Sharp zooming as it tilts toward improved Hon Hai injection

Asian Market Update: Australia leads the rally as materials giants soar; Sharp zooming as it tilts toward improved Hon Hai injection

Economic Data

- (AU) AUSTRALIA Q4 NAB BUSINESS CONFIDENCE: 4 V 1 PRIOR

- (TH) Thailand Jan Consumer Confidence: 75.5 v 76.1 prior; Consumer Confidence Economy: 64.4 v 65.1 prior

Index Snapshot (as of 04:30 GMT)

- Nikkei225 -0.2%, S&P/ASX +2.1%, Kospi +1.2%, Shanghai Composite +1.1%, Hang Seng +1.5%, Mar S&P500 +0.6% at 1,920

Commodities/Fixed Income

- Apr gold -0.1% at $1,140/oz, Mar crude oil +1.1% at $32.63/brl, Mar copper +0.8% at $2.11/lb

- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.5419 V 6.5521 PRIOR; strongest setting since Jan 6th; 19th straight firmer setting relative to Close

- (CN) PBoC to inject CNY80B in 14-day reverse repos and CNY70B in 28-day reverse repos

- GLD: SPDR Gold Trust ETF daily holdings rise 4.5 tonnes to 690.1 tonnes; highest since Nov 1st

- SLV: iShares Silver Trust ETF daily holdings fall from 9,622 tonnes from 9,610 tonnes; multi-year low

- (JP) Japan investors sold net ¥85.4B in foreign bonds v bought net ¥475B in prior week; Foreign investors sold net ¥364B in Japan stocks v sold ¥189B in Japan stocks in prior week

Market Focal Points/FX

- Asian equity markets are generally higher with most pronounced gains in Australia and the materials space. Shares of BHP and Rio Tinto are up over 8%, while Woodside Petroleum up over 5%, tracking an abrupt upward inflection in the latter part of the US session. Some of the catalysts discussed include realization that the Fed may not be particularly aggressive, particularly after New York Fed's Dudley said board members will take deterioration in financial markets more seriously if tightening in financial conditions continues. Goldman Sachs also revised view on the next Fed rate hike to June from March. Oil prices were also up nearly 10% on reports that Venezuela, Russia, and Iran have endorsed an emergency meeting. USD majors are consolidating across-the-board declines of the US session, with USD/JPY in 117.70-118.20 range, AUD/USD in 0.7150-90 range, and NZD/USD in $0.6640-80 band.

- In China, PBOC research bureau chief Lu said the room for monetary policy is relatively small given the risk of cuts in RRR or interest rates fueling financial risk accumulation and outflow pressure. Lu added there were increasing risks in corporate debt space. Overnight, China State Planner NDRC Chairman Xu reiterated the govt view to maintain economic growth within a reasonable range of 6.5-7.0%, also warning that Q1 GDP is typically slower.

- In Japan, BOJ Gov Kuroda continued to defend the latest negative rate policy, pledging to monitor the bond market while adding there is little risk of negative rate policy thwarting JGB purchases. Kuroda reiterated there was no limit to QQE and that BOJ will not hesitate to ease policy further. He also noted that while he does not think banks will pass on costs of negative rate policy to retail customers, it was impossible to rule out the chance of negative rates on deposits. Earlier, a Nikkei report speculated the BOJ will limit the scope of negative interest rates to ¥30T of banks' current account deposits. Also of note in Japan, shares of Sharp were up over 20% late in the session after a NHK report the company is leaning in favor of a restructuring offer from Hon Hai, speculated to have been increased to ¥700B from ¥650B. Despite the company's aversion, this appears to be a much more attractive offer than that from INCJ, which is only about half the amount and would likely come with conditions of management change. Sharp responded to speculation noting it has not made a final decision, will hold meetings with both, and come to conclusion in the coming weeks.

- Elsewhere, New Zealand central bank's McDermott said NZD needs to be sustainably lower than where it is, sending NZD to session low of 0.6640. McDermott did suggest that while medium-term inflation expectations have fallen, they are still near 2% target. In Korea, Fin Min Yoo said current conditions dont seem to require an extra budget following overnight announcement of a new fiscal stimulus of KRW2T for Q1.

Equities

US equities/ADRs:

- VHC: Apple ordered to pay $625.6M over patent infringement - press; +89.8% afterhours

- GLUU: Reports Q4 $0.02 v -$0.03e, R$57.9M v $49.8Me; approves $50M buyback; +29.4% afterhours

- CBS: Promotes CEO Moonves as Chairman; +4.1% afterhours

- BWLD: Reports Q4 $1.32 v $1.47e, R$490.2M v $509Me; +1.1% afterhours

- ALL: Reports Q4 $1.60 v $1.31e, R$8.69B v $8.01Be; +0.6% afterhours

- MOS: Announces phosphate production curtailments, to reduce production by up to 400K (20% quarterly phosphate sales volume); +0.4% afterhours

- YUM: Reports Q4 $0.68 v $0.66e, R$3.95B v $4.00Be; +0.4% afterhours

- MET: Reports Q4 $1.23 v $1.36e, R$17.1B v $17.4Be; -2.3% afterhours

- DHT: Reports Q4 $0.31 v $0.31e, R$80.0M v $78.5Me; -5.4% afterhours

- GPRO: Reports Q4 -$0.08 v $0.01e, R$437M v $455Me; names new CFO effective Mar 11; -8.7% afterhours

Notable movers by sector:

- Consumer discretionary: Wanda Cinema 002739.CN +2.9% (Jan result) Panasonic Corporation 6752.JP -8.7% (Q3 result); SK Networks 001740.KR +5.4% (Q4 result); Ansell ANN.AU -19.8% (H1 result)

- Financials: Vanke 2202.HK +2.3% (Jan result); Macquarie Group MQG.AU -4.1% (Q3 result)

- Industrials: Guangzhou Automobile Group 2238.HK +5.2% (Jan result); Geely Automobile Holdings 175.HK +2.4% (Jan result); Hitachi Ltd 6501.JP -9.6% (9-month result); Downer EDI DOW.AU +7.8% (H1 result)

- Technology: Lenovo 992.HK +3.3% (Q3 result); Tencent 700.HK +0.5% (partnership with ESPN) Sharp 6753.JP +13.1% (speculation on choosing Hon Hai's rescue plan); Toshiba Corporation 6502.JP +4.4% (speculation on earnings forecasts); Sumitomo Electric Industries 5802.JP +4.5% (9-month result)

- Materials: South32 S32.AU +15.0% (restructuring plan); Programmed Maintenance Services PRG.AU -34.3% (guidance); CIMIC Group CIM.AU %+4.4% (amended offer)

- Energy: JX Holdings 5020.JP +3.6% (9-month result); AGL Energy AGL.AU +1.4% (strategic decision)

- Healthcare: Eisai Co 4523.JP -0.4% (new agreement); Takeda Pharmaceutical Co 4502.JP -1.9% (9-month result)