Asian equities follow Wall St down on otherwise quiet day for Asia macro news

Asia Market Update: Asian equities follow Wall St down on otherwise quiet day for Asia macro news; Biden Admin re-examines China tariffs; US GDP in focus tonight

General trend

- In late NY trading the Nasdaq and S&P500 suddenly fell -1.5% for their worst day in a month. There was no news catalyst, with the down-move coming after extended gains in recent days and weeks since late October - with the DJIA having risen nearly 16% to record highs, the S&P 500 within 1% of a record, and the Nasdaq 100 jumping nearly 20%.

- The negative mood spread to Asia equities, with all indices down at opening and staying down for the morning.

- Japan’s Nikkei led the markets down (-1.5% at lunch) with index heavyweight Toyota shares falling by >5% after a 1M vehicle recall announced in the US.

- Japan govt sees FY24/25 income growth of 3.8%, beating inflation - a key measure for the BOJ potentially ending NIRP in 2024.

- JPY/USD strengthened +0.5%.

- Japan govt also raised GDP growth estimates to 1.6% for FY23/24 (v 1.3% prior).

- On the same theme, Japan unions reportedly to push for a 60% increase to ¥1,600/hr in the minimum wage by 2035.

- The WSJ reported that the Biden Administration is exploring raising tariffs on some Chinese goods, including Chinese EVs and solar products.

- US equity FUTs recovered slightly during Asia trading.

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 -0.3% at 7,537.

- Australia Nov Port Hedland Iron Ore Exports: 44.9Mts v 46.9Mts m/m.

- New Zealand Nov Credit Card Spending Y/Y: +3.3% v -2.9% prior (update).

- New Zealand Treasury: To offer NZ$1B of bonds in Jan 2024.

China/Hong Kong

- Hang Seng opens -1.0% at 16,455.

- Shanghai Composite opens -0.4% at 2,892.

- China Nov Swift Global Payments (CNY): 4.6% v 3.6% prior.

- China reportedly suspends US$6.5B currency swap agreement with Argentina.

- Analysts see moderate room for a cut in China's Loan Prime Rate (LPR) - China Securities Journal.

- China Foreign Min Wang Yi: China and Philippines relations face serious difficulties.

- Reportedly China Pres Xi told Pres Biden during ASEAN summit that China will reunify Taiwan with mainland China but the timing has not yet been decided and China’s preference is to take Taiwan peacefully, not by force – NBC.

- China reportedly suspends US$6.5B currency swap agreement with Argentina.

- China PBOC sets Yuan reference rate: 7.1012 v 7.0966 prior.

- China PBOC Open Market Operation (OMO): Sells CNY195B in 7-day reverse repos; Sells CNY226B in 14-day reverse repos; Net injects CNY159B v Net injects CNY20B prior.

Japan

- (JP) Nikkei 225 opens -1.2% at 33,276.

- Toyota (7203.JP) Shares untraded amid heavy sell orders following 1M vehicle US recall (Follow up: Shares trade as much as -5.6%).

- Japan releases weekly flows data [period ended Dec 15th]: Foreign buying of Japan equities: +¥273.8B v -¥992.0B prior; Japan buying of foreign bonds: ¥2.3T v -¥1.1T prior.

- Japan Govt raises GDP growth estimates to 1.6% for FY23/24 (v 1.3% prior).

- Japan Cabinet Office.

- Japan govt raises overall inflation view for next fiscal year to 2.5%.

- Japan unions to push for Y1,600/hr minimum wage by 2035.

- Japan PM Kishida's cabinet to hold a vote on Dec 22nd on draft budget for the fiscal year starting in April.

- Bank of Japan (BOJ) negative-rate exit reportedly may hinge on Jan, Apr inflation outlooks.

- Japan govt said to lower scheduled sales of JGB to market by ~11% y/y to ¥171T in next FY24/25 - press citing budget draft.

South Korea

- Kospi opens -0.6% at 2,598.

- South Korea Dec 1-20th Exports Y/Y: +13.0% v +2.2% prior; Imports Y/Y: -9.2% v -6.2% prior.

- South Korea Nov PPI Y/Y: 0.6% v 0.8% prior.

- South Korea capital gains tax threshold for listed shares to be eased to holdings of >KRW5B starting 2024 - Finance Ministry.

Other Asia

- Philippines: China Foreign Minister: Advises Philippine's counterpart to 'not go in the wrong direction, but return to the right path' as soon as possible - China Foreign Ministry.

- Follow up: Philippines Military Chief holds call with Japan's Chief of Staff of Self Defence Forces to discuss China South Sea security matters - Military Statement.

- Philippine Central Bank (BSP): Maintains 2-4% inflation target range through 2026.

- (TW) China to terminate tariff concessions on some Taiwan chemical products from Jan 1, 2024 - China Finance Ministry.

- Taiwan govt says China trade probe against Taiwan is typical 'economic coercion'.

- Indonesia says China top 4 automakers keen on local factories.

North America

- Biden Administration reportedly exploring raising tariffs on some Chinese goods, including Chinese EVs and solar products; Debating 'wind-down review' of Trump-era duties on ~$300B of Chinese goods - WSJ.

- Boeing (BA) Co. reportedly wins key China's CAAC clearance on 737 MAX deliveries to China - China trade publication The Air Current.

- (US) Q3 CURRENT ACCOUNT: -$200.3B V -$196.0BE.

- (US) NOV EXISTING HOME SALES: 3.82M V 3.78ME.

- (US) DEC CONSUMER CONFIDENCE: 110.7 V 104.5E; Median existing home price: $387.6K, +4.0% y/y; Months supply: 3.5 v 3.6 prior.

- (US) Fed's Harker (voter; non-voter in 2024): Hearing the economy is starting to soften faster than data suggests; Things are looking better for inflation outlook.

- (CA) Bank of Canada (BoC) Nov Summary of Deliberations: Recent data pointed in right direction but considerable uncertainty regarding inflation outlook remain elevated.

- (US) Houthi Leader: Our people decided not to' submit and kneel' to the Americans and not to back down from their 'principled, religious and humanitarian position'.

Europe

- UK Dec Lloyds Business Barometer: 35 v 42 prior.

- Ireland Nov Consumer Confidence: 62.4 v 61.9 prior.

- Russia Pres Putin: Says 'ready to talk on Ukraine' - press.

- (EU) EU launches anti-dumping investigation into imports of biodiesel from China - FT.

- (EU) ECB’s Knot (Netherlands): Rate cut in first half of 2024 seems rather unlikely, based on what we know today.

- (EU) EURO ZONE DEC ADVANCE CONSUMER CONFIDENCE: -15.1 V -16.3E.

- EU) Reportedly EU Finance Ministers (EcoFin) reach agreement on reform of EU fiscal, debt rules - press.

- (EU) ECB's Kazaks (Latvia, hawk): Rates will remain at 4% for some time before a likely cut.

Levels as of 00:20 ET

- Nikkei 225 -1.7%; ASX 200 -0.4%; Hang Seng -0.3%; Shanghai Composite +0.2%; Kospi -0.8%.

- Equity S&P500 Futures +0.3; Nasdaq100 +0.4%; Dax +0.2%; FTSE100 flat.

- EUR 1.0937-1.0955; JPY 142.81-143.62; AUD 0.6725-0.6763; NZD 0.6240-0.6263.

- Gold flat at $2,048/oz; Crude Oil -0.5% at $73.84/brl; Copper +0.4% at $3.8967/lb.