Asian Market Update: AUD falls to 1-month low on weak retail sales, Kiwi dollar plummets to 4-month low as Q4 unemployment rate rises to 10-yr high; Toyota recall weighs on Nikkei225 ahead of company's earnings


ECONOMIC DATA

- (NZ) NEW ZEALAND Q4 UNEMPLOYMENT RATE: 7.3% V 6.8%E (10-year high); EMPLOYMENT CHANGE Q/Q: -0.1% V -0.1%E; Y/Y: -2.4% V -2.5%E

- (NZ) New Zealand Dec Visitor Arrivals: 8.5% v -3.7% prior

- (AU) AUSTRALIA DEC BUILDING APPROVALS M/M: 2.2% V 0.0%E; Y/Y: 53.3% V 38.2%E (multi-year high)

- (AU) AUSTRALIA DEC RETAIL SALES M/M: -0.7% V 0.2%E (matches 10-month lows seen in Jun and Jul of 2009); Q4 EX-INFLATION Q/Q: 1.1% V 1.1%E

- (VN) Vietnam Jan Domestic Investor Confidence Index: 100.0 v 113.7 prior; Foreign Investor Confidence Index: 113.6 v 127.1 prior

- A more subdued session on Wall Street after two strong days was echoed in Asian markets, where equities generally traded lower. In the final hour of Tokyo session, Nikkei225 and S&P/ASX are down 0.6%. Korea's Kospi is up a marginal 0.1% - the only gainer - while Hang Seng markets are leading the selloff with a 1.6% slide. After impressive turnaround in the latter half of the prior session, Shanghai Composite is unchanged, hovering just above 3,000.


SPEAKERS/PRESS

- Asia/Pacific dominated an otherwise light economic calendar with predominantly poor data. New Zealand unemployment jumped to a 10-yr high of 7.3%, prompting a Kiwi selloff to 4-month lows. Australian figures did little to reignite speculation of the central bank considering a hike at its next meeting, with m/m retail sales matching a 10-month high for rate of decline. Building approvals did improve however, with Y/Y figure registering a multi-year high. Speaking after the data, Australia's Treasurer Swan said contraction in Dec retail sales was modest, and the data still suggests an overall economic recovery.

- Over in China, PBoC 3-month bill auction yield was unchanged. In fresh local press reports: China y/y CPI may rise 2% in January (official figure due next week); CASS think tank economist Zhang Ming said China may allow the yuan to rise by as early as March; New loans for January rumored at CNY1.5T and Q1 loans may be capped at CNY2.5T (note: Dec loans were CNY380B, and loans through Jan previously reported at just over CNY1.1T)

- In other regional speakers, Bank of Japan's Nakamura warned that increasing liquidity alone will not defeat deflation, with downside risks still exceeding those on the upside. He did point out that while recovery trend may temporarily slow by mid FY10/11, overall it is likely to continue. A report from South Korea Finance Ministry said 5% GDP growth was achievable and warned the govt needs to be ready for an increase to downside risks. Particularly, Korean officials pointed to risks coming from higher oil prices and credit tightening in China.


EQUITIES

- Toyota, weighing on overall market sentiment in Japan over the recent sessions, posted impressive Q3 results with Net ¥153B v ¥98Be, Op Profit ¥189B v ¥103Be, Rev ¥5.3T v ¥5.1Te, also raising its FY09/10 forecast due to increased sales volume and cost cuts to Net profit ¥80B v loss ¥200Be, Op loss ¥20B v loss ¥49Be, Rev ¥18.5T v ¥18.4Te (Net loss ¥200B, Op loss ¥350B, Rev ¥18T prior). In terms of the recall impact, company saw FY09/10 impact at 100K vehicles, impact from lost sales at ¥70-80B, and costs of repair at ¥100B. However, the company said it had no visibility in the coming FY, and the recently revealed impact of its top-selling Prius brake issue is not accounted for in FY09/10 forecast. In other Nikkei225 heavyweights, Sony topped estimates with Q3 Net ¥79B v ¥42Be, Op Profit ¥146B v ¥85Be, Rev ¥2.24T v ¥2.2Te, and Hitachi reported Q3 Net profit ¥22B v loss ¥35Be, Op Profit ¥66B v ¥26Be, and raised its op profit guidance for FY. In 2nd tier names, Mitsubishi Chemical reported 9-month Net profit ¥10.2B v loss ¥11.4B y/y, Op Profit ¥47.1B v ¥50.3B y/y, Rev ¥1.8T v ¥1.3T y/y. Outside the Nikkei, Samsung Electronics said it is looking to triple shipments of smart phones from 2009, with sales of over 260-270M mobile phones in 2010 vs 227M y/y. PC maker Lenovo reported strong Q3 of Net $79.5M v $37Me, Rev $4.8B v $4.3Be and was positive on EM growth, with strong momentum expected to continue.


CURRENCIES/FIXED INCOME/COMMODITIES

- In forex, the USD is broadly firmer against the European major currencies, as markets look ahead to the later today interest rate decisions from the ECB and BoE. The commodity currencies have been led lower by AUD/USD, following Australia's disappointing Dec retail sales data. However, the Aussie continues to be supported near $0.8775. Additionally, the Kiwi has moved below $0.7000 and to the lowest level since Sept after New Zealand's unemployment rate rose to a 10-yr high in Q4. The Japanese yen is mostly firmer on the weakness in the Nikkei.

- Crude oil prices are lower and trading below $77/bbl on the stronger dollar and declines in equities. Spot Gold prices are also declining and trading below $1110/oz as markets continue to focus on Friday's US payrolls report. In other commodities, Shanghai Copper prices have eased, tracking the weakness in Chinese equities.