Equities higher tracking US moves

Asia Market Update:Equities higher tracking US moves; markets await China Q4 GDP; SAFE affirms yuan fluctuations is the new norm

Headlines/Economic Data

General Trend:

- Asian markets generally track US gains

- Strength in chip-related companies after S&P500 Tech index outperformed on Wed: Taiwan Semi +2.4%, Tokyo Electron +4%, SUMCO Corp +3%

- Australian Dollar and bond yields pare gains: Dec Employment Change, unemployment rate and participation rate all higher than expected

- BHP Q2 iron ore production in line

- Awaiting China Q4 GDP data, there was a report citing NDRC official, that CHINA 2017 GDP: 6.9% V 6.8%E

Japan

-Nikkei 225 opened +0.9; closed -0.4%

- (JP) Japan's Topix passes 1,900 for the first time since 1991

- Nintendo [7974.JP] +3% (Confirms the launch of Nintendo Labo on April 20th)

- (JP) Japan Cabinet: Rising land prices helped Japan's national wealth rebound in 2016 to its highest level in over 15 years, reaching 3.35 quadrillion yen – Nikkei

- (JP) Japan investors net bought ¥953.5B in foreign bonds v bought ¥186.6B in prior week; Foreign investors net bought ¥498.7B in Japan stocks v bought ¥598.7B in prior week

- (JP) Some at BOJ are said to see need for future normalization talks, see the market getting ahead of itself and agree that current stimulus needed for now – financial press

- (JP) Japan MoF sells ¥800B v ¥800B indicated in 0.8% (0.8% prior) 30-yr bonds; Avg yield: 0.832% v 0.848% prior; Bid to cover: 3.77x v 4.38x prior

-(JP) JAPAN NOV FINAL INDUSTRIAL PRODUCTION M/M: 0.5% V 0.6% PRELIM; Y/Y: 3.6% V 3.7% PRELIM; Capacity Utilization m/m: 0.0% v 0.2% prior

Korea

-Kospi opened +0.5%

- (KR) South Korea to check source of funds for cryptocurrency trading - Korean press

-(KR) South Korea regulator: Still considering shutting down all virtual currency exchanges; will make a decision soon on cryptocurrency regulation

- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.50%; AS EXPECTED

(KR) Bank of Korea (BOK) gives 2019 outlook: GDP at 2.9%; CPI 2.0%

China/Hong Kong

-Hang Seng opened -0.3%, Shanghai Composite +0.1%

- Hang Seng Consumer Goods Index -0.7%: Automakers trade generally lower (China to further cut new energy auto subsidies in 2018 – China Daily)

- Ping An Insurance [2318.HK] +1.3% (Planning to spinoff 4 units to raise HK$62.4B – HK Press)

- CITIC Telecom [1883.HK]: +4.5% (Said to consider increase in final dividend payout - HK Press)

- Luk Fook, 590.HK Reports Q3 SSS +1% y/y ; shares down ~10%

- (CN) China said to be promoting encryption techniques to go “all domestic” to insure financial security while paving the way to introduce the nation’s own digital fiat currency – CD

-(CN) China said to reduce spending through certain bank accounts - press

- USD/CNY (CN) PBoC sets yuan reference rate at 6.4401 v 6.4335 prior

- (CN) China PBoC OMO: Injects CNY160B in 7,14 and 63-day reverse repos v CNY200B prior; Net injects CNY90B v CNY100B prior

- (CN) CHINA NOV PROPERTY PRICES M/M: RISES IN 57 OUT OF 70 CITIES V 50 PRIOR; Y/Y RISES IN 61 OUT OF 70 CITIES V 59 PRIOR

- (CN) China Dec Net FX Settlement (CNY-terms): +44.5B v -31.2B prior

- (CN) China FX regulator SAFE: 2017 cross border capital flows improved; FX market demand and supply were basically balanced

- (CN) China MOFCOM: To support auto related consumption in 2018; 2017 new-energy auto sales +53.3% y/y

- HNA unit Bohai Capital: said HNA Capital (parent company) used 2.14B shares as collateral

Australia/New Zealand

-ASX 200 opened +0.1%; closed +0.2%

- ASX 200 Financials Index +0.4%; Energy Index -1.3%

- Woodside Petroleum [WPL.AU] -1.3% (Q4 production and revenues declined y/y)

- (AU) AUSTRALIA DEC EMPLOYMENT CHANGE: +34.7K V +15.0KE (15th consecutive monthly gain); UNEMPLOYMENT RATE: 5.5% V 5.4%E

- (AU) Australia Dec RBA Govt FX Transactions (A$): -1.36B v -457M prior

- BHP [BHP.AU]: Pares gains following Q4 production update: Reports Q2 Iron Ore production 62Mt v 62Mte; Affirmed FY18 iron ore, copper production forecasts, cut metallurgical coal production forecast

- Newcrest Mining [NCM.AU] -1.5% (tracks decline in gold prices)

North America

- US equity markets ended higher: Dow +1.3%, Nasdaq +1%, S&P500 +0.9%, Russell 2000 +0.9%

- S&P500 Technology Sector +1.5%, Consumer Staples +1.1%

- Alcoa -5% afterhours: Reports Q4 $1.04 v $1.23e, Rev $3.17B v $3.29Be

- (US) Pres Trump: Any changes in China's purchases of US Treasuries wouldn't hurt US economy; everybody wants to buy Treasuries

- (US) White House Chief of Staff Kelly: Believes Congress will pass stopgap bill; GOP leaders have votes to avert government shutdown - US Media Interview

- (US) Fed's Kaplan (moderate, non-voter): three rate rises in 2018 is unlikely to invert the yield curve - Q&A with press

- (US) Fed's Mester (voter, hawk): US has returned to normal and policy is normalizing

- (US) Sen Banking Committee approves Fed Chair nominee Powell, Fed board nominee Quarles (as expected); votes now move to full Senate - press

- (US) NOV TOTAL NET TIC FLOWS: $33.8B V $152.9B PRIOR; NET LONG-TERM TIC FLOWS: $57.5B V $26.2B PRIOR; China Total holding of US Treasuries: $1.18T v $1.19T prior

- (CA) BANK OF CANADA (BOC) RAISES INTEREST RATE DECISION BY 25BPS TO 1.25%; AS EXPECTED

-(US) Weekly API Oil Inventories: Crude: -5.1M v -11.2M prior

Looking Ahead: US weekly DOE Crude Oil Inventories due to be released

- Corporate earnings are expected from companies including American Express, Bank of NY, IBM, Morgan Stanley

Europe

- (UK) House of Commons approves the EU Withdrawal Bill (as expected); Vote was 324 to 295

- (IE) Ireland Brexit negotiator Montgomery: freedom of movement is remarkably important; Not a significant chance for second Brexit vote - Dublin speech

- (UK) DEC RICS HOUSE PRICE BALANCE: +8% V -1%E

- (IT) Bank of Italy says meetings with ECB's Nouy on lenders constructive

- Carrefour: Reports Q4 Rev €23.3B, +2.3% y/y; Free cash flow in full-year 2017, excluding exceptional items, should stand around €950m vs. €1,039m in 2016. Capital expenditure in the full year should stand at €2,145mn ex Carg

 

Levels as of 01:00ET

- Nikkei225 -0.4%, Hang Seng -0.0%; Shanghai Composite +0.5%; ASX200 -0.0%, Kospi +0.1%

- Equity Futures: S&P500 -0.0%; Nasdaq100 -0.2%, Dax -0.1%; FTSE100 -0.1%

- EUR 1.2207-1.2166; JPY 111.48-111.15; AUD 0.7996-0.7942;NZD 0.7292-0.7246

- Feb Gold -0.9% at $1,327/oz; Feb Crude Oil +0.2% at $64.12/brl; Mar Copper +0.3% at $3.20/lb