Nikkei 225 trades cautiously as traders assess the BOJ’s recent move

Asia Market Update: Mixed equity session seen; Nikkei 225 trades cautiously as traders assess the BOJ’s recent move.

General trend

- Is the BOJ’s recent YCC move preparation for normalization or just an operational adjustment?

- JGB yields continue to rise.

- USD/JPY has been relatively quiet.

- NZD extends losses.

- Chinese equities quiet during morning sessions.

- Australian REITs and commodity-sensitive cos. outperform.

- US equity FUTs rise; Nike and FedEx gain after issuing earnings.
[Reminder from BOJ] With regard to the purchases on December 26, 2022, indicated in "Quarterly Schedule of Outright Purchases of Japanese Government Bonds (Competitive Auction Method) (October-December 2022) " published on November 29, the Bank will conduct the purchases in approximately the same size as the size per auction from January through March 2023, as defined in (1). The Bank will also conduct additional purchases on December 22, 2022, the amounts of which will be decided based on market conditions.

Headlines/economic data

Australia/New Zealand

- ASX 200 opened flat.

- (NZ) New Zealand Nov Trade Balance (NZ$): -1.9B v -2.3B prior.

- (NZ) New Zealand PM Ardern: To set farm emmissions tax as low as possible.

- (AU) Fitch expects Coal and Gas price caps compounding political risks for corporate names.

- (AU) Australia Nov Westpac Leading Index M/M: -0.1% v 0.0% prior.

- (NZ) New Zealand Nov Credit Card Spending M/M: -2.6% v +1.0% prior; Y/Y: 16.0% v 24.8% prior.

Japan

- Nikkei 225 opened -0.1%.

- (JP) Japan said to consider legislation on Hydrogen and Ammonia as fuel - Press.

- (JP) IMF Japan Mission Chief Salgado: BOJ YCC adjustment is a sensible step; Providing clearer communications on Adjusting monetary policy framework could anchor expectations and increase credibility.

- (JP) Japan Govt expected to set assumed interest rate at 1.1% (record low) for FY23/24 budget.

- (JP) Japan Cabinet Office Dec Monthly Report: Maintains overall economic assessment, economy is recovering moderately.

- (JP) Japan 2-year JGB yield rises above 0% [highest since 2015], follows yesterday's BOJ decision.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected].

- (JP) Japan Econ Min Goto: Acknowledge that BOJ Decision yesterday was not a tweak or exit from monetary easing.

- (JP) Bank of Japan (BOJ) Offers to purchase 3-5yr and 5-10 yr JGBs in an unscheduled op.

Korea

- Kospi opened +0.6%.

- (KR) South Korea Dec 1-20 Exports Y/Y: -8.8% v -16.7% prior; Imports Y/Y: +1.9% v -5.5% prior.

- (SK) South Korea President Yoon: Urgent need to reform labor management practices, Household and corporate debt issues may worsen next year.

- (KR) South Korea Finance Ministry: To halve net bond sales to KRW61.5T during 2023; 2023 CPI expected at 3.5%, GDP at 1.6%.

China/Hong Kong

- Hang Seng opened +0.5%; Shanghai Composite opened +0.2%.

- (CN) China PBOC sets Yuan reference rate: 6.9650 v 6.9861 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY19B in 7-day reverse repos v CNY5.0B prior; Sells CNY141B in 14-day reverse repos v CNY141B prior; Net inject CNY158B v net inject CNY83B prior.

- (CN) China PBOC may cut the loan prime rates (LPRs) in early 2023 [inline]; analysts also say MLF rate cut is needed - China Securities Journal.

- (CN) India imposes anti dumpting duty on stainless steel tubes and pipes from China for 5 years.

- (CN) China State Planner (NDRC) to study measures to deal with excessive Hog price declines.

- (CN) China Ministry of Finance (MOF) Sells 10-year bonds: Avg yield 2.8251% v 2.8000% prior.

- (CN) China President Xi: Promising to work with Australia on sustainable relationship; To work with Australia on a comprehensive strategic partnership.

- (CN) China authorities plan to conduct ‘strict’ reviews of M&A activities that could impact national security; cites guidelines released on Mon (Dec 19th) - SCMP.

Other

- (ID) Indonesia Central Bank Gov: 2022 CPI expected at 5.4%, and 2023 CPI at 5.4%.

- (ID) Indonesia President Jokowi: To ban Bauxite Exports starting June 2023; To ban exports of other raw materials when ready.

North America

- (US) US DOD: Federal Express Corp, Polar Air Cargo Worldwide Inc. and United Parcel Service Co. have been awarded indefinite-delivery/indefinite-quantity with firm-fixed-price rates contracts with an estimated total face value of $2.24B.

- (US) Dec Philadelphia Fed Non-Manufacturing Regional Index: -17.1 v -13.6 prior.

- (US) Weekly Redbook Sales w/e Dec 17th: +7.6% y/y; Dec MTD +6.4%.

- (US) NOV HOUSING STARTS: 1.427M V 1.400ME; BUILDING PERMITS: 1.342M V 1.480ME (lowest permits since May 2020).

Europe

- (IE) Ireland Dec Consumer Confidence: 48.7 v 45.3 prior.

- (UK) Dec Lloyds Business Barometer: 17 v 10 prior.

Levels as of 00:20 ET

- Nikkei 225, -0.7%, ASX 200 +1.3% , Hang Seng +0.2%; Shanghai Composite -0.1% ; Kospi -0.2%.

- Equity S&P500 Futures: +0.4%; Nasdaq100 +0.4%, Dax +0.8%; FTSE100 flat.

- EUR 1.0629-1.0607 ; JPY 132.37-131.49 ; AUD 0.6697-0.6656 ;NZD 0.6352-0.6302.

- Gold -0.1% at $1,823/oz; Crude Oil flat at $76.23/brl; Copper -0.3% at $3.7962/lb.