Nikkei up strongly again as 10-yr JGBs yields down to early Aug levels following BoJ hold yesterday
|Asia market update: Nikkei up strongly again as 10-yr JGBs yields down to early Aug levels following BOJ hold yesterday; Malaysia bans all Israeli-flagged ships from docking; NZ raised bond issuance; UK CPI data in focus today
General trend
- Following on from yesterday’s BOJ MIRP hold, the Nikkei was up 1.5% for another day of solid gains post-BOJ yesterday.
- Malaysia unexpectedly banned all ships with Israeli flags from docking at Malaysian ports, due what the PM described as… ‘A direct response to Israel's actions, which defy fundamental humanitarian principles and violate international law through ongoing massacres and atrocities against Palestinian civilians.’
- Japan’s Balance of Trade came in at a less than expected deficit.
- JGB yields extend drop post BOJ decision, with the 10-yr -9bps to 0.5500, the lowest levels since early August.
- In the US, former US Pres Trump has been banned from the ballot box in the State of Colorado for the 2024 Presidential Election.
- China lefts its LPR rate unchanged, as expected.
- US equity FUTs slightly up.
Looking ahead (Asian time zone)
- Thu night US GDP.
- Fri Japan inflation.
- Fri night US PCE.
Holidays in Asia this week
- Fri Dec 22 New Zealand Xmas, early close at 12:45pm local time.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens +0.2% at 7,502.
- Australia Nov Westpac Leading Index M/M: +0.07% v -0.04% prior.
- Australia Resources Min King: May boost funding with aim to build critical minerals capacity to rival China.
- New Zealand Dec ANZ Consumer Confidence: 93.1 v 91.9 prior.
- New Zealand Treasury & Debt Management Office economic and fiscal update (1st with new Govt); Sees NZ$7B increase in gross bond issuance over 4 years; now totaling NZ$136B, up from NZ$129B in budget.
- New Zealand PM Luxon: Current NZ immigration levels are not sustainable.
- RBNZ Gov Orr: Interest rates are restricting spending - Parliamentary hearing.
- Fonterra Global Dairy Trade Auction Dairy Trade price index: +2.3%.
China/Hong Kong
- Hang Seng opens +0.9% at 16,647.
- Shanghai Composite opens flat at 2,932.
- China PBOC monthly loan prime rate (LPR) setting: leaves both 1-year and 5-year rates unchanged; as expected.
- China PBOC sells CNY5.0B v CNY5.0B indicated in 6-month bills in Hong Kong at coupon 2.8%.
- Alibaba (9988.HK) Confirms will form a new asset management company to focus on managing the operation of the Company’s non-core assets as part of our ongoing efforts to improve return on capital and enhance shareholder value.
- China Pres Xi says China's economy is highly resilient and has strong potential.
- China PBOC sets Yuan reference rate: 7.0966 v 7.0982 prior.
- China PBOC Open Market Operation (OMO): Sells CNY134B in 7-day reverse repos; Sells CNY151B in 14-day reverse repos; Net injects CNY20B v Net drains CNY113B prior.
Japan
- Nikkei 225 opens +0.7% at 33,467.
- Japan Nov trade balance: -¥776.9B V -¥1.0TE.
- Japan Nov Tokyo Condo Sales Y/Y: -4.3% v -46.3% prior.
- Bank of Japan (BOJ): Japan Household Assets: ¥2,121T v ¥2,115T prior - Quarterly Flow of Funds Report.
- Japan sells ¥500B in 10-yr, 20-yr and 30-yr JGB's in liquidity enhancement auction: Avge yield 0.081%, bid-to-cover: 4.16x.
- Toyota (7203.JP) Japan Transport Ministry reportedly considers on-site inspection on Daihatsu testing.
- TEPCO (9501.JP) Japan Regulators lift ban on Niigata Reactor.
- Japan Steel Federation Head/JFE President: Guides FY24/25 Japan crude steel output to be in line y/y; US steel market is attractive due to growth potential.
- Bank of Japan (BOJ) Research Paper: How Do People Form the Perception of a Link between Foreign Exchange Rates and Exports? The Experience of Japan in the 1920s.
- Japan Securities Dealers Association (JSDA): In Nov Japan Trust Banks purchased a record amount of super-long JGBs.
- Japan govt expected to raise its long term interest rate estimate to 1.9% for next FY from current 1.1%.
South Korea
- Kospi opens +0.7% at 2,586.
- SK Group, (parent of chip maker SK Hynix 000660.KR) Chairman expresses concern over 'excessive investment' in semiconductors around the world.
- South Korea parliament reportedly to reach agreement on 2024 budget today.
- South Korea Land Minister Nominee said to seek relaxed housing rules.
- Bank of Korea (BOK) Nov Minutes: Current policy rate seen as restrictive enough.
- BOK: Inflation to reach ~2.0% [target] by the end of 2024 - Biannual review of inflation conditions.
Other Asia
- Malaysia to block Israel-based shipping Co. Zim from anchoring; PM says Malaysia will not accept ships bearing Israel flags to dock.
- Philippine Central Bank (BSP) Gov Remolona: 'Not yet out of the woods on inflation'.
North America
- (US) Trump to be disqualified from 2024 ballot, according to Colorado Supreme court [first court to disqualify Trump from the ballot].
- Lumen (LUMN) Reportedly requests more time to wrap restructuring deal; Hopeful to push deadline by one month to Jan 31st - US press.
- Fedex (FDX) Notes peak holiday season volume is similar to last year - earnings call comment (Adj Op at Express -49% during the quarter on a 6% decline in revenue.).
- Google plans Ad sales unit restructuring as automation booms; the move is said to impact 'big' part of the 30K person unit.
- (US) Federal Reserve Bank of New York research: Overnight Reverse Repo Facility.
- (US) Nov housing starts: 1.560M V 1.360ME (above all analysts' estimates and six-month high); building permits: 1.460M V 1.465ME.
- (US) Oct net long-term tic flowS: +$3.3B V -$1.7B prior; total net tic flows: -$83.8B V -$67.4B PRIOR.
Europe
- (UK) Dec CBI industrial trends total orders: -23 V -29E.
- Houthis spokesperson: An operation in the Red Sea could take place every 12 hours.
- (HU) Hungary central bank (MNB) cuts base rate by 75BPS TO 10.75%; as expected.
- (EU) ECB's Kazaks (Latvia, hawk): Reiterates rates need to stay at current level for some time; Too soon to declare victory over inflation.
- (RU) Russia Dep PM Novak: No need for any urgent actions from OPEC+.
- (UK) BOE Dep Gov Breeden: Policy must stay restrictive for extended period; Inflation has fallen but remains high - IIF event.
- (ES) Bank of Spain (BOS) Quarterly Economic Outlook: Sees Q4 GDP growth at 0.3%.
Levels as of 00:20 ET
- Nikkei 225 +1.5%; ASX 200 +0.8%; Hang Seng +1.1%; Shanghai Composite -0.5%; Kospi +1.7%.
- Equity S&P500 Futures +0.1%; Nasdaq100 +0.1%; Dax +0.2%; FTSE100 +0.3%.
- EUR 1.0965-1.0985; JPY 143.38-144.10; AUD 0.6747-0.6778; NZD 0.6241-0.6282.
- Gold flat at $2,053/oz; Crude Oil +0.1% at $73.98/brl; Copper +0.2% at $3.9135/lb.
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