Commodity currencies and copper move lower

Asia Market Update: Asia trades lower after volatile US session, large tech names decline after prior gain (Tencent, Samsung, Hynix); Rates rise in China; Commodity currencies and copper move lower.

General Trend

- Hang Seng declines over 2% after 2.4% gain in Monday; Shares of Tencent see volatility, TECH index drops over 3% [index rose over 4% on Mon.]

- Early decliners in Shanghai included IT and Consumer firms

- Kospi declines ahead of results from Hyundai and Kia; Chipmakers also decline

- Japan automakers decline amid continued reports related to chip shortages; Other decliners included Transports and Iron/Steel cos; Topix Pharma index rises

- MSCI warns that additional Chinese cos. could be removed from indexes as the firm awaits clarity from the US Treasury

- Rates rise in China amid PBOC cash drain; CNY280B of reverse repos are due to mature on Wed (Jan 27th); PBOC advisor said to have commented on asset bubbles and outflows

- China official does not expect COVID outbreak to lead to production shutdown

- China plans to add more 5G base stations in 2021

- Companies expected to report during the NY morning include Archer-Daniels, Autoliv, American Express, DR Horton, Freeport McMoran, GE, JNJ, Lockheed Martin, 3M, Polaris, Plug Power, Verizon, Xerox

Headlines/Economic Data

Australia/New Zealand

- ASX 200 closed for holiday

- (AU) Australia Securities and Investments Commission is working with cyber security advisers to undertake an investigation and to resume online systems after an incident related to Accellion software

Japan

- Nikkei 225 opened -0.4%

- (JP) Japan Fin Min Aso: Declines in Oil prices is a big factor in Core CPI; looked into using tax policy to offer support during pandemic

- 7203.JP Said to be on track to meet FY20/21 global production target of 8.25M units – Nikkei

- (JP) Bank of Japan (BOJ) Dec Meeting Minutes: Many members agreed that it was appropriate to assess various measures, such as asset purchases and the conduct of yield curve control

- 9202.JP Announces interim FY21 flight schedule: To operate flights using mainly smaller aircraft to downsize operations and reduce costs, domestic operations to make up core of earnings; Large aircraft usage -50% y/y, Small aircraft usage +50% y/y

- (JP) Japan PM Suga: Accepts criticism of virus policy with humility; Want to prepare for Olympics with virus measures; Not thinking about blanket cash handouts

Korea

- Kospi opened -0.2%

- 005380.KR Reports Q4 (KRW) Net 1.38T v 772.1B y/y; Op 1.64T v 1.24T y/y; Rev 29.2T v 27.8T y/y

- (KR) South Korea appeals WTO ruling on anti-dumping tariffs on Japan steel

- (KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: -1.1% V 0.9%E; Y/Y: -1.4% V -1.6%E; 2020 GDP -1.0% (lowest level since 1998)

China/Hong Kong

- Hang Seng opened -0.9%; Shanghai Composite opened -0.4%

- (CN) Shanghai Stock Exchange: To suspend short selling in the CSI 500 ETF; the outstanding securities borrowed by investors for selling hit a cap of 75% of the total ETF

- (CN) China PBOC Open Market Operation (OMO): Injects CNY2B in 7-day reverse repos v CNY2B in 7-day reverse repos prior; Net drain CNY78B v Net inject CNY0B prior

- (CN) China PBOC sets Yuan reference rate: 6.4847 v 6.4819 prior

- (CN) China Ministry of Industry and Information Technology (MIIT) Official: Confirms China plans to build 600K 5G base stations in 2021; Sector faces pressure due to coronavirus pandemic, a nationwide production halt is not likely even with COVID

- (CN) China PBoC Advisor Ma Jun said to have proposed dropping GDP target permanently; stabilizing job market and controlling inflation should be the major goals of China’s macroeconomic policy - 21st Century Business Herald

- (CN) China reportedly looking to buy more US soybeans as the Brazil crop delays have continued – press

- (CN) According to United Nations Conference on Trade and Development China was the top recipient of foreign direct investment (FDI) in 2020 - Nikkei

North America

- (US) Janet Yellen confirmed by US Senate to be Treasury Secretary - press (as expected)

- (US) Senate Minority Leader (R-KY) McConnell: Will reach power sharing agreement after Democrat Filibuster assurances; Looking forward to power sharing agreement

Europe

- (IT) PM Conte said to be likely to resign after informing the cabinet today or tomorrow; hopes to win mandate from Pres Mattarella to form a new govt - press

- (UK) Reportedly UK Hotel chains expecting government to announce enforced quarantine policy on Tuesday - UK press

- (DE) Germany Chancellor Merkel: Pandemic management slipped out of control - German press

Levels as of 12:15ET

- Hang Seng -1.9%; Shanghai Composite -1.2%; Kospi -2.0%; Nikkei225 -0.8%; ASX 200 +0.4%

- Equity Futures: S&P500 -0.5%; Nasdaq100 -0.5%, Dax -0.6%; FTSE100 +0.2%

- EUR 1.2147-1.2127; JPY 103.81-103.67; AUD 0.7720-0.7685; NZD 0.7218-0.7171

- Commodity Futures: Gold 0.0% at $1,855/oz; Crude Oil -0.6% at $52.48/brl; Copper -0.7% at $3.61/lb