US payrolls and Fed Chair Powell in focus

Asia Market Update: Asian markets pare losses on China Services PMI, confirmation of next week's trade talks with the US; US payrolls and Fed Chair Powell in focus

General Trend:

- Japan markets decline in return from 4-day holiday

- Tech and Marine Transportation names weigh on the Nikkei; Fast Retailing declines over 6% in catchup selling

- Chinese equities rebound after lowest open since late 2014, property index rises

- Big banks gain in Shanghai; Ping An Bank rises on guidance

- Pharma names in Hong Kong trade broadly higher

- Financial and Resources sectors lead declines in Australia

- Apple suppliers in Asia remain under pressure: Largan Precision declines over 4%

- JGB Futures rise in first day of trading in 2019; 10-yr JGB yield remains negative

- Gold Futures test $1,300/oz amid recent FX volatility

- China Caixin Services PMI rises to 6-month high after manufacturing index moved into contraction

- Yen declines after gains on Thursday; AUD/JPY outperforms

- Partial US government shutdown entered its 13th day as of Thursday

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened -0.6%

-(AU) Australia Dec Final CBA PMI Services: 52.7 v 52.2 prior; PMI Composite: 52.9 v 52.4 prior

China/Hong Kong

- Shanghai Composite opened -0.7%, Hang Seng -0.5%

- (CN) CHINA DEC CAIXIN PMI SERVICES: 53.9 V 53.0E (6-month high)

- (CN) China Premier Li: To step up countercyclical adjustments of macro policies; To make 'full use' of RRR and targeted RRR tools

- (CN) China Commerce Ministry (MOFCOM): Confirms China and US to hold vice ministerial level trade talks on Jan 7-8th (Mon-Tues)

- (US) White House Economic Advisor Hassett: China economy slowing, could be a recession – press

- (CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY60B injected in 7 and 14-day reverse repos prior; Net: CNY160B drain v CNY90B drain prior

- (CN) China PBoC sets yuan reference rate: 6.8586 v 6.8631 prior

- (CA) Canada govt official: 13 Canadians have been detained in China since Huawei exec arrest - Globe & Mail

Japan

- Nikkei 225 opened -1.8%

- (JP) Japan Finance Ministry (MOF) Currency Head Asakawa comments on Thursday's FX volatility: Speculative moves were seen in thin markets

- (JP) Japan Fin Min Aso: True corporate conditions are 'extremely good' [referring to decline in stock prices]

- (JP) Japan Finance Ministry (MOF), FSA and Bank of Japan (BOJ) to hold meeting on markets at 1 pm local time (11 PM EST)

- (JP) Reportedly BoJ will consider trimming inflation outlook for next 2 years – Nikkei

- (JP) BoJ Gov Kuroda: Markets 'somewhat rough', impacted by unexpected overseas developments: Reiterates important to take consistent policy 'patiently and persistently' towards beating deflation

- (JP) BoJ announcement related to daily bond buying operation: unchanged

- (JP) Japan PM Abe: Not intending to dissolve Japan Lower House

Korea

- Kospi opened -0.1%

- (KR) South Korea Finance Ministry: Held meeting after [recent] US stock decline, global stock market 'instability' may continue for 'a while'

- (KR) Bank of Korea (BOK): To closely monitor financial market movement

- (KR) South Korea Dec Foreign Reserves: $403.7B v $403B prior

Other

- (ID) Indonesia Central Bank: To hold auction in domestic NDF market, to hold auction at 'fixed rate' at 8:30 AM (local time)

- (MY) Malaysia Nov Trade Balance (MYR): 7.6B v 11.0Be; Exports to the US -3.6% y/y, China +3.9%

- (PH) PHILIPPINES DEC CPI M/M: -0.4% V -0.3% PRIOR; Y/Y: 5.1% V 5.6%E

North America

- US equity markets ended lower: Dow -2.8%, S&P500 -2.5%, Nasdaq -3.0%, Russell 2000 -1.3%

- (US) DEC ISM MANUFACTURING: 54.1 V 57.5E; PRICES PAID: 54.9 V 57.7E (biggest drop in Manufacturing activity since Oct 2008); New Orders Index: 51.1 v 62.1 prior

- (US) US Democrat controlled House votes 241to 190 to pass spending package to reopen the government, without border wall funds (as expected); White House has said it would veto any measure that did not include funding for border wall

- ((US) House Leader Pelosi (D): Reiterates 'we are not doing a wall'

- (US) US Senate Minority Leader Schumer (D): To attend Friday's meeting at the White House on the government shutdown

- (US) Reminder: Fed Chair Powell is expected to speak during Friday morning (around 10:15 AM ET) at the American Economic Association in Atlanta, expected to address monetary policy

- (US) Former Fed Vice Chair Kohn suggested Fed officials need to change how they communicate in order to improve the understanding of investors and the public - financial press

- (US) Weekly API Oil Inventories: Crude: -4.5M v +6.9M prior

Europe

- (UK) UK Brexit Min Barclay: Reiterates second referendum would cause yet more division in the UK

- (UK) Telegraph poll shows most Tories would select 'No-deal' Brexit

- (UK) UK Dec BRC Shop Price Index Y/Y: 0.3% v 0.1% prior (highest since April 2013)

- Banca Carige [CRGI.IT]: Malacalza family (main investor) said to have suggested support for a recapitalization of the company - FT

Levels as of 01:00ET

- Nikkei 225, -2.7%, ASX 200 -0.3%, Hang Seng 1.6%; Shanghai Composite 1.6%; Kospi 0.7%

- Equity Futures: S&P500 +0.5%; Nasdaq100 +0.7%, Dax +0.6%; FTSE100 +0.4%

- EUR 1.1412-1.1386 ; JPY 108.44-107.46 ; AUD 0.7031-0.6993 ;NZD 0.6708-0.6675

- Feb Gold +0.1% at $1,297/oz; Feb Crude Oil +0.4% at $47.27/brl; Feb Copper +0.7% at $2.595/lb