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Asia Market Update

EUR/CHF bounces from original SNB intervention level

Fri, Feb 5 2010, 07:15 GMT
by Trade The News Staff

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Asian Market Update: RBA Quarterly Statement raises next year's GDP and CPI forecasts, signals more hikes if justified by data; EUR/CHF bounces from original SNB intervention level

ECONOMIC DATA

- (AU) Australia Jan AiG Perf of Construction Index: 57.7 v 49.3 prior (2-year high)

- (JP) Japan Jan Official Reserve Assets: $1.05T v $1.05T prior

- (PH) Philippines Jan CPI m/m: 0.2% v 0.6%e, y/y: 4.3% v 4.9%e

- (JP) Japan Dec Prelim Leading Index: 94.0 v 93.5e; Coincident: 97.6 v 97.3e

- (AU) Australia Jan Foreign Reserves: A$46.6B v A$46.5B prior

- The contagion of European fiscal concerns spreading from Europe to Portugal and Spain that shocked US markets predictably hit Asian bourses even harder, with several major indices making fresh multi-month lows. Just ahead of Tokyo close, Nikkei225 is down 2.7% after reaching lowest level since mid-December. Hang Seng, Shanghai, and ASX are all down about 2% as well, while Taiwan is the biggest loser at -4.3% on deeper concerns related to delayed China trade talks. Ahead of the Non-farm payrolls Friday in the US, front-month S&Ps are up a marginal 0.2% at 1,064.

SPEAKERS/PRESS

- Traders tuning in for Reserve Bank of Australia Quarterly Policy Statement found more mixed messages in the wake of this week's surprising hold. While the central bank raised its FY10 and FY11 CPI to 2.5% from 2.25% and to 2.75% from 2.5% respectively, RBA noted that underlying inflation is within target in 2010-12 and is expected to continue to moderate. Policymakers also left 2010 GDP view at 3.25%, but raised 2011 forecast to 3.5% from 3.25%. Going forward, RBA said policy would have to be adjusted further if the economy continues to improve, and said the underlying assumpion was for cash rate at 4.5%, but also suggested that rates may no longer be at "exceptionally low level". RBA further warned that while Asian economies may remain strong, uncertainties over fiscal conditions in developed economies weighed on sentiment.

- Over in China, state think tank researcher saw Q1 GDP growth rising to 11.5% v 10.7% in Q4, with CPI at 2.5% and PPI 5.5%. More lending concerns out of China's financial sector saw regulators request some banks to curb their lending in the coming month, further weighing on sentiment. Separately, FX regulator SAFE forecasted capital inflows to rise in 2010 as expectations for yuan appreciation escalate.

- In other regional speakers, South Korea Finance Minister said the administration is watching Europe turmoil with caution and warned that current account balance may worsen. In Japan, BOJ Dep Gov Yamaguchi promised the bank would focus on bringing CPI out of deflationary zone, calling for narrowed output gap. That sentiment was also echoed by Fin Min Kan, who said he hoped prices will start to rise in the coming FY10/11, with the impact of deflation-fighting measures yet to take full effect.

EQUITIES

- In individual shares, Toyota was a surprising gainer amid the recall panic following prior session's strong Q3 results and raised FY outlook. Also in auto sector earnings, Mazda reported 9-month Net loss ¥16B v profit ¥29B y/y, Op loss ¥11B v profit ¥37B y/y, Rev ¥1.5T v ¥2.1T y/y and raised its FY outlook to Net loss ¥9B v loss ¥11.3Be, Op Profit ¥5B v loss ¥2.8Be, Rev ¥2.15T v ¥2.17Te (Net loss ¥17B, Op loss ¥12B, Rev ¥2.13T prior). Likewise, Suzuki reported 9-month Net ¥15.5B v ¥21.6B y/y, Op Profit ¥49.8B v ¥66.5B y/y, Rev ¥17.8T v ¥23.3T y/y, raising FY view to Net ¥16B v ¥27Be, Op Profit ¥50B v ¥64Be from Net ¥15B, Op Profit ¥40B prior. Among the large tech names reporting, Panasonic saw 9-month Op Profit ¥130B v ¥255B y/y, Rev ¥5.2T v ¥6.2T y/y, also raising its FY Op Profit ¥150B v ¥147Be, Rev ¥7.35T v ¥7.3Te (guided Op Profit ¥120B, Rev ¥7.0T on 10/30). Outside Tokyo, Acer and Asustek were said to have won PC contracts as part of China's rural home-appliance subsidy program.

CURRENCIES/FIXED INCOME/COMMODITIES

- Swiss franc trading saw heightened volatility amid ongoing EUR weakness taking EUR/CHF to pre-intervention by the Swiss National BAnk back in March 2009 below 1.46. EUR/CHF then bounced sharply higher toward 1.48 before consolidating around 1.47. EUR/USD also retreated from early weakness back above 1.47, and Sterling bounced higher from 1.57. In commodity majors, AUD/USD saw little impact from RBA statement, consolidating US session weakness at 0.8650 and USD/CAD ranged ranged in thin 1.0720-40.

- In commodities, both crude oil and gold prices have rebounded slightly from the sharp losses seen during the NY trading session. As of the time of writing, crude oil prices are trading above $73/bbl, while Spot Gold is near $1065/oz. In gold market news, SPDR Gold Trust, world's largest gold ETF, noted that its holdings declined by 5.8 metric tons as of Feb 4th, which was the largest daily decline since Dec 8th. In other commodities, Shanghai Copper futures are off by more than 2% on the declines being seen in Chinese equities. Overall, the themes of risk aversion and caution ahead of the US non-farms payrolls report are driving today's trading.

Published on  Fri, Feb 5 2010, 07:21 GMT

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