WTI crude falls another 1% after large API build
Asia Mid-Session Market Update: PBOC skips reverse repos again while weakening Yuan fix; WTI crude falls another 1% after large API build
US Session Highlights
(US) DEC TRADE BALANCE: -$44.3B V -$45.0BE
(US) Fed’s Kashkari (dove, voter): would prefer to err on side of being too loose than too tight; sees no immediate risks to financial stability; inflation expectations remain well anchored
(US) Atlanta Fed cuts Q1 GDP forecast to 2.7% from 3.4% on 2/1
GM shares slump despite solid Q4 financial results amid slide in margins and rising inventories
US markets on close: Dow +0.2%, S&P500 flat, Nasdaq +0.2%
Best Sector in S&P500: Consumer Staples
Worst Sector in S&P500: Energy
Biggest gainers: TDG +6.5%, CNC +5.3%, NOV +4.9%, EMR +4.5%, CHD +4.0%
Biggest losers: KORS -10.8%, FMC -6.0%, MSI -5.4%, VMC -4.9%, GM -4.7%
At the close: VIX 11.3 (-0.1pts); Treasuries: 2-yr 1.17% (+2bps), 10-yr 2.39% (-2bps), 30-yr 3.02% (-3bps)
US movers afterhours
COHR: Reports Q1 $2.57 ex-items (unclear if comp) v $1.79e, R$346.1M v $318M; +13.2% afterhours
MCHP: Reports Q3 $1.05 v $0.90e, R$881.2M v $850Me; Guides Q4 $1.01-1.11 v $0.93e, R$872-908M v $862Me; +9.9% afterhours
CTB: Cooper Tire to join MidCap 400; Hersha to replace WCI Communities in SmallCap 600, after the close Feb 10th; +3.3%; HT +5.9% afterhours;
TIME: Meredith, Bronfman-led investor group said to be advancing in pursuit of Time Inc – press; +2.9% afterhours
PNRA: Reports Q4 $2.05 v $2.00e, R$727M v $728Me; +2.6% afterhours
MDLZ: Reports Q4 $0.47 v $0.49e, R$6.77B v $6.87Be; +1.9% afterhours
DIS: Reports Q1 $1.55 v $1.48e, R$14.8B v $15.3Be; -0.6% afterhours
TTWO: Reports Q3 -$0.33 (gaap) v $0.37e (unclear if comp), R$476.5 v $715Me (2 est); -1.3% afterhours
AKAM: Reports Q4 $0.72 v $0.68e, R$616M v $606Me; -3.7% afterhours
BWLD: Reports Q4 $0.87 v $1.23e, R$494.2M v $515Me; -4.6% afterhours
GILD: Reports Q4 $2.70 v $2.43e, R$7.22B v $7.17Be; Increases dividend 10% to $0.52/shr from $0.47; -5.3% afterhours
Z: Reports Q4 $0.14 v $0.13e, R$227.6M v $169.4M y/y; Guides initial FY17 R$1.03-1.05B v $1.07Be; -7.2% afterhours
USNA: Reports Q4 $0.87 v $0.90e, R$253M v $251Me; Discloses internal investigation of China operations; -20.7% afterhours
Politics
(US) 9th Circuit Court of Appeals said to have indicated a ruling on Pres Trump’s travel ban today is unlikely; Ruling to come some time this week – press
(US) As expected, VP Pence breaks 50-50 deadlock in US Senate, confirming Education Sec nominee Devos
Asia Key economic data:
(CN) CHINA JAN FOREIGN RESERVES: $2.998T V $3.004TE (7th consecutive decline and falls below $3T for first time since Feb 2011) (overnight)
(JP) JAPAN DEC BOP CURRENT ACCOUNT TOTAL: ¥1.1T V ¥1.2TE; ADJ CURRENT ACCOUNT TOTAL: ¥1.7T V ¥1.7TE; TRADE BALANCE BOP BASIS: ¥807B V ¥739BE
(TW) TAIWAN JAN CPI Y/Y: 2.3% V 2.0%E; WPI Y/Y: 2.7% V 1.5%E
(NZ) New Zealand Jan ANZ Truckometer Heavy (heavy traffic) M/M: -0.8% v -0.1% prior; 2nd straight decline
Asia Session Notable Observations, Speakers and Press
Lack of momentum in US indices continues to be felt in Asia, where indices were once again mixed and volatility contained. Australia is the worst performer with Energy sector under heavy pressure – WTI oil fell below $52/brl in US hours and then fell another 1% in electronic session after API crude inventories report was 5x the expected build and also the 2nd biggest on record.
Mainland China markets are taking the 6-year low just below $3T in FX reserves released overnight in stride, with the main index down marginally. BoCom researcher said reserves of about $2T are appropriate given China’s floating exchange rate system. Similarly, overnight China FX regulator SAFE said FX reserves are ample, and fluctuations in forex reserves are normal.
Separately, PBoC weakened Yuan slightly more aggressively, with the lowest CNY setting in over 2 weeks. PBoC also skipped reverse repo operations for the 4th straight session, though reiterated that banking system liquidity is at high level. Likewise overnight, PBOC research said the OMO are influenced by market forces, and last week’s 10bp increase in offer rates should not be interpreted as tightening.
BOJ’s summary of opinion from the latest meeting touched on the familiar themes, affirming commitment to YCC policy despite the rising US rates with an eye on risks from Brexit and Trump policy uncertainties. As reflected in the statement, BOJ was more upbeat on developments in exports, consumption and capex.
China:
(CN) China Information Daily: PBOC has no conditions for interest rate hike; will focus on flexible monetary policy
(CN) Bank of Communications (BoCom) researcher Liu Jian: China FX reserves of about $2T are appropriate – Chinese press
Japan:
(JP) Japan Chief Cabinet Sec Suga: Japan does make large investments into the US
Australia/New Zealand:
(NZ) New Zealand Fin Min Joyce: Budget to be presented on May 25th
(NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +1.3% v +0.6% prior; 2nd straight increase
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.2%, Hang Seng -0.1%, Shanghai Composite -0.3%, ASX200 +0.5%, Kospi -0.5%
Equity Futures: S&P500 flat; Nasdaq flat; Dax +0.1%; FTSE100 +0.1%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.0665-1.0690; JPY 112.05-112.55; AUD 0.7610-0.7640; NZD 0.7285-0.7315
Apr Gold -0.1% at $1,235/oz; Mar Crude Oil -1.0% at $51.60/brl; Mar Copper +1.1% at $2.67/lb
(US) Weekly API Oil Inventories: Crude: +14.2M v +5.8M prior; 5x bigger expected, 3rd straight build; largest build since Feb 2015 and 2nd largest build on record
SPDR Gold Trust ETF daily holdings rise 8.2 tonnes to 826.9 tonnes; 5th consecutive increase; Highest since Dec 20th
(CN) PBOC SETS YUAN MID POINT AT 6.8849 V 6.8604 PRIOR; weakest setting since Jan 17th
(CN) China MoF sells 1-yr bonds at 2.78% v 2.78%e, bid-to-cover 1.8x; 10-yr bonds at 3.4% v 3.46%e, bid-to-cover 4.08x
(CN) PBOC skips reverse repo operations (4th consecutive day)
(JP) Japan Finance Ministry MOF: Foreign investors sold ¥119.2B in Japan stocks; bought ¥1.68T in japan bonds in Dec.
(AU) Australia MoF sells A$800M in 3.25% 2029 bonds; avg yield 2.8922%; bid-to-cover 2.48x
Asia equities/Notables/movers by sector
Consumer discretionary: 1929.HK Chow Tai Fook Jewellery Group -1.0%, 178.HK SA SA International Holdings -0.9% (Chinese New Year SSS); 2269.JP Meiji Holdings Co. -0.6% (9-month result)
Financials: 1918.HK Sunac China Holdings +5.6% (Jan result); 6837.HK Haitong Securities -0.7% (Jan result); SCP.AU Shopping Centres Australasia Property Group -2.2% (JPMorgan cuts rating); GMA.AU Genworth Mortgage Australia -14.7% (FY16 result)
Industrials: 6504.JP Fuji Electric Holding -2.5%; CIM.AU CIMIC Group +8.0% (H1 result); 7003.JP Mitsui Engineering & Shipbuilding Co -8.3% (9-month result)
Technology: CAR.AU Carsales.com limited +8.1% (H1 result); 9613.JP NTT Data Corp -5.0% (9-month result); 5201.JP Asahi Glass Co +8.5% (FY16 result)
Materials: 3405.JP Kuraray Co -5.8% (FY16/17 result)
Energy: 5019.JP Idemitsu Kosan Co -3.7% (9-month result)
Healthcare: 2784.JP Alfresa Holdings Corp +1.1% (9-month result)
Utilities: TCL.AU Transurban -2.2% (Morgans Financial cuts rating); 6841.JP Yokogawa Electric Corp -8.0% (9-month result)
