Markets tread water in absence of major data and diluted reactions to Trump breaking news

Asia market update: Markets tread water in absence of major data and diluted reactions to Trump breaking news; Focus on US Fed Chair Powell testimony tonight and US Jan CPI on Wed night.

General trend

- Markets took the latest Trump tariff news in stride, despite the US Pres saying there would be no exceptions (although Australia PM appeared to obtain one for Aussie steel), as Trump formally approved Monday's threatened 25% on imports of steel and aluminum; to begin Mar 12th. Canada’s Loonie only fell about -0.1%, less than the amount at the open on Monday following the original threat.

- Asian equities were overall mixed in quiet trading.

- Currency movements were muted (with exception of Indian rupee, below) and Bitcoin continued to oscillate around the $97-98K level.

- Indian rupee sharply rallied back to 86.6 v USD - biggest one-day rally since 2022 (hit fresh record low of 88.0 just yesterday).

- Spot Gold continued to fresh record highs >$2,965/oz following Trump confirmation of steel, aluminium tariffs.

- Aussie lithium miners hard hit by China's CATL announcement to restart its offline lithium carbonate refinery in Yichun. Liontown -7.6%, IGO -4%, Pilbara -3%, Mineral Resources -4.8%.

- Bank of Japan OIS probability of a July 25bp hike continued to climb to 83.5%.

- US Fed Chair Powell has the first of 2 days annual testimony tonight, and the next significant data will be the US Jan CPI on Wed night Asia time.

- South Korea chip exports fell significantly in the first 10 days of January, up only 1.8% y/y.

- Australian Jan Business Confidence improved back to almost its long-term average, noting that confidence remains weakest in consumer-facing industries and stronger in transport & utilities and mining. Australian Feb Consumer Confidence also edged up.

- South Korea top think tank KDI cut 2025 GDP growth forecast from 2.0% to 1.6% as it expressed concern about impact of US Pres Trump's expanding tariffs.

- US equity FUTs -0.2% during Asian trading.

Looking ahead (Asian time zone)

- Wed Feb 12th AU Q4 Home Loans (Wed night US Jan CPI, 2nd day of US Fed Powell testimony).

- Thu Feb 13th (Fri night UK prelim Q4 prelim GDP, US Jan PPI).

- Fri Feb 14th KR Unemployment, (Fri night Jan US Retail Sales).

Holidays in Asia this week

- Tue 11th Japan.

- Wed 12th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8.485.

- Australia Jan NAB Business Confidence: +4 v -2 prior.

- Australia Feb Westpac Consumer Confidence: 92.2 v 92.1 prior.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 86.7 v 88.5 prior.

- Australia PM Albanese: US Pres Trump considered exempting Australia from steel tariffs [Trump later confirms consideration for Australian exemption].

- Australia opposition leader Peter Dutton said to have ‘warned’ if the RBA cuts rates prematurely, inflation pressures could resurface; the article notes the impact of the floods in Queensland, Australia Treasury estimates that banana and sugar supplies will have a 'minor' impact on prices – Australian press.

- New Zealand opens book to sell >NZ$3.0B ([capped at NZ$6.0B] in 4.5% 15th May 2035 bonds via syndication.

- New Zealand issues NZ$5.5B in May 2035 bonds through syndication.

- New Zealand Fin Min Willis: We have a 'balanced' relationship with the US - financial press.

- New Zealand Treasury Fortnightly Economic Update: Residential construction is expected to recover in H2.

China/Hong Kong

- Hang Seng opens +0.6% at 21,656; Shanghai Composite opens +0.1% at 3,323.

- CATL (300750.CN) Plans to restart lithium carbonate refinery in Yichun following 5-month halt; May impact lithium prices negatively as refinery expected to produce ~3,500 tons this month, - update.

- Tesla: Follow up: Shanghai battery Megafactory said to have launched production - Chinese press.

- China local governments have either issued or announced plans to issue a total of CNY378B in special bonds in 2025 to refinance hidden debts – China Securities Journal.

- US Pres Trump said he has spoken with China's Pres Xi since inauguration; Doesn't clarify when - TV interview.

- Hong Kong to resume US parcel services from Tue, Feb 11th - press.

- China confirms Zou Lan as PBOC Dep Gov - press.

- China Cabinet Meeting: Reiterates stance to place greater emphasis on increasing consumption.

- (US) Reportedly Chinese officials are building a list of US tech firms that can be targeted with antitrust probes and other tools; Beijing’s strategy goal was to collect as many cards as possible to play in expected negotiations with Trump administration over U.S.-China issues, including the tariffs that Trump has imposed on Chinese goods - WSJ (update).

- China PBOC sets Yuan reference rate: 7.1716 v 7.1707 prior.

- China PBOC Open Market Operation (OMO): Injects CNY33B in 7-day reverse repos; Net injects CNY33B.

Japan

- Nikkei 225 closed for holiday.

Korea

- Kospi opens +0.5% at 2.532.

- South Korea Feb 1-10 Exports Y/Y: +0.8%; Imports: +0.3% (Chip exports +1.8% y/y, v 23.8% during Jan 1-10th).

- South Korea state think tank KDI: Cuts 2025 GDP growth forecast from 2.0% to 1.6%; Concerned about impact of US Pres Trump's expanding tariffs.

Other Asia

- Thailand Finance Ministry Pichai: Government plans measures to slow equity fund sales by investors; Plans to set up long-term equity fund to support stock market - financial press.

- Indonesia Jan Consumer Confidence: 127.2 v 127.7 prior.

North America

- (US) Tulsi Gabbard clears Senate majority vote to become Trump's Director of DNI (Director of National Intelligence), as expected - financial press.

- Softbank: Co said to be exploring funding $500B Stargate investment mostly with debt - financial press.

- (US) Pres Trump approves 25% on imports of steel and aluminum; Says no exceptions or exemptions; To begin Mar 12th.

- US Pres Trump: Expects meetings over the next four weeks about cars, drugs, and chips.

- (BR) Brazil President Lula said planning to impose tariffs on US tech firms if US goes ahead with plans for steel tariffs - Brazilian press.

- (US) Jan NY Fed 1-year Inflation Expectations Survey: 3.0% v 3.0% prior.

Europe

- Ireland Jan Construction PMI: 48.2 v 51.6 prior – update.

- (EU) Trump Administration said to 'push' European allies to purchase more US weapons for Ukraine - financial press, citing sources.

- (UK) BOE's Mann (dissenter): Inflation less of a threat as corporate power weakens - FT.

- (IE) Ireland Jan Live Register Monthly Change: -0.6K v +3.2K prior.

- US Pres Trump: If all the Gaza hostages aren't returned by Saturday at 12pm ET, Trump advised canceling the ceasefire.

- (DE) German steelmaker industry association: Trump's tariffs on steel will lead to more volumes diverted to Europe.

- (RU) EU said to be discussing possible seizures of Russian oil tankers in the Baltic Sea - Politico.

- (FR) France PM Bayrou passes new no confidence motion over 2025 budget - press.

- (EU) ECB chief Lagarde: Conditions for a recovery remain in place.

- (RU) Russia Dep Foreign Min Ryabkov: We do not have any agreements with US on high-level contacts, but we are open to dialogue.

Levels as of 00:20 ET

- Nikkei 225 closed, ASX 200 flat, Hang Seng -0.3%; Shanghai Composite flat; Kospi +0.8%.

- Equity S&P500 Futures -0.2%; Nasdaq100 -0.2%; Dax -0.1%; FTSE100 +1.0%.

- EUR 1.0292-1.0311; JPY 151.69-152.06; AUD 0.6260-0.6285; NZD 0.5629-0.5647.

- Gold +0.4% at $2,943/oz; Crude Oil +0.3% at $72.53/brl; Copper -0.3% at $4.6820/lb.