Asia Market Update: Equity indices decline after weakness on Wall St.; JP equities lag, JGB yields and Yen rise amid focus on BOJ; Hawkish Fed speak continues; China GDP in focus.

General trend

- China Dec Trade Surplus well above ests, imports miss ests.

- South Korea bond yields rise amid BOK comments on inflation; SK also announced smaller than speculated extra budget.

- UST yields rise in Asia.

- US equity FUTS have moved between slight gains and losses.

- Japanese equities have extended declines amid focus on BOJ and stronger Yen.

- Shanghai and HK equity markets traded modestly lower during the morning sessions; Shanghai Property index extended drop.

- Transaction related to Ant Financial unit breaks down.

- S&P ASX 200 has been weighed down by Consumer Staples index.

- SAP issued prelim Q4 results and 2022 guidance, also announced buyback.

- PBOC generally conducts MLF operations around the 15th of the month.

- China Dec data and Q4 GDP due on Monday [Sunday night in the US].

- BOJ rate decision and economic forecasts are due on Tues (Jan 18th).

- US financial earnings in focus (BlackRock, Citi, JPMorgan, Wells Fargo).

- US Dec retail sales due later today.

- US equity markets are closed for holiday on Mon (Jan 17th).

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened -0.4%.

- (AU) Australia sells A$1.0B v A$1.0B indicated in 0.25% Nov 2025 bonds, Avg Yield: 1.325%; bid-to-cover 5.28x.



- Nikkei 225 opened -0.8%.

- (JP) Bank of Japan (BOJ) policy makers said to be debating when to 'telegraph' a rate hike that can come before hitting 2.0% CPI target; notes an actual rate hike is not imminent - financial press.

- (JP) Japan MoF sells ¥1.2T v ¥1.2T indicated in 0.500% 20-year JGBs, Avg Yield: 0.5320% v 0.4520% prior, bid-to-cover: 3.18x v 3.66x prior.

- (JP) Japan Fin Min Suzuki: Affirms to strive to reach FY25/26 primary budget balancing target; JGBs will not face a loss of principal, reiterates market confidence is important.

- (JP) Economist Poll: Japan wage hike policies are unlikely to start a virtuous growth cycle in 2022; Economists see 2021 GDP +2.7% (down from 2.8%), and 2022 GDP +3.0% (down from 3.1%).


- Kospi opened -0.8%.


- (KR) South Korea confirms to submit extra budget proposal to parliament before the Lunar New Year - South Korea press.

- (KR) South Korea may permit private gatherings of up to 6 people - South Korea press.

- (KR) South Korea Fin Min Hong: Planning KRW14T extra budget.

China/Hong Kong

- Hang Seng opened -1.0%; Shanghai Composite opened -0.3%.

- 3333.HK Main unit Hengda Real Estate exec: Bondholders approve proposed delay to CNY bond redemption and coupon payments.

- (CN) China 2022 infrastructure investment seen +8% y/y - Chinese press.

- (CN) China Zuhai City (Guangdong province) to conduct mass coronavirus testing on Fri (Jan 14th).

- (CN) China expected to release updated 5-year plan related to transportation - Chinese press.

- (CN) China soybean production to rise 40% by 2025 - SCMP.

- 1359.HK Says will not subscribe for shares of Chongqing Ant Consumer Finance [6688.HK]; cites commercial consideration and negotiation with Ant unit.

- (CN) China PBOC sets Yuan reference rate: 6.3677 v 6.3542 prior.

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

- (CN) China President Xi to speak at World Economic Forum (WEF) video conference on Jan 17th (Mon).

- (CN) CHINA DEC TRADE BALANCE: $94.5B V $74.0BE; 2021 EXPORTS +29.9% Y/Y.


- (CN) China Ministry of Finance (MOF) sells 3-month bills and 30-year bonds.

- (HK) Hong Kong to extend current coronavirus restrictions for 2-weeks.

North America

- (US) Fed's Waller (Hawk, Voter): Does not favor 50bps hike in March; 3 hikes in 2022 is still a good baseline, if inflation remains 'stubbornly' high, there could be 4 or even 5 rate hikes.

- (US) Fed's Daly (non-voter, dove): Pace of balance sheet reduction can be faster than last time but should be predictable and not meeting-by-meeting; Don't want to raise rates while still buying bonds - press interview.

- (US) Fed’s Harker (voter): Pencils in three rate hikes for 2022 but four increases are not out of the question.

- (US) Supreme Court blocks Pres Bide.


- (US) President Biden has selected Raskin to become the Vice Chair of supervision (as expected); Cook and Jefferson have been selected as Fed Governors.


- (DE) German Chancellor Scholz: Situation with Russia has not become less dangerous after start of talks but negotiations with Moscow are still important.

- (UK) UK expected to end COVID passes later in Jan - UK press.

Levels as of 00:20 ET

- Nikkei 225, -1.4%, ASX 200 -1.1% , Hang Seng -1%; Shanghai Composite -0.6% ; Kospi -1.5%.

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

- EUR 1.1476-1.1451 ; JPY 114.22-113.64 ; AUD 0.7286-0.7264 ;NZD 0.6867-0.6849.

- Gold +0.3% at $1,826/oz; Crude Oil -0.3% at $81.84/brl; Copper flat at $4.5125/lb.

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