Asian Market Update: Nikkei Financials Led the Tokyo Decline Amid Catch-up Selloff; Recovery in Aussie Jobs Growth Boosts AUD and S&P/ASX, While Rio Tinto Finalizes Chinalco Deal; Bank of Korea Cuts Rates to Record Low 2%, Signals Continued Economic Slump

- Asian equity bourses traded widely mixed as Nikkei returned from a day off to chase the global selloff in financials, Korea's Kospi collapsed on downbeat BOK sentiment and banking weakness of its own, while S&P/ASX cheered surprisingly strong January employment report. Investors in Japan latched on to prior session's skepticism over the vague Financial Stability Plan and, despite the recovery in US financials today, punished regional banks across the board. Late in the day, Mitsubishi UFJ and Mizuho were down over 3.5%, Sumitomo fell nearly 5%, while Nomura and Daiwa Securities collapsed by about 7%. The broader Nikkei index was down by over 3% coming out of midday break, but pared some of that weakness just ahead of session close. In other notable index names, earnings from Chiyoda and Yamaha Motor yielded mixed results. The former fell short of comparable levels on a 9-month basis on top and bottom line, and also cut its FY Net and Op Income guidance by over 40%, sending its shares down 3.6% after posted results from relatively unchanged levels earlier. Yamaha Motor surpassed its recent FY forecast of 1.5B yen on the bottom line with a 1.85B yen result, helping its shares recover from -3.7% trough to trade just under 1% on the day.
Elsewhere, Elpida continued to attract buying interest in early trading on confirmed talks for a possible merger with Taiwan chipmakers before giving in to profit taking, turning its 4% rally into a 1% loss. Asahi Breweries was also heavily sold after reducing its sales target and receiving a downgrade at Deutsche Bank. In notable gainers, Kobe Steel rallied after rumors that its Chairman would step down on inappropriate political contributions, and Nippon Oil was up 3% after being raised to Buy at Nomura. In Japan's economic data, Corporate Goods Price Index registered a 5-year low, confirming recent rhetoric from Japan's officials expecting additional disinflationary trend.

- Australian jobs data supplied minor relief into an otherwise gloomy regional Asian session while helping S&P/ASX - the only major gaining Asian index - to finish up 1.2%. In spite of the unemployment rate rising to a two-and-a-half year high 4.8%, the economy gained 1.2K jobs v estimates of an 18K loss. More notably, in contrast to the deceptively balanced prior month where most of the new jobs were part-time, this month's release reversed that trend with 33.7K in full-time employment against 32.6K part-time positions. Rio Tinto was halted for the entire session, finalizing its $19.5B strategic partnership with Chinalco and was also reportedly fielding offers for some of its assets from BHP. Newcrest Mining rallies on strength in gold prices, gaining 4.5%, while Leighton Holdings traded up 10% before closing 5% higher after securing a A$2.6B mining contract and beating H1 top line estimates by over 10%. In other developments, Australia's lawmakers failed to reach an agreement on A$42B stimulus package, and February consumer inflation expectations ticked to multi-year lows at 2.3%.

- Korea's Kospi finished its second consecutive session with a decline of just under 1% after trading far deeper to the downside earlier in the day. Bank of Korea delivered a widely expected 50bp cut to record low 2.00%, but its accompanying downbeat rhetoric soured sentiment and boosted expectations for additional easing in months to come. Central bank noted that Korea's economy was contracting rapidly, lending for companies was still constrained, and additional downside risks were becoming more evident. BOK's Lee was uncertain in estimating when the economy would bottom, and signaled that the monetary authorities would do everything necessary to stimulate growth short of buying corporate debt.

- In foreign exchange, AUD was a notable gainer across the board in the aftermath of the strong jobs data, rising above prior session highs of 0.66 against USD with comparable rallies vs JPY and NZD. Failure of the Aussie parliament to pass the stimulus plan pared AUD strength however, pushing it down below 0.6550. In other commodity majors, NZD/USD and USD/CAD consolidated greenback gains, respectively trading below 0.53 and above 1.2380. In European majors, EUR/USD and USD/CHF oscillated around 1.29 and 1.16, while GBP/USD was narrowly confined below 1.44.
Japanese Yen volatility was also mostly subdued - USD/JPY sold down some 80 pips from US peak to 90.00 handle, EUR/JPY was supported above 116, and GBP/JPY found its support-turned-resistance inflection at 129.40.

- At the time of writing, crude oil prices are marginally higher, after closing the NY session down by 4%. The NY session declines came as US weekly crude oil and distillates supplies exceeded expectations, while gasoline supplies were lower than expected (DOE CRUDE: +4.7M V +2.6ME; GASOLINE: -2.6M V +500KE; DISTILLATES: -1M V -1.7ME). Additionally, the IEA lowered its 2009 oil demand forecast and the group now expects demand to decline by 1M bpd y/y. Spot Gold is higher after the metal rose to its best level since July 22, 2008 (around $953.30/oz), during the NY intraday session. The US session gains in gold prices came as the US 10 Treasury price rose by more than 2%. Additionally, the largest gold ETF, SPDR Gold Trust, increased its holdings of bullion to 935.1 tons vs. 894.7 on 2/10.