Asia Market Update: Asian equities track losses in the US amid focus on corporate earnings; NVIDIA guidance weighs on chip equipment companies, Huawei weighs on Chinese telecoms


General Trend:

- Equity Futures pare losses amid reports China trade delegation to the US to include PBoC Gov Yi Gang

- Shanghai Telecom Services Index -3.1%; Canada confirmed US filed extradition request for Huawei's CFO

- China autos decline, NDRC commented on industry support measures

- Japan’s Machinery index declines, Komatsu drops on guidance from Caterpillar

- Daiwa Securities declines ahead of expected earnings report

- Energy and financial shares decline in Australia

- Canada confirms US filed extradition request for CFO Meng; China asks US to withdraw arrest order for Meng

- China PBOC said to be again planning to offer offshore yuan bills in February

- Japan 30-yr JGB yield fall below 0.65%, lowest level since Dec 2016

- Japan government downgrades view on exports for the first time in 3-months

- Aussie declines on NAB business conditions data (multi-year low), pares loss on RBA comments

- Australia Q4 CPI due for release on Wed

- US/China trade talks remain in focus (Jan 30-31st)

- US companies due to report earnings on Tuesday are 3M, AMD, Allergan, Amgen, Apple, Biogen, Corning, Harley Davidson, KLA-Tencor, Lockheed Martin, Pfizer, PulteGroup, Robert Half, Verizon, Xerox, eBay (includes afterhours)


Headlines/Economic Data


- Nikkei 225 opened -0.5%

- (JP) Spring 2019 Wage talks begin between business and labor leaders; key issue for the talks will be whether or not workers receive raises sufficient to prepare for October's planned consumption hike - Japan press

- (JP) Japan 2018 shipments of White goods $22B (highest in 22 years), driven by strong air conditioner sales - Japan press

- (JP) Japan Cabinet Office (Govt) Jan Monthly Economic Report: Maintains economic assessment; downgrades view on exports, cites US/China trade war (first cut in 3-months); exports are weakening vs flat prior view

-(JP) Japan MoF sells ¥399.5B v ¥400B indicated in 0.80% (prior 0.8%) 40-yr JGBs, highest accepted yield 0.7400% v 0.9400% prior, bid to cover: 3.79x v 3.85x prior


- Kospi opened -0.2%

- 010950.KR Reports Q4 (KRW) Net -247.9B v 386.9B y/y, Op Profit -292.4B v 369.3B y/y, Rev 6.9T v 5.8T y/y

- (KR) South Korea Treasury sells KRW800B v KRW800B indicated in 30-yr bonds; avg yield 2.095% v 1.96% prior, bid to cover 2.11x

-(KR) Bank of Korea (BOK): No plans to issue or authorize a digital currency in the near future

China/Hong Kong

- Hang Seng opened -0.7%, Shanghai Composite -0.2%

- (CN) China said to cut minimum spread for local government bond issues over China Treasury bonds to 25-40bps v 40bps prior - financial press

- (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 7th consecutive session; Net: CNY0B drain v CNY0B drained prior

- (CN) China PBoC sets Yuan Reference Rate: 6.7356 v 6.7472 prior

- (CN) China Vice Premier Liu He has arrived in Washington DC ahead of the Jan 30-31 trade talks; Chinese delegation includes PBoC Gov Yi Gang, China NDRC Vice Chairman and China's Vice Finance Min - Xinhua

- (CN) China PBoC Dir of Monetary Policy Sun Guofeng: PBoC Bank Bills Swap (CBS) scheme is not China's version of quantitative easing;CBS does not change the net liquidity of the market, whereas with QE the central bank buys assets - Chinese press

- (HK) Hong Kong commercial spaces seeing increased termination of office leases due to trade war - HK press

- (CN) China expected to fight US demands for structural changes in next round of trade talks, parties still remain divided - US press

- (CN) China Banking and Insurance Regulatory Commission (CBIRC): Insurance companies being encouraged to buy more shares/bonds of high quality listed companies as part of their role in making long term investments to foster stable development – Xinhua

- (CN) China said to cut minimum spread for local government bond issues over China Treasury bonds to 25-40bps v 40bps prior - financial press

- (HK) Hong Kong Chief Exec Lam: Exports in early 2019 expected to be worse than Q4

- HUAWEI.CN DOJ unseals indictment against Huawei for conspiring to steal trade secrets from T-mobile

Australia/New Zealand

- ASX 200 opened -0.0%

- (AU) Reserve Bank of Australia (RBA) member Harper: Reiterates expect next rate move to be up, strong budget and jobs growth show economy is strong; not a lot of evidence of negative wealth effect


- (NZ) New Zealand Dec Trade Balance (NZ$): +264M v +150Me; Exports: 5.5B v 5.5Be; Imports: 5.2B v 5.3Be; Trade Balance (12-month YTD): -5.86B v -5.8Be

- TPM.AU Halts roll out of 5G equipment after Australia govt announcement in Aug that it would prohibit use of Huawei equipment in 5G networks

- (NZ) New Zealand PM Ardern: Cannot comment on interim Kiwibuild targets; home building not at pace would like to see

Other Asia

- 2330.TW Discloses that a shipment of chemicals used in the manufacturing process deviated from specs and caused wafers to have lower yields at on facility; should still be able to achieve Q1 guidance as issued on 1/17

- 2330.TW Suppliers have agreed to cut prices by 10% after TSMC warned of a weaker H1 during talks with suppliers; TSMC in return promised suppliers that if H2 orders and profits recover, will boost order volumes to compensate for suppliers' losses - DigiTimes

- 2409.TW Reports Q4 (NT$) Net 280M v 1.6Be; Op 1.45B v 1.9Be; Rev 77.09B v 77.3Be

North America

- (MX) Mexico Central Bank Dep Gov Esquivel: it's possible a US slowdown could affect the Mexican economy

- PCG California regulator approves waiver needed for bankruptcy, the measure will allow the utility to receive DIP financing


- (UK) UK PM May urges MPs to support the 'Brady amendment' that calls for the Irish backstop to be replaced by alternative arrangements - press


Levels as of 12:50ET

- Hang Seng -0.3%; Shanghai Composite -0.1%; Kospi +0.1%; Nikkei225 +0.1%; ASX 200 -0.5%

- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.4%, Dax -0.1%; FTSE100 +0.1%

- EUR 1.1418-1.1444; JPY 109.14-109.39; AUD 0.7138-0.7172; NZD 0.6817-0.6850

- Commodity Futures: Gold 0.0% at $1,303/oz; Crude Oil +0.5% at $52.27/brl; Copper +0.4% at $2.69/lb

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