JP GDP strength surprises – CN record-high loans

Asia market update: JP GDP strength surprises; CN record-high loans; Focus on AU RBA Rate Decision.

- Currencies generally stronger as JPY/USD rose 0.5% amid further signs of sustainable inflation in Japan with Sumitomo Mitsui Bank saying it will raise wages by ~8% this year - but the big surprise was Japan’s Q4 GDP numbers coming in much hotter than expected.

- China Aggregate Financing and New Yuan Loans both hit record levels since records began in the early 1990s, with the main driver being corporate loans. However, results likely boosted by fiscal monetization through corporate buying of Chinese govt bonds. Will not get a deeper read on the Chinese economy until early March, when Jan/Feb figures will be released together.

- Australian bond yields up another 7bps on top of last week’s ~30bps run, perhaps sowing further doubt into the RBA cutting by 25bps tomorrow, an expectation the market believed was a 95% probability just one week ago; Commodity currencies Kiwi and Aussie +0.2% against the greenback.

- WTI crude -0.6% early to threaten last week’s lows, but then pared the losses to be up +0.1% before coming back to mid-range.

- Further indication of a turnaround in the New Zealand economy, with Jan Performance of Services registering its first expansion in 11 months (coming on top of last week’s 1st month of expansion in 23 months for Jan Manufacturing PMI).

- Volatility in Hong Kong equities: Hang Seng up 1.7% early, with Hang Seng Tech index >2% early to a 52-week high in the afterglow of DeepSeek potential of cheaper and more advanced output for AI stacks without using the most advanced chips, implying earnings gains for China tech stocks. Tencent +7% as it announced it is integrating DeepSeek into WeChat. However, Hang Seng then collapsed in less than an hour to be -0.7% before rising back to +0.5%, but then fall again to -0.6%.

- Australian equities underperformed, -0.4%, on weaker than expected results from Westpac and Bendigo banks; (AU Financials -1.4%).

- US equity FUTs +0.1% to +0.3% during Asian trading.

Looking ahead (Asian time zone)

- Tue 18th AU RBA Rate Decision, BOJ’s Takata.

- Wed 19th JP Trade Balance, (Wed night ID Rate Decision, UK Jan CPI, US Jan Housing Starts, FOMC Minutes).

- Thu 20th AU Jan jobs, CN Feb LPR.

- Fri 21st AU & JP Flash Feb PMIs, JP Jan National CPI, (Fri night EU & US Flash PMIs).

- Sat 22nd CN Jan FDI (YTD), DE Federal Election.

Holidays in Asia this week

- Mon 17th (Monday night US holiday).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,551.

- Port Hedland (Pilbara, Western Australia) reopens after Tropical Cyclone Zelia - financial press.

- New Zealand Jan Performance of Services Index: 50.4 v 48.1 prior (first expansion in 11 months).

- New Zealand Dec Net Migration: 3.8K v 2.1K prior.

- NZIER: Monetary Policy Shadow Board recommends that the Reserve Bank of New Zealand (RBNZ) ease the Official Cash Rate (OCR) by 50 basis points to 3.75% in the upcoming Feb 19th Monetary Policy Statement.

China/Hong Kong

- Hang Seng opens +0.6% at 22,755; Shanghai Composite opens +0.3% at 3,355.

- Chinese manufacturing companies said to have put Mexican greenfield investment plans on hold since US Pres Trump took office – Nikkei.

- Cinda Asset Management: Follow up: China's MOF to transfer 58% stake in Co to Central Huijin Investment.

- China Pres Xi attends private enterprise symposium with China's "top entrepreneurs", incl Jack Ma of Alibaba, Lei Jun of Xiaomi, BYD's Wang Chuanfu, CATL's Robin Zeng and Ren Zhengfei of Huawei - China state media.

- Tencent: Co says it is integrating DeepSeek into WeChat - financial press; Shares +7%.

- China Jan aggregate financing (CNY): 7.06T V 6.500TE (record high) [weekend update].

- China JAN new Yuan loans (CNY): 5.13T V 4.530TE (all time high) [weekend update].

- China JAN M2 money supply Y/Y: 7.0% V 7.3%E [weekend update].

- China PBOC Gov Pan Gongsheng: Reiterates a more proactive fiscal policy and more accommodative monetary policy (inline) - financial press (update).

- China Commerce Ministry (MOFCOM): Held call with EU auto group leader; Exchanged views on EU's anti-subsidy case against Chinese EVs [weekend update].

- China Foreign Minister Wang Yi: We can't have conflict between China and US; China's US policy is consistent and stable; Global challenges require US and China to work together - Munich Sec Conference [weekend update].

- China PBOC sets Yuan reference rate: 7.1702 v 7.1706 prior.

- China PBOC Open Market Operation (OMO): Injects CNY191B in 7-day reverse repos; Net drains CNY39B v prior drains CNY85B.

Japan

- Nikkei 225 opens -0.1 at 39,094.

- Japan Q4 PRELIMINARY GDP Q/Q: 0.7% V 0.3%E; ANNUALIZED GDP Q/Q: 2.8% V 1.1%E.

- Japan Dec Final Industrial Production M/M: -0.2% v +0.3% prelim; Y/Y: -1.6% v -1.1% prelim.

- Japan Dec Tertiary Industry Index M/M: +0.1% v +0.1%e.

- Sumitomo Mitsui Banking Corp: To raise wages by ~8% in FY25 - Nikkei.

- Japan 10-yr JGB yield rises to 1.375%, the highest since 2010.

- Japan Chief Cabinet Sec Hayashi: Will respond appropriately to US auto tariffs - financial press.

- Japan and UK to conduct economic '2+2' meeting in Tokyo on March 7th - Japanese press [weekend update].

Korea

- Kospi opens +0.2% at 2,595.

- South Korea ruling party leader Kwon says will accept court decision on Pres Yoon's impeachment - Korean press.

Other Asia

- Thailand Q4 GDP Q/Q: 0.4% v 0.5%e; Y/Y: 3.2% v 3.8%e.

- Singapore Jan Non-Oil Domestic Exports M/M: -3.3% v 0.3%e; Y/Y: -2.1% v 0.3%e.

- Intel: TSMC said to consider operating Intel factories following request from US Pres Trump; Other companies may become shareholders in the TSMC-Intel collaboration – press [weekend update].

North America

- (US) Pres Trump asks US Supreme Court to intervene on firing of Federal workers - financial press (update).

- (US) Pres Trump to approve LNG export project after ending Biden-era moratorium on new LNG projects – press [weekend update].

- *(US) Jan advance Retail Sales M/M: -0.9% V -0.2%E; Retail Sales (EX AUTO) M/M: -0.4% V 0.3%E; Retail Sales (control group): -0.8% v 0.3%e; Dec revised higher; Weather and LA fires citied as headwind for Jan data [weekend update].

- (US) Jan import price index M/M: 0.3% V 0.4%E; Y/Y: 1.9% V 1.9%E [weekend update].

- (US) Jan industrial production M/M: 0.5% V 0.3%E; capacity utilization 77.7%E [weekend update].

Europe

- (UK) Feb Rightmove House Prices M/M: 0.5% v 1.7% prior; Y/Y: 1.4% v 1.8% prior.

- (UK) PM Starmer: "I am ready to put British troops in Ukraine" - press.

- (UR) Ukraine not invited to initial US-Russia talks in Saudi Arabia, led by US Sec of State Rubio – press; Update: US Pres Trump says Ukraine Pres Zelenskiy "will be involved" in Ukraine talks.

- (UR) US Treas Sec Bessent presented proposal for US to own 50% of Ukraine's rare earths minerals; Ukraine Pres Zelenskiy did not sign, 'will study document' (update).

- (EU) US Defense Sec Hegseth: US, Europe and Ukraine will be involved in Russia/Ukraine peace talks - comments from Warsaw [weekend update].

- (EU) Commission Pres Von Der Leyen: Need a surge in European defense spending - comments from Munich Security Conf [weekend update].

- (IL) Trump says Hamas released 3 hostages - social media post [weekend update].

Levels as of 00:20 ET

- Nikkei 225 +0.1%, ASX 200 -0.2%, Hang Seng -0.3%; Shanghai Composite +0.1%; Kospi +0.6%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.2%; Dax +0.2%; FTSE100 -0.1%.

- EUR 1.0485-1.0507; JPY 151.51-152.39; AUD 0.6347-0.6372; NZD 0.5717-0.5750.

- Gold +0.4% at $2,911/oz; Crude Oil +0.1% at $70.44/brl; Copper +0.5% at $4.6635/lb.