Australia Trade Surplus hits record high
Asia Mid-Session Market Update: Australia Trade Surplus hits record high; Korea inflation finally within BOK target range
US Session Highlights
(US) JAN ADP EMPLOYMENT CHANGE: +246K V +168KE; goods producing +46K v -16K m/m
(US) JAN FINAL MARKIT MANUFACTURING PMI: 55.0 V 55.1E
(US) JAN ISM MANUFACTURING: 56.0 V 55.0E; PRICES PAID: 69.0 V 65.5E (Manufacturing Index highest since Nov 2014, Prices Paid highest since May 2011)
(US) DOE CRUDE: +6.5M V +3ME; GASOLINE: +3.9M V +1.5ME; DISTILLATE: +1.6M V -0.5ME
(US) Atlanta Fed raises Q1 GDP forecast to 3.4% from 2.3% on 1/30
(US) Senate Finance Committee votes to approve Mnuchin for Treasury Secretary and Price for HHS Secretary; Democrats boycotted the vote and were not present; GOP members suspended committee rules to force a vote; full Senate to take up vote
US markets on close: Dow +0.1%, S&P500 flat, Nasdaq +0.5%
Best Sector in S&P500: Healthcare
Worst Sector in S&P500: Utilities
Biggest gainers: ARNC +11.2%, AVY +9.1%, AAPL +6.1%, AGN +4.8%, NVDA +4.4%
Biggest losers: PBI -17.5%, D -5.8%, ADP -5.7%, PVH -4.2%, AFL -4.1%
At the close: VIX 11.8 (-0.2pts); Treasuries: 2-yr 1.21% (-1bps), 10-yr 2.47% (+2bps), 30-yr 3.08% (+3bps)
US movers afterhours
MJN Reckitt Benckiser confirms its in talks to acquire Mead Johnson at $90.00/shr cash (implied deal ~$16.6B), in period of due diligence; +23.7% afterhours
LCI: Reports Q2 $0.92 v $0.83e, R$170.9M v $169Me- Affirms FY17 Net sales in the range of $675-685M v $672Me (prior $675-685M); +4.3% afterhours
ALL: Reports Q4 $2.17 v $1.61e, R$9.3B v $8.45Be; +3.7% afterhours
TSCO: Reports Q4 $0.94 v $0.92e, R$1.92 v $1.87Be; +3.6% afterhours
FB: Reports Q4 $1.41 (adj) v $1.34e, R$8.81B v $8.47Be; Monthly active users (MAUs) 1.86B, +17% y/y; +0.1% afterhours
EW: Reports Q4 $0.73 v $0.71e, R$768Mv $756Me; -1.0% afterhours
MET: Reports Q4 $1.28 v $1.34e, R$17.2B v $17.3Be; -1.1% afterhours
HOLX: Reports Q1 $0.52 v $0.51e, R$734.4 v $724Me; -2.0% afterhours
CRUS: Reports Q3 $1.87 v $1.63e, R$523M v $495Me; -10.1% afterhours
SFLY: Reports Q4 $2.63 v $2.73e, R$561.2M v $586Me; To restructure in 2017; Guides Q1 GAAP -$1.00 to -$0.95 to $ v -$0.87e, R$185-190M v $199Me, gross margin 37-37.5%; -18.0% afterhours
M Said to be open to a sale to prevent shakeup of the Board – NY Post
Asia Key economic data:
(AU) AUSTRALIA DEC TRADE BALANCE (A$): 3.5B (record surplus) V +2.0BE
(AU) AUSTRALIA DEC BUILDING APPROVALS M/M: -1.2% V -1.5%E; Y/Y: -11.4% (4th stragith decline) V -10.8%E
(KR) SOUTH KOREA JAN CPI M/M: 0.9% V 0.3%E; Y/Y: 2.0% V 1.5%E (highest annual pace since Oct 2012)
(NZ) NEW ZEALAND JAN ANZ JOB ADVERTISEMENTS M/M: -0.2% V +1.4% PRIOR
Asia Session Notable Observations, Speakers and Press
Investors digest FOMC statement as the US yield curve steepens; While the Fed is more convinced about inflation reaching 2% target in the near term, there were no direct signals of March rate hike, prompting some modest USD selling.
Fears of a Trump-led trade and FX war continue to reverberate across the globe after reports of a tense call between Trump and Australia’s Turnbull regarding refugee agreement made between the countries’ leaders under Obama.
AUD rises to 2 1/2-month high as Australia terms of trade hits a record high amid recent rise in prices of iron ore and coal; Components showing value of shipments to China at record high, Iron ore at highest since Apr 2014, and Coal at highest since Nov 2008. Exports remained robust with 5% increase, though down from 8% prior. Conversely, Aussie building approvals contracted y/y for the 4th straight month, as analysts declare the peak in the housing market coming in 2016.
Korea CPI y/y rises to its best levels since late 2012 and finally within BOK’s target range for the first time in 39 months; Stats Bureau attributes rise in prices to food and gasoline inflation.
China:
(CN) China Stats Bureau economist: Latest PMI data showed over 40% of business owners experienced some weak market demand along with cash and labor shortages – Shanghai Daily
(CN) According to Economic Policy Institute (EPI) report trade with China has cost 3.4M US jobs from 2001-2015 – SCMP
Japan:
(JP) Japan PM Abe: Generally not desirable for US and Japan leaders to talk forex at summits
(JP) Japan Center for Econ Research (JCER): Japan Dec GDP estimated at -0.5% m/m (first drop in four months) – Nikkei
Australia/New Zealand:
(AU) RBC economist: Last 4 months’ of building approvals affirms the view that Australia housing market peaked in 2016 – AFR
(NZ) New Zealand PM English: Will continue to advocate for free trade – State of the Nation
Asian Equity Indices/Futures (00:00ET)
Nikkei -0.9%, Hang Seng -0.7%, Shanghai Composite closed, ASX200 -0.1%, Kospi flat
Equity Futures: S&P500 -0.3%; Nasdaq -0.4%; Dax -0.3%; FTSE100 -0.3%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.0760-1.0795; JPY 112.50-113.40; AUD 0.7580-0.7650; NZD 0.7240-0.7310
Apr Gold +0.7% at $1,218/oz; Mar Crude Oil -0.6% at $53.58/brl; Mar Copper +0.3% at $2.72/lb
GLD: SPDR Gold Trust ETF daily holdings rise 10.6 tonnes to 809.7 tonnes; first rise since Jan 21st
SLV: iShares Silver Trust ETF daily holdings fall to 10,414 tonnes from 10,444 tonnes prior
JGB: (JP) Japan MoF sells ¥2.17T in 10-yr 0.1% JGBs; Avg yield: 0.087% v 0.056% prior; bid to cover: 3.62x v 3.59x prior
Asia equities/Notables/movers by sector
Consumer discretionary: TAH.AU Tabcorp -5.5% (H1 result); 6952.JP Casio Computer Co -5.1% (9-month result); 9697.JP Capcom Co -9.1% (9-month result)
Consumer staples: 4967.JP Kobayashi Pharmaceutical Co +2.0% (FY16 result)
Financials: VCX.AU Vicinity Centres -1.2% (Jefferies cuts rating)
Industrials: DOW.AU Downer EDI +13.0% (H1 result); CSR.AU CSR -2.0% (JPMorgan cuts rating); GUD.AU GUD Holdings -0.9% (JPMorgan cuts rating); 7013.JP IHI Corp +2.3% (9-month result); 6501.JP Hitachi Ltd +2.0% (9-month result); 5202.JP Nippon Sheet Glass -8.8% (private placement)
Materials: 4186.JP Tokyo Ohka Kogyo -6.9% (9-month result); 3861.JP OJI Holdings Corp -1.2% (9-month result speculation)
Energy: 010950.KR S-Oil Corp +1.4% (Q4 result)
Healthcare: VRT.AU Virtus Health -2.2%; 4519.JP Chugai Pharmaceutical +10.4% (guidance); 6849.JP Nihon Kohden Corp -8.5% (9-month result)
Telecom: VOC.AU Vocus +4.5% (Macquarie initiates Outperform); 032640.KR LG Uplus Corp +3.6% (Q4 result)
