Markets mixed as they await US Fed and BoJ rate decisions

Asia Market Update: Markets mixed as they await US Fed and BoJ rate decisions; Softbank mobile unit spin off has weak start

General Trend:

- Equities markets mixed throughout the session with little catalyst to push a firm direction, markets await US Fed final meeting of 2018 and BoJ policy decision

- Shares of Softbank fall over 10% after Mobile unit spin off opens for trade below pricing, dragging Nikkei 225 to the lowest level since late March in the first 10 minutes of trade. Nearly an hour into trade losses reversed.

- Japan trade balance starting to show impacts of trade tensions with exports nearly unchanged

- USD remains broadly weaker, sovereign bond yields decline around the globe. In Japan, Japan Securities Clearing Corporation (JSCC): Emergency margin call has been triggered for JGB futures

- PBoC again used reverse repos in OMO operations, yuan made little moves with no new trade talks news

- China Economic Work Conference has started, awaiting comments to show targets and policies for what is expected to be a rocky 2019 with China slowing and trade war impacts

Headlines/Economic Data

Japan

- Nikkei 225 opened slightly lower

- (JP) Japan PM Abe: New budget has ample room to overcome effects of sales tax increase

- (JP) Japan Coalition Party Leader Yamaguchi: Budget to be approved by Cabinet as soon as Friday

- (JP) JAPAN NOV BALANCE OF TRADE: -¥737.3B V -¥630BE; ADJ TRADE BALANCE: -¥492.2B V -¥275BE; Exports y/y: 0.1% v 1.2%e , Imports y/y: 12.5% v 11.8%e

- 7270.JP Subaru said to plan to reduce Japan output by 40K units - Japanese press

- (JP) Japan FY19/20 initial budget seen at ¥101.5T (1st time over the ¥100T level) - financial press

- TAK Takeda Announces Listing of American Depositary Shares on the New York Stock Exchange on Dec 24th

- 9432.JP Japan govt to cut stake in NTT in 2019 totaling ¥160B – Nikkei

- 9984.JP Mobile IPO opens for trade at ¥1,463/shr v ¥1,500/shr pricing

- Looking ahead: BOJ holding its policy meeting Dec 19-20th ; expected to leave policy unchanged in tomorrow’s announcement

Korea

-Kospi opened +0.3%

-(KR) South Korea Fin Min Hong has asked US Treasury Sec Mnuchin for exemption from tariffs on imported vehicles - Yonhap

-(KR) Bank of Korea (BOK) Nov Minutes: Necessary to focus on resolving fiscal imbalances; One dissenter: Domestic growth faces bigger downside risks. With inflation still soft, slower growth in Japan, the EU and China may weigh on Korean exports

- (KR) Bank of Korea (BOK) sells KRW2.0T in 2-yr Monetary Stabilization Bonds (MSBs) at 1.82% v 1.93% prior

- 036460.KR Prelude LNG to start commercial production in Q1 2019

-(KR) Bank of Korea (BOK) Gov Lee: See minor impact from US rate gap on flows into bonds; Not expecting economy, market situation to worsen in 2019

-(KR) South Korea Fin Min Hong: To talk about economy and risks with BOK Gov Lee; 2019 economic conditions not looking good due to external risks

- (KR) North Korea 2017 Trade volume $5.55B v $6.53B in 2016, impacted by sanctions – Yonhap

- (KR) Bank of Korea (BOK) Gov Lee: Expression of policy harmony by Fin Min Hong has nothing to do with interest rate policy direction; we both share the view that economic conditions for 2019 are not good

China/Hong Kong

- Hang Seng opened +0.2%, Shanghai Composite +0.1%

- (HK) Hong Kong starter subsidized apartments to be sold for HK$3-7M – SCMP

- (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day and 14-day Reverse Repos v injects CNY180B in 7-day and 14-day prior; Net injects CNY60B v CNY180B prior

- (CN) China PBoC sets yuan reference rate: 6.8869 v 6.8854 prior

- (CN) China housing rental market expected to reach CNY3.0T with 252M renters by 2025 v CNY1.2T currently – SCMP

- (CN) China MoF Sells 1-yr bonds at 2.6385% v 2.57%e, bid to cover 1.56x; Sells 10-yr bonds at 3.2875% v 3.36%e, bid to cover 2.21x

-(CN) China Commerce Ministry (MOFCOM): China and US have spoken on the phone Dec 19th on trade and economy on a Vice Min level

- Looking ahead: Awaiting comments from China Economic Work Conference

Australia/New Zealand

- ASX 200 opened -0.3%

- (NZ) New Zealand Q3 Westpac Consumer Confidence: 109.1 v 103.5 prior

- (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +1.7% v +2.2% prior

-TLX.AU Updates on Japan regulatory process for TLX250-CDx; completes enrollment for its ZIR-DOSE clinical study

-(NZ) New Zealand Q3 Current Account (NZD): -6.2B v -5.9Be

- (AU) Australian Prudential Regulation Authority (APRA): To remove interest only home loan benchmark, effective Jan 1st, 2019

- (NZ) New Zealand to raise minimum wage NZ$1.20/hr to NZ$17.70/hr, effective April 1st

- BGA.AU Will have increased depreciation charges on Koroit Infrastructure; Guides FY19 normalized Net A$44-48M; EBITDA A$123-130M v 109.6M y/y

- (AU) Australia Nov Westpac Leading Index m/m: -0.1% v +0.1%e

- (AU) RBA Gov Lowe said to have held meetings with each of the large banks, warning them against over tightening credit supply - Australian

- Looking ahead: New Zealand to release trade balance and Q3 GDP; Australia releasing Nov employment data tomorrow

Other Asia

- (MY) Malaysia Nov CPI y/y: 0.2% v 0.4%e

North America

- (US) SEMI: Nov North America Billings $1.94B v $2.03B prior, -4.2% m/m and -5.3% y/y

- (US) Weekly API Oil Inventories: Crude: +3.5M v -10.2M prior

- FDX Will no longer provide FY19 Rev and Op margin guidance (prior Rev +9% y/y, operating margin 8.5%) - earnings call

- PAYX Reports Q2 $0.65 v $0.63e, Rev $858.9M v $856Me (official results expected pre-market US) - US financial press

- (US) Senate passes bipartisan criminal justice bill

Europe

- (UK) Business leaders want PM May to call a referendum on her Brexit deal

-(UK) Minor UK opposition parties table vote of no confidence in government - financial press

-(UK) UK puts 3.5K troops on standby to deal with reaction to a no deal Brexit - press

Levels as of 12:50ET

- Hang Seng +0.2%; Shanghai Composite -0.6%; Kospi +0.7%; Nikkei225 -0.7%; ASX 200 -0.2%

- Equity Futures: S&P500 +0.6%; Nasdaq100 +0.5%, Dax +0.4%

- EUR 1.1337-1.1402; JPY 112.19-112.60 ; AUD 0.7177-0.7200;NZD 0.6845-0.6870

- Feb Gold +0.1% at $1,254/oz; Feb Crude Oil +0.5% at $46.80/brl; Mar Copper +1.1% at $2.68/lb