China CPI softer then expected, opening door for possible rate cut

Asia Market Update: China CPI softer then expected, opening door for possible rate cut; covid measures in China continue to impact manufacturing, US CPI in focus for US morning.

Headlines/Economic data

- Markets across the region trading higher, taking a cue from New York session. Hong Kong boosted by JD.com who opened its first robot manned stores in the EU. Alibaba higher on a Jack Ma sighting.

- Fed Chair Powell comments seen as less hawkish than expected, sparking risk on sentiment.

- China CPI came in weaker than expected at 1.5%, giving further confirmation for China to continue with looser monetary policy.

- Didi moving forward with IPO in Hong Kong.

- Major currencies little changed in the session.

- China continues to take measures to enforce its zero covid case policy, having all workers in Tianjin (foreign industrial manufacturing hub) take a half day off work to get tested. Volkswagen and Toyota have warned of production impacts for factories in the city.

- Attention to now focus on US inflation being released in US morning, which is estimated to be highest since early 1980s at 7.0% y/y.

Australia/New Zealand

- ASX 200 opened +0.2%.

- APT.AU Block received confirmation of the non-opposition of the Bank of Spain to the Afterpay Transaction – filing.

- (AU) Australia sells A$1.0B v A$1.0B indicated in 1.75% Nov 2032 bonds, avg yield 1.8898% v 1.969% prior; bid to cover 3.65x v 3.39x prior.

- (NZ) New Zealand Dec ANZ Commodity Price M/M: -0.2% v +2.8% prior.

- (AU) Australia Q3 Job Vacancies Q/Q: +18.5% v -9.8% prior.

Japan

- Nikkei 225 opened +0.8%.

- (JP) Bank of Japan (BOJ) quarterly Regional Economic Report (Sakura): Upgrades assessment of all 9 regions, economies are picking up or showing signs up pick up.

- 3880.JP To increase the prices of household products including tissues and toilet rolls by at least 15%, effective starting March 22nd shipments.

- 6506.JP Reported 9M Net ¥30.8B v ¥14.1B y/y, Pretax ¥41.2B v ¥19.1B y/y, Op ¥39.9B v ¥20.0B y/y, Rev ¥357.4B v ¥279.9B y/y (yesterday after the close).

- (JP) Japan Nov Current Account: ¥897.3B v ¥589.8Be; Adj Current Account: ¥1.37T v ¥1.05Te.

- (JP) Japan said to offer advanced chipmakers support in building production facilities domestically including for 10NM technologies - Nikkei.

- (JP) Japan Cabinet approval rating +7ppt to 57% - NHK poll.

- (JP) Bank of Japan Gov Kuroda: Financial system maintaining stability; Watching coronavirus impact, and will add stimulus as needed; CPI picking up gradually.

- (JP) Japan Chief Cabinet Sec Matsuno: Expects Tokyo Stock Exchange changes to be good for the market and companies.

- (JP) Japan MoF sells ¥2.5T v ¥2.5T indicated in 0.005% 5-year JGBs; Avg Yield: -0.0410% v -0.0860% prior, bid-to-cover: 3.34x v 3.63x prior.

Korea

- Kospi opened +0.8%.

- (KR) South Korea Dec Unemployment: 3.8% v 3.2%e, adds 773K jobs (added most jobs since 2014).

- (KR) North Korea confirms it had a successful final test firing of its hypersonic missile, flew 1,000 km and accurately hit its target.

- 005380.KR America unit to run two shifts instead of three at Alabama facility due to chip supply issues - press.

- (KR) Poll of Economists expect South Korean GDP Growth at 3.9% in 2021, 2.9% in 2022, and 2.5% in 2023, down from prior polling.

China/Hong Kong

- Hang Seng opened +1.4%; Shanghai Composite opened +0.3%.

- (HK) Hong Kong asks civil servants to work from home starting Thursday.

- (CN) CHINA DEC CPI M/M: -0.3% V +0.2%E; Y/Y: 1.5% V 1.8%E; PPI Y/Y: 10.3% v 11.3%e; Food CPI y/y: -1.2% v +1.6% prior.

- 363.HK China unit had CNY2.62B outstanding in accounts receivable, a portion may be nonrecoverable as unit is 70% owned by China listed Subsidiary.

- 9988.HK Founder Jack Ma was said to have been spotted at a charity event for rural teachers - Press.

- 883.HK Guides FY22 production 600-610M boe; Guides FY21 Net production ~570M boe (shares +11%).

- (CN) China PBOC sets Yuan reference rate: 6.3658 v 6.3684 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior; Net CNY0B v CNY0B prior.

- 9618.HK Opened two robotic and automated stores in the Netherlands called “Ochama” - press.

- (CN) Tianjin, China has asked all workers to take a half day off for covid testing.

- (HK) Hong Kong Chief Exec Lam: Will set up a new bureau that focuses completely on housing - Comments to legislative council.

- (HK) Hong Kong sees change of China reopening if there are no local coronavirus cases for 14 days.

Other

- (TW) China Official Zhu: Has blocked imports from 2 Taiwan fish farms due to toxins; not targeting specific fish farmers.

North America

- (US) Fed Chair Powell: If we have to raise rates more over time, we will - comments to Senate.

- (US) Senior White House official: Administration expects used car prices to remain high in tomorrow's CPI data, while energy inflation should subside m/m - CNBC.

- (US) Weekly API Crude Oil Inventories: -1.1M v -6.4M prior.

- DISH Said to be in merger talks again with DirecTV - NY Post.

Europe

- (EU) EU plans to put on large-scale cyberattack exercise against the supply chain.

Levels as of 00:15ET

- Hang Seng +2.2%; Shanghai Composite +0.4%; Kospi +1.4%; Nikkei225 +1.8%; ASX 200 +0.7%.

- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax +0.2%; FTSE100 +0.6%.

- EUR 1.1376-1.1365; JPY 115.40-115.24; AUD 0.7220-0.7205; NZD 0.6794-0.6780.

- Commodity Futures: Gold +0.0% at $1,819/oz; Crude Oil +0.1% at $81.28/brl; Copper +0.7% at $4.46/lb.