Asian Market Update: Risk appetite returns with higher Chinese inflation and an almost solution in Greece


Economic Data

- (CN) CHINA JAN CONSUMER PRICE INDEX (CPI) M/M: 1.5% V 1.0%E; Y/Y: 4.5% V 4.0%E (first rise in 6 months and 3-month high)

- (NZ) NEW ZEALAND Q4 UNEMPLOYMENT RATE: 6.3% V 6.5%E (lowest since Q1 of 2010); EMPLOYMENT CHANGE Q/Q: 0.1% V 0.4%E; Y/Y: 1.6% V 1.9%E; PARTICIPATION RATE Q/Q: 68.2% V 68.5%E

- (CN) CHINA JAN PRODUCER PRICE INDEX (PPI): Y/Y: 0.7% V 0.8%E (6th consecutive decline and a 26-month low); M/M: -0.1%

- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED 3.25%; AS EXPECTED

- (KR) SOUTH KOREA JAN PRODUCER PRICE INDEX (PPI) Y/Y: 3.4% V 4.3% PRIOR (15-month low)

- (JP) JAPAN DEC MACHINE ORDERS M/M: -7.1% V -5.0%E (3-month low); Y/Y: 6.3% V 8.5%E

- (JP) JAPAN JAN MONEY STOCK M2 Y/Y: 3.0% V 3.1%E; M3 Y/Y: 2.6% V 2.6%E

- (JP) JAPAN Q4 HOUSING LOANS Y/Y: 2.2% V 2.1% PRIOR

- (JP) JAPAN JAN TOKYO AVG OFFICE VACANCIES Y/Y: 9.2% V 9.0% PRIOR (4th consecutive monthly increase)

- (MA) MALAYSIA DEC INDUSTRIAL PRODUCTION Y/Y: 3.0% V 1.7%E; MANUFACTURING SALES VALUE Y/Y: 1.1% V 6.3% PRIOR

- (JP) JAPAN JAN CONSUMER CONFIDENCE: 40.0 V 38.9 PRIOR (11-month high); Japan govt raises assessment on consumer confidence to "revocering" from "nearly unchanged"

- (ID) INDONESIA CENTRAL BANK CUTS REFERENCE RATE BY 25BPS TO 5.75%; NOT EXPECTED

- (MA) MALAYSIA DEC TRADE BALANCE (MYR): 8.3B V 10.5BE

- (TH) THAILAND JAN CONSUMER CONFIDENCE INDEX: 64.0 V 63.1 PRIOR

- (JP) Japan investors bought ¥281B in foreign bonds last week v ¥1.2T bought in prior week


Markets Snapshot (as of 05:30GMT)

- Nikkei225 -0.1%

- S&P/ASX -0.2%

- Kospi -0.2%

- Taiwan Taiex +0.4%

- Singapore Straits Times +0.2%

- Shanghai Composite +0.3%

- Hang Seng -0.5%

- S&P Futures unchanged at 1,346

- April gold +0.3% at $1,737/oz

- March Crude +0.3% at $98.96


Overview/Top Headlines

- Markets were weaker overall today with a little move to the upside after Greek officials literally worked through the night, with only the pension issue remaining unresolved (expected to be solved by the Troika later today). Talks between Papademos and Troika now revolve around filling €625M gap; PASOK will not accept lower pensions. After a later meeting it was said that Greece now has about 15 days to reduce pension liabilities by €300M. Under bailout agreement Greece will be given 1 extra year to 2015 to return to primary surplus of €4.5B; Government must specify additional austerity measures worth €10B in June for 2013-2015 period. An agreement was reached to cut minimum wage by 22%, but will not cut holiday bonuses.
EUR/USD rocketed higher to $1.3312 nearly 100 pips from session bottom.
Markets also move higher after China reported higher than expected inflation for January both m/m 1.5% and y/y 4.5%, which was the first increase in 6 months and a 3 month high. PPI for China fell to a 26-month low in its 6th consecutive decline to 0.7%, shy of estimates. Korea's Kospi came off its losses after the Bank of Korea kept rates on hold for the 8th consecutive session. Governor Kim remains concerned about the global outlook and inflation. With an appetite for risk back on, USD saw broad weakness against the majors and emerging market currencies despite its rosier outlook giving the markets more confidence.


Speakers/Geopolitical/In the press

- (JP) Japan PM Noda: There is no doubt that the strong yen is a downside risk to the economy; No comment on current yen level

- (CN) Former PBoC Advisor: Yuan rate will probably stay volatile due to capital flows - China Daily

- (AU) Australia Treasurer Swan: Returning budget to surplus will give the RBA room to ease rates; Expecting trend growth in Australia


Equities

- RIO: Reports FY11 Net $5.8B v $14.6Be; Underlying Earnings $15.55B v $15.3Be; Rev $60.53B v $55.17B y/y

- Lenovo, 992.HK: Reports Q3 Net $153.5M v $130Me; $8.37B v $7.9Be

- UMC: Reports Jan sales NT$8.1B v NT$8.1B m/m, v NT$9.5B y/y

- TLS.AU: Reports H1 Net profit A$1.48B v A$1.5Be; Rev A$12.4B v A$12.26B y/y; Affirms FY12 guidance

- BHP: Union rep: Queensland coal mine workers to strike starting Wednesday for 7-days

- BOQ.AU: Will keep standard variable mortgage rates on hold until next RBA meeting, despite what other banks do - The Australian

- Alibaba.com, 1688.HK: Hearing that Alibaba is in talks to put together a $3.0B loan from 6 banks to buyback Yahoo's stake in Alibaba - Chinese press

- ABC, 1288.HK: Chairman: To restrict new lending for property and local govt investment vehicles in 2012 to prevent a rise in bad debt - Chinese press


US Equities

- CSCO: Reports Q2 $0.47 v $0.43e, R$11.5B v $11.2Be; Guides Q3 Rev 5-7% y/y v 6%e (implies $11.4-11.6B v $11.5Be) - conf call; -0.3% afterhours

- WFM: Reports Q1 $0.65 v $0.60e, R$3.39B v $3.4Be; -1.2% afterhours

- GRPN: Reports Q4 -$0.02 v $0.03e, R$507M v $475Me; -15.6% afterhours

- FMC: Reports Q4 $1.58 v $1.37e, R$908.6M v $883Me; +3.1% afterhours

- PRU: Reports Q4 $1.97 v $1.76e, R$10.26B v $10.2Be; flat afterhours

- V: Reports Q1 $1.49 v $1.23 y/y, R$2.55B v $2.4Be; Announces $500M buyback (0.7% of market cap); +3.1% afterhours

- IM: Reports Q4 $0.70(adj) v $0.56e, R$9.95B v $9.7Be; -0.2% afterhours

- AKAM: Reports Q4 $0.45 v $0.40e, R$324M v $311Me; Guides Q1 $0.36-0.39 v $0.39e, R$305-313M v $305Me - conf call; +12.8% afterhours


FX/Fixed Income/Commodities

- JGB: Japan MoF sells 2.2% (2.2% prior) 40-yr bonds, bid to cover 3.61x v 3.92x prior

- (CN) China govt officials denying Japan press speculation that the two sides have signed a "mutual exchange agreement" on rare earth businesses - China Daily