials are closely monitoring for any protracted impact on the markets, while analysts with NAB note the political transition is constructive as candidates for the post are all in favor of reforming the chaebol system.
China
(CN) PBoC Gov Zhou Xiaochuan: Fed factor contributing to volatility in FX; CNY expeted to be stable this year – press
(CN) Goldman Sachs raises China 2017 GDP forecast to 6.6% from 6.5% prior guided
Japan
(JP) According to one survey, analysts are unanimous in expectation for BOJ to leave all policy settings unchanged next week – press
Korea
(KR) South Korea Court Justices unanimously upholds Pres Park impeachment; South Korea to hold a special presidential election within 60 days
(KR) South Korea Finance Ministry: Closely watching financial markets
(KR) NAB: Impeachment ruling for Korea’s Pres Park is a positive for Korean stocks – press
Asian Equity Indices/Futures (00:30ET)
Nikkei +1.4%, Hang Seng +0.2%, Shanghai Composite flat, ASX200 +0.6%, Kospi +0.3%
Equity Futures: S&P500 +0.2%; Nasdaq +0.3% Dax +0.1%; FTSE100 +0.1%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.0570-1.0600; JPY 114.90-115.35; AUD 0.7500-0.7525; NZD 0.6890-0.6915
Apr Gold -0.5% at $1,197/oz; Apr Crude Oil +0.6% at $49.61/brl; May Copper flat at $2.58/lb
SLV iShares Silver Trust ETF daily holdings fall to 10,268 tonnes from 10,303 tonnes prior; 11-month low
GLD: SPDR Gold Trust ETF daily holdings fall 2.7 tonnes to 834.1 tonnes; lowest since Feb 9th; 3rd straight decline; Apr Gold extending decline below $1,200; 5-week lows
(CN) PBOC SETS YUAN MID POINT AT 6.9123 V 6.9125 PRIOR; first stronger setting in 4 sessions
(CN) PBoC skips open market operations for 2nd straight session; Drains net CNY110B this week vs CNY280B
(JP) BOJ announces amounts to buy in upcoming QE operation; lowers 1-3-yr JGB purchases to ¥300B from ¥320B
(AU) Australia MoF (AOFM) sells A$600M in 5.75% 2021 Bonds; avg yield: %; bid-to-cover: 5.26x
Asia equities/Notables/movers by sector
Consumer discretionary: TWE.AU Treasury Wine +3.2% (Seeks to maintain earnings margin in Asia); DLX.AU Dulux Group +2.3% (Ellerston initiates holding); RFG.AU Retail Food Group +2.5% (UBs initiates holding)
Consumer staples:090430.KR Amorepacific Corp +0.4% (South Korea court ruling)
Financials: 665.HK Haitong International Securities Group -0.9% (FY16 result); 4.HK Wharf +8.8% (FY16 result, to scrap i-CABLE); 8795.JP T&D Holdings +4.2%, 8750.JP Dai-Ichi Mutual Life Insurance +3.0% (Nomura raises rating)
Industrials: 368.HK Sinotrans Shipping -7.5% (FY16 result); CSR.AU CSR +5.1% (JPMorgan raises rating); 9202.JP ANA Holdings Inc +3.5% (Tier 1 firm raises rating)
Technology: 2038.HK FIH Mobile -1.9% (FY16 result); 6502.JP Toshiba Corporation +1.2% (asset sale consideration); 1097.HK i-Cable Communications -35.5% (Wharf scraps interest); 732.HK Truly International Holdings -13.9% (profit warning)
Materials: JSP.IN Jindal Steel +4.7% (India court rejects pleas on coal block bid); ILU.AU Iluka -1.8% (Gearing likely to remain elevated among increased capex outlook)
Healthcare: NRT.AU Novogen Limited -8.6% (CFO resigns)
