Nikkei tumbles again with dollar pressured ahead of Yellen testimony

Asian Market Update: Nikkei tumbles again with dollar pressured ahead of Yellen testimony; Australia's consumer confidence improves and CBA posts strong results even as ASX200 enters bear market

Economic Data

- (AU) AUSTRALIA DEC HIA NEW HOME SALES M/M: +6.0% (2-year high) V -2.7% PRIOR

- (AU) AUSTRALIA FEB WESTPAC CONSUMER CONFIDENCE INDEX: 101.3 (3-month high) V 97.3 PRIOR, M/M: +4.2% V -3.5% PRIOR

- (NZ) NEW ZEALAND JAN RETAIL CREDIT CARD SPENDING M/M: 0.3% V 0.3%E; TOTAL M/M: 0.6% V 0.1%E

- (JP) JAPAN Q4 HOUSING LOANS Y/Y: 2.2% V 2.4% PRIOR

- (JP) JAPAN JAN PPI M/M: -0.9% V -0.7%E; Y/Y: -3.1% (smallest decline in 6 months) V %-2.8%E

- (PH) Philippines Dec Exports: $4.7B v $5.1B prior; Y/Y: -3.0% v +1.0%e

Index Snapshot (as of 04:30 GMT)

- Nikkei225 -2.4%, S&P/ASX -1.4%, Kospi closed, Shanghai Composite closed, Hang Seng closed, Mar S&P500 -0.3% at 1,842

Commodities/Fixed Income

- Apr gold -0.6% at $1,191/oz, Mar crude oil +1.9% at $28.48/brl, Mar copper -0.3% at $2.03/lb

- GLD: SPDR Gold Trust ETF daily holdings fall 1.5 tonnes to 702.0 tonnes; first decline after 6 straight increases

- (US) API Petroleum Inventories: Crude: +2.4M v +3.8M prior; 4th straight week of build

- (JP) BOJ offers to buy ¥450B in 5-10yr JGBs, ¥260B in 10-25yr JGBs and ¥180B in JGBs with maturity over 25-yr

- (AU) Australia MoF (AOFM) sells A$600M in 4.25% 2026 Bonds; avg yield: 2.4382% v 2.755% Jan 12th; bid-to-cover: 3.15x v 2.82x on Jan 12th

Market Focal Points/FX

- Japan and Australia markets are trading notably lower yet again, even though the losses are somewhat less pronounced than overnight. Declines in Tokyo are heavier again, with USD remaining on the back foot against the yen as traders anticipate a considerably more dovish set of remarks from Fed Chair Yellen in Congress tomorrow. Recall the last FOMC statement renewed concerns with global market volatility, stating "Committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation". This round of talks from Yellen should allow her the opportunity to temper the official Fed projections of 4 rate hikes this year when the future markets is hardly pricing in any tightening. USD/JPY was down about 100pips from Asia session highs below 114.30, EUR/USD consolidates its thrust higher in US hours above 1.1280, while AUD/USD is contained to a 40pip range above 0.7040 despite some more benign economic data.

- Australia house sales growth rate rose to a 2-year, while Westpac Consumer Confidence rebounded to a 3-month high. Westpac economist noted there has been little net movement in either share markets or the oil price in January, and the improved number is indicative of respondents' relief that markets did not follow on from the steep declines. Australia earnings is also in a higher gear - most notably CBA is up nearly 2% as profits rose to A$4.8B v A$4.6B y/y. Accompanying metrics were somewhat softer, as NIMs fell to 2.06% v 2.11% y/y and ROE to 17.2% v 18.6% y/y. Nevertheless, ASX200 is at a 2 1/2 year low and in a "bear market", with oil names particularly softer on lower oil prices in US hours.

- Among notable speakers, Japan's new Econ Min Ishihara reiterated that the country's economic fundamentals have improved recently, attributing volatility to external factors. PM Abe deferred to the BOJ on guiding monetary policy and expressed confidence in Gov Kuroda's decisions despite continued volatility in the bond markets. After Japan's 10-year JGB yield turned negative yesterday, the yield on the 20-year has also come in several basis points, as investors continue to bet on deeper negative rates at the BOJ. In the energy space, Mar WTI contract briefly rose on a slightly smaller build in API crude inventories, and added to gains after reports that Iranian Oil Minister signaled willingness to negotiate with Saudi Arabia over current oil market conditions.

- Stateside, New Hampshire primary elections went to Sanders (D) and Trump (R) as widely anticipated by the polls, with fewer surprises than in Iowa. Ohio Gov Kasich also did surprisingly well with a 2nd place showing, while the momentum of Marco Rubio wilted to a 5th place finish.

Equities

US equities/ADRs:

- AKAM: Reports Q4 $0.72* v $0.62e, R$579M v $567Me; approves $1B buyback (114% of market cap); +16.8% afterhours

- PAYC: Reports Q4 $0.10 v $0.08e, R$65.1M v $61.2Me; +15.6% afterhours

- PNRA: Reports Q4 $1.88 adj v $1.78e, R$691M v $696Me; +3.4% afterhours

- WU Reports Q4 $0.42 v $0.41e, R$1.38 v $1.40Be; Boosts dividend 3% to $0.16/share; +0.9% afterhours

- CSC: Reports Q3 $0.71 adj v $0.69e, R$1.75B v $1.86Be; +0.2% afterhours

- DIS: Reports Q1 $1.63 v $1.44e, R$15.2B v $14.9Be; -3.5% afterhours

- SGEN: Reports Q4 -$0.18 v -$0.17e, R$93.5M v $86.7Me; -3.6% afterhours

- USNA: Reports Q4 $1.83 v $1.90e, R$232.6M v $225Me; -9.8% afterhours

- SCTY: Reports Q4 -$2.37 adj v -$2.57e, R$115.5M v $104Me; sees slower growth in Q1 and FY16, but still over 40%; -33.5% afterhours

Notable movers by sector:

- Consumer discretionary: Stockland SGP.AU -1.1% (H1 result); Asahi Group Holdings 2502.JP -7.7% (9-month result, speculation of offering); Seiko Holdings Corp 8050.JP -12.2% (9-month result)

- Financials: Computershare CPU.AU -8.4% (H1 result); Commonwealth Bank of Australia CBA.AU +1.8% (H1 result)

- Industrials: CIMIC Group CIM.AU +9.3% (FY15 result); Boral BLD.AU +2.4% (H1 result); Daikin Industries 6367.JP +2.2% (9-month result); Taisei Corp 1801.JP -0.7% (9-month result)

- Technology: Veda Group VED.AU +0.4% (Equifax deal approval); Toshiba Corporation 6502.JP +0.5% (no need to correct past earnings)

- Materials: OZ Minerals OZL.AU -1.7% (FY15 result); Mitsubishi Materials 5711.JP -14.0% (9-month result)

- Energy: AGL Energy AGL.AU -0.5% (H1 result)

- Telecom: KDDI Corp 9433.JP -8.7% (9-month result, share buyback)