Australia Current Account hints at stronger Q4 GDP

Asia Mid-Session Market Update: Japan industrial output contracts; Australia Current Account hints at stronger Q4 GDP

US Session Highlights

- (US) Jan Building Permits revised higher from 1.285M to 1.293M

- (US) JAN PRELIMINARY DURABLE GOODS ORDERS: 1.8% V 1.7%E; DURABLES EX-TRANSPORTATION: -0.2% V +0.5%E

- (US) President Trump: defense budget increases will be offset by savings elsewhere; tomorrow's address will have big statement on infrastructure spending

- (US) JAN PENDING HOME SALES M/M: -2.8% V +1.0%E; Y/Y: +2.7% V -2.0% PRIOR (falls to one-year low)

- (US) White House spokesperson: budget plan to request $54B increase in defense spending; will look for corresponding cuts across other agencies - press

- (US) FEB DALLAS FED MANUFACTURING ACTIVITY: 24.5 V 19.4E

US markets on close: Dow +0.1%, S&P500 +0.1%, Nasdaq +0.3%

- Best Sector in S&P500: Energy

- Worst Sector in S&P500: Telecom

- Biggest gainers: ILMN +4.3%, SWN +3.5%, TGNA +3.5%, REGN +3.3%, JWN +3.3%

- Biggest losers: AES -6.6%, NEM -5.9%, NRG -4.0%, MDLZ -3.6%, HBI -3.4%

- At the close: VIX 12.1 (+0.6pts); Treasuries: 2-yr 1.20% (+4bps), 10-yr 2.37% (+5bp), 30-yr 2.99% (+3bps)

US movers afterhours

- NTRI: Reports Q4 $0.29 v $0.22e, R$108.9M v $100Me; Guides Q1 GAAP $0.14-0.19 v $0.10e, R$202-207M v $180Me; EBITDA $11.6-13.6M; +17.9% afterhours

- SBY: To be Acquired by Tricon Capital Group Inc. in $1.4B in All-Cash Transaction, or $21.50/shr; +16.9% afterhours

- KND: Reports Q4 $0.08 v $0.06e, R$1.75B v $1.73Be; Guides initial FY17 $0.55 v $0.43e, R$7.1-7.3B v $6.8Be, EBITDAR $910-950M; +5.1% afterhours

- PCLN: Reports Q4 $13.47 v $13.06e, R$2.35B v $2.33Be; +3.3% afterhours

- HTZ: Reports Q4 -$0.71 v -$0.54e, R$2.01B v $2.03Be; +2.0% afterhours

- WDAY: Reports Q4 $0.07 v -$0.01e, R$436.7M v $430Me; Guides initial FY18 R$2.01-2.03B v $1.99Be; -2.1% afterhours

- FTR: Reports Q4 -$0.12 v -$0.03e, R$2.41B v $2.50Be; approves stock split; Guides initial FY17 Capex $1-1.25B, ~ unch y/y; -8.5% afterhours

- PRGO: Reports FY16 $5.6B v $5.44Be; To divest Tysabri royalty stream to Royalty Pharma in $2.9B deal; Guides FY17 adj $7.10-7.25 v $7.21e, R$5-5.2B v $5.51Be; -10.7% afterhours

- FRGI: Reports Q4 $0.27 v $0.27e, R$171.3M v $176Me; Halts strategic alternatives search; -13.3% afterhours

- THC: Reports Q4 $0.06 v $0.20e, R$4.86B v $4.97Be; Guides Q1 -$0.60 to -$0.45 v $0.45e, R$4.75-4.95B v $4.95Be, adj EBITDA $475-525M; -14.3% afterhours

Politics

- (US) Wilbur Ross confirmed as US Commerce Sec by US Senate in 72-27 vote - press

- (US) Former US Ambassador to China Jon Huntsman said to be in talks to become No 2 official at the State Dept - press

Asia Key economic data:

- (JP) JAPAN JAN RETAIL SALES M/M: 0.5% V 0.3%E; RETAIL TRADE Y/Y: 1.0% (3rd straight increase) V 1.0%E

- (JP) JAPAN JAN PRELIMINARY INDUSTRIAL PRODUCTION M/M: -0.8% (biggest decline since May 2016, first decline in 6 months) V +0.4%E; Y/Y: 3.2% V 4.3%E

- (JP) JAPAN JAN VEHICLE PRODUCTION Y/Y: 3.8% V 4.2% PRIOR

- (AU) AUSTRALIA Q4 CURRENT ACCOUNT BALANCE (A$): -3.9B V -4.0BE; NET EXPORTS OF GDP: 0.2% V 0.2%E

- (AU) AUSTRALIA JAN HIA NEW HOME SALES M/M: -2.2% (First decline in 3 months) V +0.2% PRIOR

- (AU) AUSTRALIA JAN PRIVATE SECTOR CREDIT M/M:0.2% V 0.5%E; Y/Y: 5.4% V 5.6%E

- (NZ) NEW ZEALAND JAN TRADE BALANCE (NZ$): -285M V -25ME (7th straight deficit)

- (NZ) NEW ZEALAND FEB ANZ ACTIVITY OUTLOOK: 37.2 (5-month low) V 39.6 PRIOR; BUSINESS CONFIDENCE: 16.6 (5-month low) V 21.7 PRIOR

Asia Session Notable Observations, Speakers and Press

- Asian indices traded mixed after consecutive down days, with funds flowing out of Treasuries and seeking riskier assets. Nikkei is outperforming as USD/JPY broke a string of 3 straight down days with a rally. Reversals in Treasuries and the greenback are construed as technically driven, with all eyes on President Trump's first speech to a joint session of Congress on Tuesday night and hopes of more concrete outline of promised tax cuts and infrastructure spending initiatives.

- Also due out tomorrow is Australia's Q4 GDP, and analysts are increasingly more upbeat following today's narrower than expected current account deficit as well as anticipated rise in Exports % of GDP component. This follows strong corporate profits data overnight and mixed CapEx figures last week, leading some analysts to revises their growth targets slightly higher.
- Japan industrial output surprised with its first sequential decline in 6 months. While METI raises its Feb forecast to 3.5% m/m v 0.8%, March is seen contracting again at -0.5% as JPY remains stubbornly stronger in the first two months of the year.

- China's Vice Premier Yang took a more conciliatory tone ahead of Trump's address tomorrow, calling for Beijing to maintain non-confrontational principle with the US despite the recent press reports of both sides boosting their military spending. Overnight, a PBoC official also called for monetary policy to be more neutral, as China govt looks ahead to Trump's address and any further mention of Beijing being the "grand champion" Of currency manipulation.

Asian Equity Indices/Futures (00:30ET)

- Nikkei +0.6%, Hang Seng -0.1%, Shanghai Composite +0.2%, ASX200 -0.2%, Kospi +0.3%

- Equity Futures: S&P500 flat; Nasdaq flat; Dax +0.1%; FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (00:30ET)

- EUR 1.0570-1.0595; JPY 112.45-112.80; AUD 0.7665-0.7690; NZD 0.7175-0.7195

- Apr Gold -0.4% at $1,254/oz; Apr Crude Oil +0.3% at $54.20/brl; May Copper flat at $2.69/lb

- (CN) PBOC SETS YUAN MID POINT AT 6.8750 V 6.8814 PRIOR

- (CN) PBOC to inject combined CNY30B v CNY30B prior in 7-day, 14-day and 28-day reverse repos

- (JP) Japan MoF sells ¥2.09T v ¥2.3T indicated in 2-yr 0.1% JGBs; Avg yield: -0.252% v -0.173% prior; bid to cover: 3.93x (lowest since Sept 29) v 5.19x prior

Asia equities/Notables/movers by sector

- Consumer discretionary: HVN.AU Harvey Norman +0.3% (H1 result); MBE.AU Mobile Embrace -9.0% (H1 result); VTG.AU Vita Group +7.1% (H1 result)

- Financials: 1233.HK Times Property Holdings +6.6%, 388.HK Hong Kong Exchanges & Clearing -0.9% (FY16 result); SPO.AU Spotless -13.7% (guidance); EGH.AU Eureka Group Holdings -14.0% (H1 result)

- Industrials: WOR.AU Worley Parsons +30.2% (receives proposal); 7013.JP IHI Corp +3.6% (booked gain); CDD.AU Cardno +11.9% (Morgans Financial raises rating)

- Technology: 018260.KR Samsung SDS Co Ltd -1.9% (momentum)

- Materials: RSG.AU Resolute Mining -12.8% (H1 result); FMG.AU Fortescue -0.3% (no interest in Wesfarmers coal assets); ORE.AU Orocobre -14.6% (H1 result)

- Energy: AWE.AU AWE +3.2% (H1 result)

- Healthcare: CAJ.AU Capitol Health -6.1% (H1 result)

- Telecom: SDA.AU SpeedCast International -6.0% (FY16 result)