Equities trade mixed ahead of US CPI, Retail Sales and Bank earnings

Asia Market Update: Equities trade mixed ahead of US CPI, Retail Sales and Bank earnings; China expresses caution regarding trade outlook

Headlines/Economic Data

General Trend: Energy shares outperform

- China Dec Trade Surplus above estimates amid lower than expected imports; China Customs Dept expresses caution regarding 2018 trade outlook

- Japan 40 year JGB auction has highest bid to cover since 2014

- Earnings expected in NY morning from BlackRock, JPMorgan, PNC and Wells Fargo

- India’s Infosys due to report Q3 results

China/Hong Kong

- Hang Seng opened +0.6%, Shanghai Composite flat
Hang Seng Energy Index +1.9%, Materials +1.3%, Consumer Goods +0.6%, Financials +0.5%

- (CN) CHINA DEC TRADE BALANCE ($): 54.7B V 37.0BE (highest monthly surplus since Jan 2016); Exports Y/Y: 10.9% v 10.8%e; Imports Y/Y: 4.5% v 15.1%e

- (CN) China Customs Dept Comments on drivers of 2017 Trade: For 2017, trade growth was driven by better than expected global recovery, domestic economic improvement, policies to boost imports, 'Belt and Road Initiative' and low comparison base.

- (CN) China Customs Dept Comments on Trade Outlook: China Trade outlook ‘upbeat’ in 2018; will be difficult to maintain double digit trade growth in 2018; Dec Export Leading Index 41.1, down 0.7 m/m; Says data shows pressure facing Q1 exports.

- (CN) China PBoC OMO: Injects CNY270B v CNY60B injected in 7, 14-day reverse repos prior: Net injects CNY180B v CNY30B drained prior; For the week, PBoC injects net of CNY40B v CNY510B drain w/w

- (CN) PBoC sets yuan reference rate at 6.4932 v 6.5147 prior

- (CN) China should keep its property controls continuous and stable

- China press

- (CN) Trust companies in China have placed limits on leveraged funds used for equities – China Securities Journal

Japan

- Nikkei 225 opened flat; closed -0.2%

TOPIX Real Estate Index -0.7%, Information/Communications -1%

Fast Retailing +6% (Q1 results above ests; affirmed FY outlook)

Softbank -1%

Nikkei 225 Jan options said to settle at ~23,723

- JAPAN NOV TRADE BALANCE BOP BASIS: ¥181.0B V ¥310.6BE

- Japan Dec Bank Lending Ex-Trusts Y/Y: 2.4% v 2.7% prior; Incl Trusts Y/Y: 2.5% v 2.7% prior

- JAPAN NOV BOP CURRENT ACCOUNT ADJUSTED: ¥1.70T V ¥2.17TE; CURRENT ACCOUNT: ¥1.35T V ¥1.84TE

- Japan Dec Eco Watchers Survey Current: 53.9 v 55.1e; Outlook: 52.7 v 53.5e

- Japan MoF sells ¥500B v ¥500B indicated in 0.90% 40-yr bonds, bid to cover 3.67x v 3.00x prior (highest bid to cover since 2014)

South Korea

- Kospi opened +0.5%, has since pared gains
Samsung Electronics -3%: Shares remain weaker following release of prelim Q4 results earlier in week

- South Korea Presidential Office officials to discuss measures related to cryptocurrencies – South Korea Press

- South Korea and China to hold Finance Chief meeting on Friday, Feb 2nd

Australia/New Zealand

- ASX 200 opened +0.2%: closed flat
ASX 200 Resources Index +1.5%, Energy +0.8%; Financials -0.1%, REIT -0.5%

- (NZ) New Zealand Nov Building Permits M/M: +10.8% v -9.6% prior

North America

- US equities markets closed higher: Dow Jones +0.8%, S&P500 +0.7%, Nasdaq +0.8%, Russell 2000 +1.7%
S&P 500 Energy Sector +2%, Consumer Discretionary +1.6%

- (US) Pres Trump: will terminate NAFTA unless we reach a fair deal - press interview

- (US) US Commerce Sec Ross: Submitted results of probe into national security impact of steel imports to President Trump; - President Trump now has 90-days to decide on any potential action based on the findings of the Section 232 Steel probe.

- (US) Fed's Dudley (dove, FOMC voter): worried growth overheating is a real risk in the next few years; Fed may have to press harder on the brakes at some point; Case for rate rises remains strong; A more aggressive Fed policy could increase risk of a hard landing; Fed forecast for 3 rate hikes this year is a reasonable starting point; We should try to achieve current 2% inflation target before talking about moving the goal higher;
Looking Ahead : US Dec CPI and Retail Sales due for release

Europe

-(UK) PM May reportedly told bankers that their industry is a priority for her in Brexit talks - press

-(UK) US President Trump said to cancel UK visit planned for Feb, expected to send US Sec of State Tillerson instead – UK Press; Trump was said to have been concerned about the welcome he would receive in the UK.

 

Levels as of 01:00ET

- Hang Seng +0.4%; Shanghai Composite +0.1%; Kospi flat

- Equity Futures: S&P500 flat; Nasdaq100 flat, Dax flat; FTSE100 -0.1%

- EUR 1.2067-1.2029 ; JPY 111.06-111.35; AUD 0.7875-0.7905 ;NZD 0.7248-0.7277

- Feb Gold +0.5% at $1,328/oz; Feb Crude Oil -0.3% at $63.62/brl; Mar Copper +0.3% at $3.237/lb