Equity indices trade generally lower after mixed session on Wall Street

Asia Market Update: Equity indices trade generally lower after mixed session on Wall St.; Tencent continues to cut stakes in tech cos. amid regulatory headwinds; Huarong’s shares crushed after trading resumption.

General trend

- Evergrande unit [Hengda Real Estate] seeks to delay yuan-denominated bond repayment.

- USD/JPY and 10-year UST yield trade slightly lower.

- JPY/KRW rises amid reported launch by North Korea.

- Japan’s monetary base continued to slow in Dec.

- South Korea’s FX reserves declined in Dec [2nd straight drop].

- US equity FUTs have remained modestly lower in Asia, Nasdaq FUTs continue to lag.

- Chipmakers trade generally lower.

- Financials trade higher in Asia after US gains, recent rise in 10-yr UST yield.

- Nikkei has traded generally flat and outperformed in Asia [Exporters supported by recent yen weakness; Sony rises amid EV news; Softbank Group tracks the Nasdaq decline]; Topix Banks index rises.

- Fast Retailing [largest Nikkei component] to report Dec sales after the market close.

- Hang Seng ended morning trading lower despite the higher open [TECH index declined by over 2.9%; Mainland property index pared drop].

- Shanghai Composite declined during the morning session [IT index dropped >2.8%].

- China Mobile’s H-shares rise on stock buyback, A-shares gain in Shanghai debut.

- S&P ASX 200 reversed the opening gain [Consumer indices drop amid higher bond yields].

- Kospi lags amid North Korea report and declines in chipmakers.

- US ADP data due later today.

- US FOMC Minutes also due later today.

- Companies due to report during the NY morning include RPM International, Simply Good Foods.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened +0.2%.

- (NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.3% v -1.5% prior.

- (US) Fed's Kashkari (dove, non-voter): Expects two rate hikes in 2022.

- (AU) Australia PM Morrison: To sign a historic treaty with Japan to strengthen defense and security ties.

Japan

- Nikkei 225 opened -0.0%.

- 8473.JP CEO Kitao: Repaying public funds via a delisting is an alternative – press.

- (JP) Japan expected to declare a quasi state of emergency in Okinawa Prefecture due to covid spread – press.

- 6758.JP CEO: Looking into launch of Sony EV, establishing Sony Mobility Inc - Comments at CES.

- (JP) Japan MoF sells ¥2.6T v ¥2.6T indicated in 0.1% 10-year JGBs; avg yield 0.0960% v 0.0600% prior; bid to cover: 3.46x v 3.16x prior.

- 4507.JP Oral COVID drug application said to be delayed - Japan press.

Korea

- Kospi opened -0.2%.

- (KR) Said that North Korea had fired what appears to be a ballistic missile towards the east sea - Japanese coast guard.

- (KR) South Korea Fin Min Hong: Housing market has been stabilizing with home prices not just in Seoul but also many other local areas on a downward trend on higher taxes and stricter lending rules.

China/Hong Kong

- Hang Seng opened +0.2%; Shanghai Composite opened -0.1%.

- (CN) China Shanghai and Shenzhen bourses issued draft rules to tighten information disclosure over listing companies’ bankruptcy and restructuring – press.

- (CN) China PBOC may increase liquidity injection before the Spring Festival in order to deal with the liquidity shortage ahead of the holiday - China Securities Journal.

- (HK) Hong Kong Dec PMI (Whole Economy): 50.8 v 52.6 prior (11th consecutive expansion).

- (HK) Hong Kong has discovered its first untraceable case of covid (within the last 3 months).

- (CN) China city of Yulin offering up to CNY10,000 subsidy for home purchases.

- (CN) China PBOC sets Yuan reference rate: 6.3779 v 6.3794 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior; Net drain: CNY200B v drain CNY260B prior.

- (CN) China city of Yuzhou (Henan province) ordered its 1.17M population into lockdown to contain covid.

- (CN) Banks in China have reduced traditional lending, notes concerns related to the Chinese economy - FT.

- (CN) CICC sees China Q4 GDP at 4.1% (would be lowest since June 2020) - press.

- (CN) China Cyberspace Regulator has issued draft rules for mobile apps: App creators must not use apps to conduct activities that endanger national security.

Other

- (PH) Philippines Dec CPI Y/Y: 3.6% v 4.1%e (Moves back into 2.0-4.0% target range for the 2nd time in 12 months); Central Bank Gov Diokno: CPI to ease close to midpoint of range in 2022, 2023.

- (SG) Singapore Nov Retail Sales M/M: 2.1% v 0.7% prior; Y/Y: 1.9% v 0.7%e.

North America

- (US) Atlanta Fed GDPNow: Cuts Q4 GDP forecast to 7.4% from 7.6%.

- (US) Weekly API Crude Oil Inventories: -6.4M v -3.1M prior.

- (US) CDC Updates Quarantine and Isolation Guidance: If have access to test and want to test, best use to use antigen test towards the end of 5-day isolation period, its its positive then continue to isolate for 5 more days, if negative wear mask around others for final 5 days.

- (US) Chicago teachers (3rd largest school district in US) vote to switch to remote learning due to COVID; In person classes canceled effective immediately.

Europe

- (IE) Ireland Dec PMI Services: 55.4 v 59.3 prior (lowest since Mar 2021, 10th consecutive expansion).

Levels as of 00:15ET

- Hang Seng -1.2%; Shanghai Composite -0.9%; Kospi -1.6%; Nikkei225 +0.1%; ASX 200 -0.3%.

- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.5%, Dax -0.3%; FTSE100 -0.5%.

- EUR 1.1297-1.1277; JPY 116.25-115.90; AUD 0.7245-0.7226; NZD 0.6820-0.6798.

- Commodity Futures: Gold +0.1% at $1,815/oz; Crude Oil +0.0% at $76.99/brl; Copper -0.6% at $4.44/lb.