Equity futures rise as PBoC uses targeted MLF facility for first time ever

Asia Market Update: Equity futures rise as PBoC uses targeted MLF facility for first time ever; Trade remains in focus amid press reports related to US/China, decline in Japan’s exports

 

General Trend:

- Trump Administration official dismissed report that the US rejected an offer from China for vice-ministerial level talks

- Shanghai Property index rises in early trade after drop in prior session: Trading halt for Jiayuan International [2768.HK] extended

- Consumer Discretionary companies rise in Australia, Energy and financial names decline

- Financials rise in Japan, Nikkei-weighted Softbank and Fast Retailing gain

- Japan Display gains over 8% on M&A speculation

- IBM rose over 6% post earnings, outlook above ests

- Little initial impact seen from BoJ decision and cut in inflation forecasts (as expected); USD/JPY remains below ¥110

- BoJ Gov Kuroda expected to hold post rate decision press conference around 1:30 AM EST

- Japan Dec exports have largest decline since 2016, exports to China -7% y/y

- NZD rallied as Q4 inflation came in hotter than expected, headline inflation remains below mid-point of RBNZ target range of 1-3%

- Reserve Bank of Australia (RBA) expected to revise down its economic forecasts in Feb (Westpac)

- Australia monthly jobs data due for release on Thursday

- US companies seen reporting earnings on Wednesday include Comcast, Ford, Kimberly-Clark, Lam Research, Procter & Gamble, SL Green, Texas Instruments, United Technologies (includes after hours)

 

Headlines/Economic Data

Japan

- Nikkei 225 opened -0.8%

- (JP) Bank of Japan (BOJ) Quarterly Outlook for Economic Activity and Prices; cuts this year GDP, raises next 2; cuts core CPI outlooks

- (JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED

- (JP) JAPAN DEC TRADE BALANCE: -¥55.3B V ¥42.3BE; ADJ TRADE BALANCE: -¥183.6B V -¥290.7BE; Exports Y/Y: -3.8% v -1.8%e; Imports Y/Y: +1.9% v 4.0%e

- (JP) Bank of Japan (BoJ) Quarterly report on risks: Risk of financial system destabilizing not big for now but outlook warrants attention

- (JP) Bank of Japan (BoJ) Loan Officer Opinion Survey Jan Household Loan Demand Index: 3 v 0 prior

- 7203.JP Confirmed plan to establish green car batteries JV with Panasonic by the end of 2020

- 7270.JP Gunma plant has been stopped since Jan 16th due to supplier parts issue - Japan press

- (JP) Committee investigating Japan Labor Ministry data issues finds the ministry threw away statistical data that should be kept permanently, used improper methods for monthly surveys - Japan press

- (JP) Fitch affirms Japan sovereign rating at A; outlook stable

Korea

- Kospi opened -0.4%

- (KR) European Commission urges South Korea to take meaningful actions over the next three months to resolve the long-pending ratification of key international labor conventions – Yonhap

- 3659.JP Founder to sell controlling stake in co seen valued at ~KRW10T; Samsung offered to join bid, through is undecided if it will do so - Korean press

China/Hong Kong

- Hang Seng opened -0.5%, Shanghai Composite -0.2%

- (CN) CHINA PBOC CONDUCTS CNY257.5B 1-YEAR TARGETED MEDIUM-TERM LENDING FACILITY (TMLF) AT 3.15% v 3.30% at last MLF (1st use of targeted MLF)

- (US) Trump Administration reportedly turned down Chinese offer to send ministers for preparatory trade talks - FT

- (CN) White House Adviser Kudlow: earlier trade story about canceled China trade meeting is not true; there was never a planned meeting for junior ministers

-(CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 3rd consecutive session; Net: CNY350B drained v CNY80B drained prior

- (CN) Bureaucrats and economists in China said to be debating whether the PBoC should pursue quantitative easing or directly ‘bankroll’ government spending, notes deepening economic slowdown and issues related to transmission of current monetary policy – HK Press

- 2768.HK Chairman's share pledge in Chaungsheng released (forced to sell 93.6m shares), bank borrowings have been fully repaid (trading to resume)

- (CN) US Sec of State Pompeo: doesn't see superpower conflict with China as inevitable; Made further progress with North Korea when official visited last week

- (CN) US Chamber of Commerce and the American Chamber of Commerce in China deliver a joint report to the Office of the US Trade Representative: calling on US to focus on China’s technology plans when trade talks resume – SCMP

- (CN) China Securities Regulator (CSRC) Vice Chairman Fang Xinghai: Does not see China significantly cutting US bond holdings - Davos comments

- (CN) The ‘Made in China 2025’ plan has been hurt by the trade war with the US, various advanced manufacturing sectors in China are seeing weakening demand – HK Press

- (CN) China Govt official: Have approached a handful of potential IPO candidates for new technology board in Shanghai and will soon release draft rules for listings – SCMP

- (CN) China PBoC sets Yuan Reference Rate: 6.7969 v 6.7854 prior

Australia/New Zealand

- ASX 200 opened -0.2%

- (NZ) NEW ZEALAND Q4 CPI Q/Q: 0.1% V 0.0%E; Y/Y: 1.9% V 1.8%E

- NST.AU Reports Q2 gold production 124K oz ; Gold sold 210.5K oz v 128.8K y/y; Affirms FY19 production while raising AISC outlook

- CGF.AU Guides H1 normalized Net A$200M; Pretax A$270M; Cuts FY19 normalized Pretax A$545-565M (prior A$591-613M)

- (AU) Australia Dec Westpac Leading Index m/m: -0.2% v -0.1% prior (1st consecutive decline since 2016)

- (AU) Australia sells A$900M v A$900M indicated in 2.75% Nov 2029 bonds, avg yield 2.2988%

- (NZ) New Zealand RBNZ Q4 Sectoral Factor Model Inflation Y/Y: 1.7% v 1.7% prior; Sectoral Factor Model Non-Tradeable (core) Y/Y: 2.7% v 2.7% prior

Other Asia

- (TH) Thailand Finance Ministry: Do not expect any rate hikes in 2019

- (TH) Thailand Royal Decree calls for elections in 2019

North America

- (US) Bureau of Labor Statistics: furloughed govt workers to be counted as employed in January payrolls

- (US) Senate leaders agree to hold vote on Trump's proposal and a Democratic proposal for reopening the govt; Neither bill is likely to pass this week, but may be seen as a small step toward compromise on the govt shutdown - press

- (US) US federal courts spokesperson: have enough funding to stay open through Jan 31st but not beyond that

- (US) Senate Finance Committee to hold hearing on drug pricing on Jan 29th

- IBM Reports Q4 $4.87 v $4.81e, Rev $21.8B v $21.7Be

Europe

- (UK) Labour Party likely to back Cooper-Boles Brexit plan, with a sensible Brexit delay

- (CZ) Czech Central Bank Holub (chief economist): External developments roughly compensate for weaker than thought currency, rates may not rise for several meetings

- RNO.FR Chairman Carlos Ghosn is considering resigning as Renault Chairman and CEO - Japan press

 

Levels as of 12:50ET

- Hang Seng -0.1%; Shanghai Composite -0.1%; Kospi +0.2%; Nikkei225 -0.1%; ASX 200 -0.3%

- Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.5%; FTSE100 +0.3%

- EUR 1.1358-1.1378; JPY 109.33-109.80; AUD 0.7117-0.7143; NZD 0.6742-0.6785

- Feb Gold 0.0% at $1,283/oz; Mar Crude Oil +0.2% at $53.11/brl; Mar Copper +0.4% at $2.67/lb