Crude oil spikes on confirmed death of Saudi king

Asian Mid-session Update: Crude oil spikes on confirmed death of Saudi king; China flash HSBC PMI sees manufacturing contraction for 2nd straight month

Economic Data

- (CN) CHINA HSBC JAN FLASH MANUFACTURING PMI: 49.8 V 49.5E (2nd straight contraction)

- (JP) JAPAN JAN PRELIM MARKIT/JMMA MANUFACTURING PMI: 52.1 V 52.0 PRIOR

- (KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: 0.4% (lowest since Q3 of 2012) V 0.4%E; Y/Y: 2.7% V 2.8%E

Index Snapshot (as of 03:30 GMT)

- Nikkei225 +0.9%, S&P/ASX +1.3%, Kospi +0.8%, Shanghai Composite +1.4%, Hang Seng +1.1%, Mar S&P500 -0.1% at 2,054

Commodities/Fixed Income

- Feb gold -0.2% at $1,300, Mar crude oil +1.9% at $47.19/brl, Mar Copper -1.5% at $2.54/lb

- (JP) BOJ offers to buy ¥400B in 1-3yr JGB, ¥400B in 305yr JGB, ¥240B in 10-25yr JGB and ¥140B in JGB with maturity over 25-yr

- (AU) Australia MoF (AOFM) sells A$700M in 3.25% bonds due 2025; Avg yield: 2.6134%; Bid-to-cover: 3.1x

- (US) Weekly Fed Balance Sheet Total Assets for week ending Jan 21st: $4.51T v $4.52T prior; M1 y/y change: 9.4% v 9.4% w/w; M2 y/y change: 5.8% v 5.8% w/w

Market Focal Points/FX

Upbeat sentiment permeating European and US markets in the wake of a more meaningful ECB QE announcement than anticipated has fed through to Asia, where China is leading the way. Returning for trade in the afternoon session, Shanghai Composite has made fresh 5-year highs above 3,400, and the rally in Hong Kong is nearly as impressive. China flash HSBC manufacturing PMI portends a contraction for the 2nd straight month but just barely, coming in 3 ticks above consensus and 2 ticks away from the the expansion threshold. HSBC economist noted marginal improvement in domestic demand, but still saw labor market sufficiently weak, recommending further monetary easing. To that end, PBoC said it would maintain prudent monetary policy through timely fine-tuning only a day after its first reverse repo operation at lower offering yield in nearly a year. Separately, China Academy of Sciences forecasted 2015 GDP at 7.2%, down from 7.4% in 2014, even though trade surplus was expected to improve.

USD remained on the offensive, particularly in the afternoon part of the Asia session. EUR/USD was down over 50pips around 1.1320, AUD/USD extended its losses below 0.80 - a 5-year low, while GBP/USD moved below 1.50. ECB's Nowotny remarked that personally he would prefer to have waited before launching QE. In Asia, BOK Gov Lee shrugged off ECB action as in line with expectations, while China's SAFE official warned there may be some spillover impact on the mainland. European focus now turns to Greek elections on Sunday, where Syriza will attempt to prevent a last-minute comeback from the ruling ND party before potentially searching for a governing partner.

Crude Oil spiked up almost 3% to near $47.80 after confirmed death of Saudi Arabia's King Adbullah despite the well-articulated succession plan. Analysts noted that the rally could reflect some added uncertainty on output agenda, particularly if the Kingdom decides to embark on some public spending to help smooth over the transition.

In Japan, Jan manufacturing PMI continued on expansion track, edging expectations by a decimal point above 52 level. Markit economist noted improvement in operating conditions for Japanese manufacturers, with production and new orders remaining in robust growth territory. Recall in the latest decision, BOJ also upgraded its assessment of industrial output. Also of note, BBC reporter citing BOJ Gov Kuroda suggesting that reaching 2% inflation target would be delayed to the end of FY15/16, which is in line with the latest projections of FY15/16 Real CPI 1.0% (down from 1.7%) and FY16/17 Real CPI of 2.2%. USD/JPY traded in about a 50pip range around 118.50.

Equities

US markets:

- INFN: Reports Q4 $0.13 v $0.11e, R$186.3M v $182Me; Guides Q1 $0.10 +/- a couple pennies v $0.07e, R$180-190M v $167Me - conf call; +13.5% afterhours

- MXIM: Reports Q2 $0.33 (adj) v $0.29e, R$566.8M v $567Me; +5.4% afterhours

- SBUX: Reports Q1 $0.80 v $0.80e, R$4.80B v $4.79Be; +4.5% afterhours

- ETFC: Reports Q4 $0.26 v $0.23e, R$461M v $445Me; +4.2% afterhours

- DWA: Implements strategic plan to restructure feature film business; To cut 500 jobs; +1.0% afterhours

- COF: Reports Q4 $1.68(core) v $1.74e, R$5.81B v $5.69Be; +0.1% afterhours

- CE: Reports Q4 $1.28 v $1.19e, R$1.56B v $1.69Be; -1.6% afterhours

- ALTR: Reports Q4 $0.36 v $0.35e, R$479.9M v $482Me; -2.0% afterhours

- ISRG: Reports Q4 $4.92 v $4.32e, R$601M v $586Me; -2.4% afterhours

- MSCC: Reports Q1 $0.65 v $0.65e, R$303.6M v $304Me; -3.4% afterhours

- EGHT: Reports Q3 $0.04 v $0.04e, R$41.4M v $41.5Me; -3.4% afterhours

- KLAC: Reports Q2 $0.68 v $0.51e, R$676.4M v $662Me; Guides Q3 $0.63-0.87 v $1.03e, R$685-765M v $811Me - conf call; -5.6% afterhours

- LF: Reports Q3 prelim -$1.77 v $0.28e, Rev $145M v $228Me; Withdraws FY guidance; -24.4% afterhours

- BOX: Said to price 12.5M shares of IPO at $14.00/shr, above expected $11-13/shr range - financial press

Notable movers by sector:

- Consumer Discretionary: Gome Electronics 493.HK -5.2% (FY14 guidance); Daphne International Holdings 210.HK -6.7% (Q4 SSS results); China Southern 1055.HK +1.5% (controlling shareholder raises stake)

- Financials: Haitong Securities 6837.HK +2.9% (FY14 results); Dai-Ichi Mutual Life Insurance 8750.JP +5.1% (approved for Protective acquisition)

- Materials: Arrium Ltd ARI.AU -6.7% (Q2 shipment results); MACA Ltd MLD.AU -11.3% (cuts FY15 guidance)

- Energy: Sinopec Yizheng Chemical Fibre 1033.HK +6.1% (FY14 guidance); Kansai Electric Power 9503.JP +1.3% (press speculation on nuclear reactors extension); Santos STO.AU +4.7% (Q4 production); Tap Oil TAP.AU +3.9% (shareholder raises stake)

- Industrials: Worley Parsons WOR.AU +7.7% (awarded contract)

- Technology: Shanghai Great Wisdom 601519.CN +10.0% (to acquire Xiangcai Securities)