RBA Gov hints rates preferred on hold this year

Asia Mid-Session Market Update: Australia miners fall as iron ore prices retreat; RBA Gov hints rates preferred on hold this year

US Session Highlights

- (US) Treasury Sec Mnuchin: number one commitment is to growth and passing significant tax reform; 3% GDP is achievable but could take until the end of 2018; reviewing China currency manipulator status

- Moody's: Global economy to maintain momentum; average rate of growth in G-20 countries for both 2017 and 2018 period at 3.0% vs. 2.6% prior year

- (US) INITIAL JOBLESS CLAIMS: 244K V 240KE; CONTINUING CLAIMS: 2.06M V 2.07ME

- (US) Jan Chicago Fed National Activity Index: -0.05 v 0.00e

- (US) Fed's Lockhart (moderate, non-voter): 2 or 3 rate hikes this year are likely

 

US markets on close: Dow +0.2%, S&P500 flat, Nasdaq -0.4%

- Best Sector in S&P500: Utilities

- Worst Sector in S&P500: Industrials

- Biggest gainers: FSLR +10.8%, HPQ +8.6%, RIG +7.8%, ENDP +3.9%, EW +3.8%

- Biggest losers: LB -15.8%, NVDA -9.3%, URI -5.6%, HRL -5.4%, URBN -5.2%

- At the close: VIX 11.7 (flat); Treasuries: 2-yr 1.19% (-3bps), 10-yr 2.39% (-3bp), 30-yr 3.02% (-2bps)

 

US movers afterhours

- RH: Guides Q4 $0.68 v $0.65e; R$590M v $589Me; Adds $300M to buyback plan; +16.3% afterhours

- OLED; Reports Q4 $0.55 v $0.39e, R$74.6M v $67.5Me; guides initial FY17 R$230-250M v $239Me; +12.2% afterhours

- AAOI; Reports Q4 $0.84 v $0.69e, R$84.9M v $82.7Me; Guides Q1 non-GAAP $0.80-0.88 v $0.40e; R$87-91M v $74.3M; gross margin 38-40%; +11.6% afterhours

- INCY; +4.1% INCY, CBOE, and REG to be added to S&P500; ENDP demoted to S&P400; NUS (+3.0%), CONE (+2.8%), and DDS (+3.9%) added to S&P400

- CXW; DOJ reportedly reverses position on private prisons to more favorable stance - press; +3.7% afterhours

- JWN; Reports Q4 $1.15 v $1.13e, R$4.24B v $4.37Be; Guides initial FY17 $2.75-3.00 v $3.06e, Rev ~+3-4%; +3.4% afterhours

- BJRI; Reports Q4 $0.55 v $0.40e, R$265.6M v $265Me; SSS -2.2%; +2.5% afterhours

- BIDU; Reports Q4 $1.91 v $0.93e, R$2.62B v $2.51Be (2 est); +1.6% afterhours

- ACHC; Reports Q4 $0.59 ex-items v $0.55e, R$703M v $707Me; +1.6% afterhours

- SPLK; Reports Q4 $0.25 v $0.18e, R$306.5M v $288Me; Guides Q1 R$231-233M v $241Me; -5.9% afterhours

- HPE; Reports Q1 $0.45 v $0.44e; R$11.4B v $12.1Be; cuts FY17 outlook; -6.5% afterhours

- ZOES; Reports Q4 -$0.07 v -$0.06e, R$62.0M v $62.3Me; -10.0% afterhours

- ACIA; Reports Q4 $0.94 v $0.90e, R$142M v $139Me; Guides Q1 $0.63-0.70 v $0.80e, R$108-114M v $140Me; -16.4% afterhours

 

Asia Key economic data:

- (KR) South Korea Feb Consumer Confidence: 94.4 v 93.3 prior

- (SG) Singapore Jan Industrial Production M/M: -6.0% v -2.5%e; Y/Y: 2.2% v 9.5%e

 

Asia Session Notable Observations, Speakers and Press

- Asian equity markets are down modestly for the 2nd straight day; Selling is the heaviest in the high-beta space, particularly materials and miners, as Dalian iron ore prces plunge over 5% from recent multi-year highs. Wall St sentiment has also turned more cautious as funds flowed to high-dividend / safehaven Utilities and Healthcare sectors as well as US Treasuries. Materials names were also hit in the US session, as Copper prices fell sharply.

- USD majors traded in very tight ranges in the absence of meaningful economic data; Notable speaker commentary was also limited to RBA Gov Lowe, who said that while global economy is on a firmer footing, he would rather have lower AUD than higher. In terms of policy, Lowe said the current rates are consistent with meeting CPI target, and that the market pricing of rates remaining on hold in 2017 seems reasonable.

China:

- (CN) PBoC official calls for asset management supervision improvement - Chinese press

- (CN) China govt said to prioritize restructuring in steel, coal, and power industries - Chinese press

- (CN) China has no reason to raise interest rates in the short term - Chinese press

Australia/New Zealand:

- (AU) RBA Gov Lowe: Would like AUD to be lower; Global economy is on a firmer footing, much more positive - press

 

Asian Equity Indices/Futures (00:00ET)

- Nikkei -0.5%, Hang Seng -0.4%, Shanghai Composite -0.3%, ASX200 -0.8%, Kospi -0.7%

- Equity Futures: S&P500 -0.1%; Nasdaq -0.2%; Dax -0.1%; FTSE100 -0.1%

 

FX ranges/Commodities/Fixed Income (00:00ET)

- EUR 1.0570-1.0585; JPY 112.60-112.95; AUD 0.7700-0.7720; NZD 0.7210-0.7235

- Apr Gold flat at $1,251/oz; Apr Crude Oil +0.1% at $54.48/brl; Mar Copper +0.7% at $2.66/lb

- USD/CNY (CN) PBOC SETS YUAN MID POINT AT 6.8655 V 6.8695 PRIOR

- (CN) PBOC to inject combined CN30YB v CNY50B prior in 7-day, 14-day and 28-day reverse repos

- (CN) China MoF sells 3-month bonds at 2.534%

 

Asia equities/Notables/movers by sector

- Consumer discretionary: 1970.HK IMAX China Holding +3.2% (FY16 result); MRN.AU Macquarie Media -4.8%; SUL.AU Super Retail +6.5% (guidance); CTD.AU Corporate Travel Mgmt +1.3% (guidance); CAB.AU Cabcharge Australia +7.2% (H1 result); BBG.AU Billabong -1.6% (H1 result); MGC.AU Murray Goulburn -5.9% (H1 result)

- Consumer staples: 2689.HK Nine Dragons Paper Holding -4.1% (H1 result); BAL.AU Bellamy's Australia -3.6% (H1 result); AHY.AU Asaleo Care +10.4% (Credit Suisse raises rating)

- Financials: 1299.HK AIA Group -0.8%, 123.HK Yuexiu Property -0.8% (FY16 result); PRO.AU Prophecy International Holdings -9.2% (H1 result); CHC.AU Charter Hall Group +4.7% (H1 result); PEP.AU Pepper Group -4.9% (H1 result)

- Industrials: MQA.AU Macquarie Atlas -2.1% (Completes placement); IPL.AU Incitec Pivot -4.2% (CEO to step down); AHG.AU Automotive Holdings -4.4% (H1 result)

- Technology: 6502.JP Toshiba Corporation +3.5% (update on chip sale); MYO.AU MYOB -7.7% (Majority holder Bain placed stake); NXT.AU +12.3% (H1 result); 2018.HK AAC Technologies Holdings -5.2%; WPP.AU WPP AUNZ +5.5% (FY16 result)

- Materials: 5711.JP Mitsubishi Materials -4.4%; BHP BHP.AU -2.8%, Rio Tinto RIO.AU -4.1%, Fortescue FMG.AU -3.2% (Iron Ore prices fall over 5%)