Falling oil prices continued to weigh on inflation in Japan

Asian Mid-session Update: Japan upgrades industrial output while CPIs hit fresh multi-month lows

Economic Data

- (JP) JAPAN DEC NATIONAL CPI Y/Y: 2.4% V 2.3%E; CPI EX FRESH FOOD Y/Y: 2.5% (9-month low) V 2.6%E

- (JP) JAPAN JAN TOKYO CPI Y/Y: 2.3% V 2.2%E; CPI EX FRESH FOOD Y/Y: 2.2% (10-month low) V 2.2%E

- (JP) JAPAN DEC OVERALL HOUSEHOLD SPENDING Y/Y: -3.4% V -2.3%E; 9th month of decline

- (JP) JAPAN DEC VEHICLE PRODUCTION Y/Y: -2.5% V -12.2% PRIOR

- (JP) JAPAN DEC PRELIMINARY INDUSTRIAL PRODUCTION M/M: 1.0% V 1.2%E; Y/Y: 0.3% V 0.3%E

- (JP) JAPAN DEC JOBLESS RATE: 3.4% V 3.5%E (lowest since Aug 1997); Job to applicant ratio 1.15 v 1.12e

- (AU) AUSTRALIA DEC PRIVATE SECTOR CREDIT M/M: 0.5% V 0.5%E; Y/Y: 5.9% V 5.9%E

- (AU) AUSTRALIA Q4 PPI Q/Q: 0.1% V 0.2% PRIOR; Y/Y: 1.1% V 1.2% PRIOR

- (NZ) New Zealand Dec M3 Money Supply Y/Y: 6.3% v 5.8% Prior

- (SG) SINGAPORE Q4 PRELIMINARY UNEMPLOYMENT RATE: 1.9% V 2.0%E

- (SG) Singapore Dec Credit Card Bad Debts (SGD): 23.5M v 24.7M Prior; Credit Card Billings: 4.37B v 3.82B Prior

- (KR) SOUTH KOREA DEC INDUSTRIAL PRODUCTION M/M: 3.0% V 0.9%E; Y/Y: +0.4% V -1.7%E

- (KR) SOUTH KOREA DEC CYCLICAL LEADING INDEX CHANGE: 0.2% v 0.0% PRIOR

Index Snapshot (as of 03:30 GMT)

- Nikkei225 +0.8%, S&P/ASX +0.9%, Kospi flat, Shanghai Composite -1.0%, Hang Seng -0.1%, Mar S&P500 -0.3% at 2,012

Commodities/Fixed Income

- Apr gold +0.4% at $1,261, Mar crude oil +0.1% at $44.57/brl, Mar copper -0.5% at $2.44/lb

- GLD: SPDR Gold Trust ETF daily holdings rise 5.7 tonnes to 758.4 tonnes; highest since Oct 16th

- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, ¥400B in 5-10yr JGBs and ¥2.5T in T-bills

- (AU) Australia MoF (AOFM) sells A$700M in 2.75% bonds due 2024; Avg yield: 2.4315%; Bid-to-cover: 3.84x

- (US) Weekly Fed Balance Sheet Total Assets for week ending Jan 28th: $4.50T v $4.51T prior; M1 y/y change: 9.5% v 9.4% w/w; M2 y/y change: 5.8% v 5.8% w/w

Market Focal Points/FX

- Falling oil prices continued to weigh on inflation in Japan, sending core nationwide and Tokyo CPIs to 9- and 10-month lows respectively. Analysts are speculating that eventually, lower energy costs will translate into higher spending, but that development is yet to materialize. Meanwhile, Japan is approaching the consumption tax hike rolloff in April, which could send annual CPI levels back to negative territory and further dampen Abenomics objective of 2% inflation target. Recall a recent Nikkei survey has already stated that some 60% of respondents do not believe Abenomics policies had any significant impact on economy. Other economic datapoints in Japan were similarly troubling. Household consumption fell y/y for the 9th straight month, and Industrial Output missed consensus, which did not stop the govt from raising economic assessment on production to "gradually recovering". The skeptical disconnect between soft economic data and upbeat govt sentiment is translating into a USD/JPY retreat - the pair is down some 60pips from the highs below 117.90.

- Going into next week's RBA policy decision, analysts appear to be increasingly divided on whether the Aussie central bank will cut rates or simply shift to a much more dovish stance, particularly in light of the much more accommodative than anticipated position adopted this week by the RBNZ. AUD/USD briefly fell 25pips to 0.7760 on reports that nearly half of surveyed economists see RBA cutting rates by as early as March and a quarter expect a cut next month. Treasurer Hockey said noted markets and economy need to adjust to falling AUD, adding that a flexible economy can actually benefit from currency weakness.

- Shanghai Composite is down for the 4th straight day and on pace for its first lower weekly close in 10 weeks, as headwinds from recent scrutiny into margin trading are finally translating into more tangible retreat. According to a survey, fund managers reduced their suggested equity allocation for the next three months to 82.8% from 85.9%, and increased their suggested bond allocation to 6.8% from 5.1% in the prior month. Separately, Ministry of Finance reported 2014 Fiscal Spending rose 8.2%, while Revenue was up 8.6%. A-shares are down 1% on the day going into the final hour of trading.

Equities

US markets:

- ICPT: Receives breakthrough therapy designation From FDA for Obeticholic Acid for Nonalcoholic Steatohepatitis (NASH) with Liver Fibrosis; +28.9% afterhours

- GIMO: Reports Q4 $0.18 v $0.08e, R$51.3M v $43.1Me; +18.4% afterhours

- SYNA: Reports Q2 $1.46 v $1.22e, R$464M v $448Me; +12.7% afterhours

- AMZN: Reports Q4 $0.45 v $0.24e, R$29.3B v $29.8Be; Amazon Prime global membership +53% in 2014; +12.2% afterhours

- MTW: To split into Two independent companies, Cranes and Foodservices businesses; +8.4% afterhours

- BIIB: Reports Q4 $3.74 v $3.76e, R$2.64B v $2.65Be; +7.4% afterhours

- QLGC: Reports Q3 $0.36 v $0.28e, R$140.2M v $138Me; +7.2% afterhours

- NGVC: Reports Q1 $0.16 v $0.14e, R$146M v $143Me; +6.8% afterhours

- V: Reports Q1 $2.53 v $2.50e, R$3.38B v $3.34Be; To split stock 4 for 1, effective March 19th; +4.6% afterhours

- EMN: Reports Q4 $1.64 v $1.54e, R$2.35B v $2.33Be; Guides FY15 EPS "similar to 2014" (~$7.07 v $7.43e); +2.0% afterhours

- BRCM: Reports Q4 $0.76 v $0.87e, R$2.14B v $2.12Be; +1.7% afterhours

- GOOG: Reports Q4 $6.88 v $7.13e, R$14.5B v $14.8Be; +1.5% afterhours

- LUK: Macquarie Group said to be in talks to acquire Jefferies commodities and financial derivatives unit Pru Bache; Terms not disclosed - press; flat afterhours

- MCHP: Reports Q3 $0.64 v $0.62e, R$536M v $526Me; -0.8% afterhours

- SCSC: Reports Q2 $0.68 v $0.66e, R$807.0M v $795Me; -2.5% afterhours

- GDOT: Reports Q4 $0.16 v $0.17e, R$150.6M v $151Me; -4.3% afterhours

- DECK: Reports Q3 $4.50 v $4.52e, R$784.7M v $811Me; -14.3% afterhours

- SHAK: Confirms to price 5M shares of IPO at $21/shr, above $17-19/shr expected range

Notable movers by sector:

- Financials: Shizuoka Bank 8355.JP +2.4% (9-month results); Sumitomo Mitsui Trust Holdings 8309.JP +2.2% (9-month results); Shinsei Bank 8303.JP +5.4% (9-month results); ORIX Corp 8591.JP -3.1% (9-month results)

- Materials: Newcrest Mining NCM.AU +0.2% (Q2 production results); BC Iron BCI.AU -3.1% (Q2 production results); Whitehaven Coal WHC.AU

-3.7% (H1 results); Nippon Steel & Sumitomo Metal Corp 5401.JP -3.4% (9-month results); RUSAL 486.HK +1.2% (FY14 production results)

- Energy: Tohoku Electric 9506.JP +3.2% (9-month results)

- Industrials: China Shipping Container 2866.HK +2.1% (FY14 guidance); China Automation Group 569.HK -8.0% (FY14 guidance); Fuji Electric Holding 6504.JP +3.3% (9-month results); Daihatsu Motor 7262.JP +3.1% (9-month results); Yamato Holdings 9064.JP +6.5% (9-month results)

- Technology: Toshiba Corp 6502.JP +3.7% (9-month results); NEC Corp 6701.JP -6.4% (9-month results); Kyocera Corp 6971.JP -2.9% (9-month results)

- Telecom: Softbank 9984.JP -3.3% (Alibaba Q4 results)