JP tech pares gains seen following TSMC capex guidance, China achieves 2024 GDP target

Asia Market Update: JP tech pares gains seen following TSMC Capex guidance; China achieves 2024 GDP target; Quieter day for FX amid focus on BOJ.

General trend

- Asian equities followed US markets’ directionless lead, Nikkei underperformed -0.6%.

- Japanese tech stocks rose late yesterday, especially chip-related Tokyo Electron +5.6%, on better than anticipated Q4 results out of Taiwan Semi, including a positive Revenue outlook for 2025 and a sharp rise in forecast 2025 Capex. However, no price follow-through for Tokyo Electron or TSMC today (TSM was up 3.5% during earlier US trading).

- China, somewhat unsurprisingly, reported GDP for Q4 at a higher than expected number, leveling out the full 2024 GDP figure to be precisely 5.0% (meeting Pres Xi’s and the NPC’s target of “around 5%” announced in March, 2024.

- Feeder numbers Industrial Production and Retail Sales likewise higher than expected. Meanwhile China home prices continued falling in most cities, though at a lesser rate, y/y. China Stats Bureau noted the official population figure continues to fall for the third straight year.

- OIS market is pricing an even greater chance of a Japan BOJ rate hike next week due to press reports yesterday of a “good chance” of a Jan rate hike. The market now sees an 80% chance of a 0.25bp rate hike next week, up from 74% yesterday.

- USD/JPY 1-week implied volatility rose to >11.8% [1-month high]; This period covers both Pres-elect Trump's inauguration on Jan 20th as well as BOJ rate decision on Jan 24th (Fri).

- During Senate testimony, US Treasury Sec nominee Scott Bessent said the Chinese economy is the most unbalanced economy in the history of the world, adding that China is in a severe recession/depression and has been trying to 'export its way out' of it.

- New Zealand manufacturing stayed mired in contraction.

- China Vice Premier Han Zheng announced to attend Pres-elect Trump inauguration on Jan 20th (in place of the invitation extended by Trump to Pres Xi).

- Copper continued its recent advance, trading at the top of levels not seen since early Dec.

- US equity FUTs +0.2% during Asian trading.

Looking ahead (Asian time zone)

Note: This will be the final week for US Fed speakers before the communications blackout is imposed ahead of the Jan 29th decision.

- Fri Jan 17th (Fri night US Dec Building Permits).

Holidays in Asia this week

- Mon Jan 13th Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,328.

- Australia sells A$700M v A$700M indicated in 2.75% Nov 2027 bonds; Avg Yield: 3.9156% v 4.0313% prior ; bid-to-cover 3.78x v 3.54x prior.

- Glencore (GLEN.UK) Reportedly Rio Tinto and Glencore are discussing a possible combination - press.

- New Zealand Dec Manufacturing PMI: 45.9 v 45.5 prior (22nd month of contraction) (update).

- Follow up: New Zealand Electricity Authority proposes options for Power Purchase Agreements - financial press.

China/Hong Kong

- Hang Seng opens -0.1% at 19,499; Shanghai Composite opens -0.3% at 3,226.

- CHINA Q4 GDP Q/Q: 1.6% V 1.7%E; Y/Y: 5.4% V 5.0%E.

- CHINA DEC INDUSTRIAL PRODUCTION Y/Y: 6.2% V 5.4%E.

- CHINA DEC RETAIL SALES Y/Y: 3.7% V 3.6%E.

- CHINA DEC YTD FIXED URBAN FIXED ASSETS Y/Y: 3.2% V 3.3%E.

- China Dec YTD Property Investment Y/Y: -10.6% v -10.4%e.

- China Dec Surveyed Jobless Rate: 5.1% v 5.0%e.

- China Dec New Home Prices M/M: -0.1% v -0.2% prior.

- China NBS [Stats Agency] Official: China's economic operations generally steady in 2024 - comments on Dec and Q4 data.

- China Commerce Ministry (MOFCOM): Requests WTO to set up expert group to examine Turkey's restrictions on Chinese EVs - financial press.

- China Commerce Ministry (MOFCOM) comments on US 301 Report: Reiterates will take measures to defend legitimate rights.

- China Vice Premier Han Zheng to attend Pres-elect Trump inauguration on Jan 20th (in place of invitation extended to Pres Xi) - China state media.

- China Economists predict 2025 GDP growth of at least 4.8% - China Securities Times poll of 60 economists.

- US Trade Rep finds China's dominance in maritime, logistics and shipbuilding to be 'actionable' under Section 301 – press.

- China Commerce Ministry: To initiate anti-dumping and anti-subsidy investigation into US subsidies in its mature/legacy chip industry.

- China's total investment in real estate sector said to have contracted 11% in 2024 - financial press.

- Early local bond sales are expected to stabilize the economy; in 2025 local bond issuance will be significantly earlier than in prior years; cites 'unidentified' experts - China Securities Journal.

- (US) Treasury Sec nominee Scott Bessent (during Senate testimony): Chinese economy is most unbalanced economy in the history of the world; China's in a severe recession/depression and has been trying to 'export it's way out' of it.

- China Commerce Ministry (MOFCOM): To enhance control on dual-use items according to needs; Initial probe finds PVH has improper Xinjiang behaviors; Plan to summon PVH in the near future [overnight update].

- China PBOC sets Yuan reference rate 7.1889 v 7.1881 prior.

- China PBOC Open Market Operation (OMO): Injects CNY105B in 7-day reverse repos; Net injects CNY101B v injects CNY336B prior.

Japan

- Nikkei 225 opens -0.3% at 38,454.

- Japan Fin Min Kato: Will keep close eye on recent "yield surge"; Reiterates that monetary policy should be left to BOJ (inline) - financial press.

- Japan releases weekly flows data [period ended Jan 10th]: Foreign buying of Japan equities: +¥313.3B v -¥74.0B prior; Japan buying of foreign bonds: +¥756.7B v -¥332.3B prior.

- BOJ Quarterly Opinion Survey: Japanese households expect inflation to rise by average +11.5% one year from now, with median +10.0%; By +9.2% five years from now, with median +5.0%.

- USD/JPY 1-week implied volatility rises to >11.8% [1-month high]; (**Note: This period covers both Pres-elect Trump's inauguration on Jan 20th as well as BOJ rate decision on Jan 24th (Fri).

Korea

- Kospi opens -0.3% at 2,520.

- South Korea Acting President Choi: To closely monitor the impact of the new US government on markets.

- South Korea sells KRW500B vs. KRW500B indicated in 50-year Bonds: Avg Yield: 2.570% v 2.400% prior; bid-to-cover: x v 2.00x prior.

Other Asia

- Singapore Dec Non-Oil Domestic Exports M/M: +1.7% v -0.8%e; Y/Y: 9.0% v 7.4%e.

- TSM *CFO: GUIDES Q1 REV $25.0-25.8B V $23.9BE; RAISES SHARPLY FY25 CAPEX AND GUIDES FY25 REV STRONG; US ARIZONA PLANT'S YIELD IS COMPARABLE TO TAIWAN - EARNINGS CALL [overnight update].

- TSM *EXPECTS REVENUE FROM AI ACCELERATORS TO DOUBLE IN 2025 AFTER MORE THAN TRIPLING IN 2024 - EARNINGS CALL [overnight update].

- TSM Reports Q4 (NT$) Net 374.4B v 369.8Be, Op 425.7B v 411.4Be, Rev 868.5B v 868.4B prelim.

- Taiwan PM Cho Jung-tai warns of 'crisis' as lawmakers push 'big' 2025 budget cuts - US financial press [overnight update].

North America

- (US) Follow up: Chinese hackers said to have accessed Treas Sec Janet Yellen's computer in the US Treasury hack - financial press.

- Trump team reportedly readies wide-ranging sanctions "strategy" to facilitate Russia-Ukraine deal in coming months and same time squeeze Iran and Venezuela; big sanctions package against iran could come as early as feb 2025 - press.

- (US) Treasury Sec nominee Bessent: Federal govt has significant spending problem; Must adjust federal discretionary spending - US Senate confirmation hearing

- (CA) Canada Dec Annualized Housing Starts: 231.5K v 250.0Ke.

- (US) DEC ADVANCE RETAIL SALES M/M: 0.4% V 0.6%E; RETAIL SALES (EX-AUTO) M/M: 0.4% V 0.5%E; Retail Sales (control group): 0.7% v 0.4%e.

- (US) DEC IMPORT PRICE INDEX M/M: 0.1% V -0.1%E; Y/Y: 2.2% V 2.1%E.

- (US) INITIAL JOBLESS CLAIMS: 217K V 210KE; CONTINUING CLAIMS: 1.859M V 1.87ME.

- (US) JAN PHILADELPHIA FED BUSINESS OUTLOOK: +44.3* V -5.0E (highest reading since April 2021); New Orders: +42.3 v -3.6 prior (highest reading since Nov 2021).

- (US) JAN NAHB HOUSING MARKET INDEX: 47 V 45E.

- (US) NOV BUSINESS INVENTORIES: 0.1% V 0.1%E.

- (US) Fed's Waller (voter): If we continue to get inflation numbers like Dec reasonable to think we could get rate cuts in H1 2025 (several months from now); Don't think March rate cut can be completely ruled out - CNBC.

- (CA) Canada Energy and Natural Resources Min: Confirms Canada is prepping retaliatory tariffs, some of which could include critical minerals.

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: -258 BCF VS. -253 BCF TO -257 BCF INDICATED RANGE.

- (CA) Reportedly Canadian retaliatory tariffs would target US aluminum and steel industries- press.

Europe

- (IL) Follow Up: Israel reportedly agrees to Gaza hostage deal, cabinet to meet on Fri - Israeli media.

- (IE) Ireland Dec CPI M/M:+0.9 % v -0.5% prior; Y/Y: 1.4% v 1.0% prior.

- (EU) ECB ACCOUNT OF DEC. 11-12 MEETING (MINUTES): Members were increasingly confident that inflation would return to target in the first half of 2025.

- (EU) ECB’s Centeno (Portugal, dove) reportedly will not be named for second term after term ends on July 19th 2025 - press.

- (PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 5.75%; AS EXPECTED.

- (FR) French PM Bayrou survives no-confidence motion against Govt - press.

Levels as of 00:20 ET

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

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

- EUR 1.0292-1.0310; JPY 154.98-156.50; AUD 0.6195-0.6220; NZD 0.5590-0.5616.

- Gold -0.2% at $2,745/oz; Crude Oil +0.7% at $78.42/brl; Copper +0.5% at $4.488/lb.