Japan manufacturing PMI at multi-year highs

Asia Mid-Session Market Update: Japan manufacturing PMI at multi-year highs; USD rallies on hawkish comments from Fed's Harker; HSBC earnings disappoint

US Holiday Hours

- CYH: Reports Q4 $0.46 v $0.12e, R$4.47B v $4.42B

- PLKI: Restaurant Brands International said to be near agreement to acquire Popeyes - press

- (GR) EU official: Meeting between creditors and Greek Fin Min Tsakalotos went well, progress was made, auditors to return to Athens by next week - press

 

Asia Key economic data:

- (JP) JAPAN FEB PRELIMINARY PMI MANUFACTURING: 53.5 V 52.7 PRIOR; multi-year high, 6th month of expansion

- (JP) Japan Dec All Industry Activity Index M/M: -0.3% v -0.2%e

- (KR) South Korea Q4 Household Debt (KRW) q/q: 1.34T v 1.29T prior (record high)

- (KR) South Korea Feb First 20-days Exports y/y: 26.2% v +25.0% prior; Imports y/y: 26.0% v +25.9% prior

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.7 v 116.4 prior

 

Politics

- (US) President Trump names General H.R. McMaster as his new National Security Adviser - US press

- (FR) French police said to have raided the office of National Front's Le Pen on suspicion of EU funds misuse - press

 

Asia Session Notable Observations, Speakers and Press

- Asia equity markets are slightly higher, though trading conditions remain muted after Monday's US holiday. Nikkei225 is one of the better performing indices on weakness in JPY, while tepid earnings season in Australia continues to weigh on S&P/ASX 200.

- USD traded firmer following hawkish set of comments from Fed voter Harker, particularly gaining vs JPY, NZD, and EUR. Harker reiterated that March meeting should be on the table for next rate hike, adding the Fed is not behind the curve, the economy is healthy, and job growth is steady. USD/JPY was up some 40pips in the wake of comments, EUR/USD fell about 30pips, and NZD/USD was off by 30pips.

- Japan flash manufacturing PMI offered a glimpse of February economic data, and the signs were positive. 53.5 was a multi-year high, as New Export Orders and Employment components increased at a faster rate while Backlog of work rose for the first time in over a year and Inventories fell.

- RBA meeting minutes expanded on neutral-hawkish rate decision earlier this month, noting higher terms of trade impact on growth and rising prices of commodities renewing mining investment; On inflation, RBA tone was more measured, stating the headwinds could be more persistent than assumed, but also noting wage inflation could rise more quickly if labor conditions improve.

- Late in the day, HSBC (and the Hang Seng) slumped after the banking giant released underwhelming FY16 results. Net profit of $19.3B missed expected $20.3Be, and Adj Rev slowed to $50.2B v $51.4B y/y; CET1 ratio came in 30bps to 13.6% and ROE slowed drastically to 0.8% v 7.2% y/y. HSBC also underscored some of the risks going forward, namely the "threat of populism impacting policy choices in upcoming European elections, possible protectionist measures from the new US administration impacting global trade, uncertainties facing the UK and the EU as they enter Brexit negotiations, and the impact of a stronger dollar on emerging economies with high debt levels."

China:

- (CN) PBOC says it is conducting an evaluation of a targeted RRR cut this month; Changes to take effect on Feb 27th; Adjustments to targeted rates will be made both upward and downward - financial press

- (CN) China Commerce Ministry (MOFCOM): Expect 2017 consumption growth to remain robust; China to assess and react if US rolls out tariffs - press

- (CN) China researcher: trade war unlikely to weaken China - China Daily

- (CN) China's 3rd batch of free trade zones may start this month - Chinese press

Japan:

- (JP) Bank of Japan (BOJ) Gov Kuroda: BOJ still far from inflation target; appropriate to continue powerful easing

- (JP) Japan Fin Min Aso: Cannot comment on border tax being considered by the US

Australia/New Zealand:

- (AU) Westpac's Evans: See nothing in RBA minutes to change our view that RBA will be on hold throughout 2017 and 2018 - SMH

- (AU) AUD/USD : Deutsche Bank chief economist: AUD may rise to $0.80 and beyond on strength in exports - SMH

- (AU) ANZ: New "Fed-Style" inflation indicator suggests inflation in Australia won't fall any further - press

- (NZ) According to Seek.com, January National new online job ads rose 5.0% y/y; Auckland rates rose 7.2% y/y - NZ Herald

 

Asian Equity Indices/Futures (23:30ET)

- Nikkei +0.7%, Hang Seng +0.1%, Shanghai Composite +0.3%, ASX200 -0.2%, Kospi +1.1%

- Equity Futures: S&P500 +0.2%; Nasdaq +0.3%; Dax flat; FTSE100 flat

 

FX ranges/Commodities/Fixed Income (23:30ET)

- EUR 1.0575-1.0615; JPY 113.05-113.70; AUD 0.7665-0.7690; NZD 0.7150-0.7185

- Apr Gold -0.4% at $1,234/oz; Apr Crude Oil +0.5% at $54.05/brl; Mar Copper -0.4% at $2.74/lb

- (CN) PBOC to inject combined CNY100B v CNY170B prior in 7-day, 14-day and 28-day reverse repos

- (CN) PBOC SETS YUAN MID POINT AT 6.8790 V 6.8743 PRIOR; 2nd straight weaker setting

 

Asia equities / Notables / movers by sector

- Consumer discretionary: SEK.AU SEEK -1.9% (H1 result)

- Financials: 5.HK HSBC -3.8% (FY16 result); WBC.AU Westpac Banking Corp flat (Q1 metrics); SCG.AU Scentre Group -1.2% (FY16 result); FXL.AU FlexiGroup -2.1% (H1 result)

- Industrials: WOR.AU WorleyParsons -5.9% (Credit Suisse cuts rating); BKN.AU Bradken +0.2% (H1 result); MND.AU Monadelphous Group +11.8% (H1 result); 6472.JP NTN Corp +5.5% (Nomura raises rating)

- Technology: ALU.AU Altium -5.7% (guidance); BXB.AU Brambles Limited -2.4% (Deutsche Bank cuts rating)

- Materials: IGO.AU Independence Group -5.0% (H1 result); SAR.AU Saracen Mineral Holdings -3.9% (H1 result)

- Energy: OSH.AU Oil Search -2.1% (FY16 result); CTX.AU Caltex Australia +1.3% (FY16 result)

- Healthcare: GXL.AU Greencross Limited +6.0% (H1 result)

- Telecom: 762.HK China Unicom +0.5%, 728.HK China Telecom Corp. +0.5% (Jan result)

- Utilities: 9507.JP Shikoku Electric Power Co. Inc +5.7% (raises guidance)