China sees only modest rally on PBoC RRR cut

Economic Data

- (AU) AUSTRALIA DEC RETAIL SALES M/M: 0.2% V 0.3%E; Q4 Q/Q: 1.5% v 1.1%E

- (AU) AUSTRALIA DEC HIA NEW HOME SALES M/M: -1.9% V +2.2% PRIOR (1st decline in 5 months)

- (PH) PHILIPPINES JAN CPI M/M: 0.4% V 0.0%E; Y/Y: 2.4% V 2.3%E; CPI CORE Y/Y: 2.2% V 1.8%E

- (TW) TAIWAN JAN CPI Y/Y: -0.9% V +0.3%E; WPI Y/Y: -7.6% V -5.0%E

Index Snapshot (as of 03:30 GMT)

- Nikkei225 -1.0%, S&P/ASX +0.4%, Kospi -0.8%, Shanghai Composite +1.0%, Hang Seng +0.4%, Mar S&P500 -0.2% at 2,026

Commodities/Fixed Income

- Apr gold +0.6% at $1,272, Mar crude oil +0.5% at $48.69/brl

- GLD: SPDR Gold Trust ETF daily holdings rise 3.0 tonnes to 767.9 tonnes; highest since Oct 1st

- JGB: (JP) Japan MoF sells ¥0.55B in 1.5% (1.5% prior) 30-yr notes; Avg yield: 1.464% v 1.123% prior; Bid to cover: 2.67x v 3.57x prior

- (CN) PBoC to inject CNY30B in 28-day reserve repos (5th consecutive injection); Injects net CNY90B this week v injected CNY55B prior (3rd week of injection)

- (JP) Japan investors net bought ¥675.2B in foreign bonds v bought ¥44.2B in prior week; Foreign investors sold net ¥104.8B in Japan stocks v bought ¥464.8B in prior week

Market Focal Points/FX

- The muted response in China markets following the overnight 50bp RRR cut by the PBoC speaks to the extent to which this easing has been anticipated in the recent run-up. Shanghai Composite opened up 2.4% but has entered its break up only 1%. In contrast, the rate cut in November sparked a 7% rally. In notable local press, China Daily said the cut is unlikely to reverse property market correction, CICC remarked financials would be the main beneficiaries of earlier than expected RRR move, and a separate report called for a more proactive fiscal policy to accompany monetary stimulus.

- Renewed concerns over the implications of political transition in Greece helped constrain a 2-day rally. ECB announced it will restrict Greek banks' access to cash by preventing use of junk-rated government debt as collateral for loans, citing uncertainty about a successful conclusion of Greek program review. Greece Finance Ministry response sought to restore confidence, stating the banking system remains fully protected through access to ELA funding. EUR/USD, which fell 130pips following the ECB report to $1.13 low, recovered to $1.1350 in the afternoon session.

- In Japan, shares of Sony were up as much as 15% after the company beat Q3 estimates and raised its FY projections. Toyota was down slightly despite a Q3 beat of its own, with much of the gains attributed to favorable FX rates, as the world's top automaker lowered its FY15 global sales outlook by 0.5% to 9M cars. Separately, Japan's 30-year JGB auction saw soft demand just as the 10-year did earlier in the week, and BOJ Gov Kuroda expressed some alarm over the impact of low oil prices on rapid decline in overall CPI. USD/JPY sold off as low as ¥117 before retracing to ¥117.40.

Equities

US markets:

- SMRT: Announces $5.00/shr Special Dividend (35% indicated yield) and $275 Million Credit Facility; +20.1% afterhours

- GLUU: Reports Q4 $0.11 v $0.02e, R$72.9M v $63.5Me; +14.6% afterhours

- DATA: Reports Q4 $0.42 v $0.11e, R$142.9M v $122Me; +14.2% afterhours

- AGN: Reports Q4 $2.17 v $1.81e, R$1.91B v R$1.7B y/y; +3.0% afterhours

- BGC: Reports Q4 $0.15 v $0.20e, R$1.55B v $1.48Be; +2.4% afterhours

- YUM: Reports Q4 $0.61 v $0.65e, R$4.00B v $3.91Be; +1.0% afterhours

- ORLY: Reports Q4 $1.76 v $1.67e, R$1.76B v $1.74Be; Announces additional $500M (2.5% of market cap) share repurchase authorization; +0.2% afterhours

- NFLX: Confirms to launch in Japan this fall; flat afterhours

- UA: Reports Q4 $0.40 v $0.39e, R$895M v $848Me; Acquires Endomondo And MyFitnessPal; -1.5% afterhours

- ALL: Reports Q4 $1.72 v $1.67e, R$ v $7.64Be; Raises dividend 7.1% to $0.30/shr; Adds $3B to buyback plan (about 10% of market cap); -2.7% afterhours

- PRU: Reports Q4 $2.12 v $2.38e, R$15.8B v $12.4Be; -3.1% afterhours

- GIL: Reports Q1 -$0.31 (adj) v -$0.03e, R$390.6M v $401Me; Announces 2-for-1 stock split; Acquires all of the assets of Comfort Colors for $100M; -4.0% afterhours

- FOXA: Reports Q2 $0.53 v $0.44e, R$8.06B v $7.40Be; raises dividend 20%; -5.5% afterhours

- GMCR: Reports Q1 $0.88 v $0.89e, R$1.39B v $1.50Be; -7.5% afterhours

- NXPI: Reports Q4 $1.35 v $1.32e, R$1.54B v $1.52Be

- WFT: Reports Q4 $0.32 v $0.32e, R$3.73B v $3.91Be

- DLPH: Reports Q4 $1.32 ex item v $1.26e, R$4.15B v $4.22Be

Notable movers by sector:

- Consumer Discretionary: SEEK Ltd SEK.AU -1.7% (CFO to step down); Echo Entertainment Group EGP.AU +5.3% (H1 results); Kao Corp 4452.JP +3.0% (FY14 results)

- Consumer staples: Shenguan Holdings Group 829.HK -2.6% (profit warning)

- Financials: FlexiGroup FXL.AU +11.8% (H1 results); National Australia Bank NAB.AU +0.6% (Q1 update); China Merchants Properties 000024.CN +5.5%, China Vanke 000002.CN +2.8%, Poly Real Estate 600048.CN +3.6%, CITIC Securities 600030.CN +2.2% (PBoC cuts RRR rate)

- Materials: Ramelius Resources RMS.AU +3.9% (H1 results); Sojitz 2768.JP +1.3% (9-month results)

- Energy: China LNG Group 931.HK +3.1% (FY14 guidance)

- Industrials: Downer EDI DOW.AU -4.6% (H1 results); Mazda Motor Corp 7261.JP -2.0% (9-month results); Toyota Motor Corp 7203.JP -1.0% (Q3 results); Hitachi Ltd 6501.JP -10.0% (9-month results); Asahi Kasei Corp 3407.JP -1.5% (9-month results)

- Technology: Sony Corp 6758.JP +13.3% (Q3 results)