US stocks erased earlier gains as Fed prepares to hike rates

Asia Market Update: US stocks erased earlier gains as Fed prepares to hike rates; Asian equities see big losses, 2-year UST yield extends rise [curve flattens]; Hotter NZ CPI generally ignored; Samsung dropped amid cautious guidance.

General trend

- Commodity currencies drop with the focus on higher interest rates, equity declines.

- Metals also decline.

- USD/CHF and USD/JPY have traded generally flat [focal points have included US rates, Russia, equity declines].

- US equity FUTs erased gains amid volatile session, Nasdaq FUTs dropped 2%.

- Nikkei 225 has dropped by >3%, despite the higher open [Tech declines weigh on big component Softbank Group; Fanuc rises on guidance].

- Will BOJ purchase ETFs today?

- Japanese companies due to report earnings include Canon Inc, Fujitsu, Shin-Etsu Chemical, Advantest, Fuji Electric, Japan Exchange.

- Hang Seng has dropped by over 2.5% [Mainland Property and TECH indices lag].

- Evergrande drops amid ongoing restructuring concerns; HK property developers continue to raise capital [Times China, Logan Property].

- Shanghai Composite has declined by >1% after opening flat.

- S&P ASX 200 dropped >2.9% following holiday [Higher rates weighed on the Telecom, REIT and Consumer Indices].

- LG Energy Solutions starting trading in South Korea [LG Chem drops >7%].

- China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thurs.

- Companies due to report during the NY morning include Alliance Data, Blackstone, Comcast, Danaher, Dow, HCA, International Paper, JetBlue, Southwest Airlines, McDonald’s, McCormick, Marsh & McLennan, Altria, MSCI, NetScout, Nucor, Rogers Communications, Rockwell Automation, Sherwin-Williams, Textron, Valero.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened +0.2%.

- (AU) AUSTRALIA Q4 EXPORTS PRICE INDEX Q/Q: +3.5% V -2.6%E; IMPORTS PRICE INDEX Q/Q: 5.8% V 1.4%E.

- OZL.AU Reports FY21 copper production 125.5Kt v 97.6Kt y/y; gold production 237.3K oz v 258.0K y/y.

- (NZ) NEW ZEALAND Q4 CPI Q/Q: 1.4% V 1.3%E; Y/Y 5.9% V 5.8%E (>31 year high).

- (AU) Australia Dec Westpac Leading Index: -0.03% v 0.22% prior.

- (NZ) New Zealand sells NZ$200M in bonds v NZ$200M indicated.

- (NZ) New Zealand Q4 RBNZ Sectoral Factor Model inflation Index Y/Y: 3.2% v 3.0% prior (highest since Q1 2009); Sectoral Factor Model Non-Tradable Core Y/Y: 5.3% v 4.5% prior.

Japan

- Nikkei 225 opened +0.5%.

- (JP) Japan Investors Net Buying of Foreign Bonds: -¥107.1B v +¥928.2B prior; Foreign Net Buying of Japan Stocks: ¥10.2B v ¥562.9B prior.

- (JP) Japan MOF sells ¥3.0T v ¥3.0T indicated in 0.00% 2-year JGBs: Avg Yield: -0.0540% v -0.093% prior; bid-to-cover: 3.87x v 4.25x prior.

- 8697.JP Reports 9M Net ¥38.0B v ¥37.4B y/y, Pretax ¥55.9B v ¥54.5B y/y, Op ¥56.0B v ¥54.4B y/y, Rev ¥100.6B v ¥97.3B y/y; To cancel 1.5% of shares on Feb 10th.

Korea

- Kospi opened 0.0%.

- 005930.KR Reports final Q4 (KRW) Net 10.8T v 6.6T y/y (v 11.1Te); Op 13.9T v 13.8T prelim (v 9.1T y/y) , Rev 76.6T v 76.0T prelim (v 61.6T y/y).

- (KR) North Korea again fires projectile towards East Sea and landed just outside Japan's EEZ - Yonhap.

- (KR) South Korea Vice Fin Min Lee: South Korea will try to divide bond sales with balance; To coordinate with Bank of Korea on Govt bond purchases if needed.

- (KR) Bank of Korea (BOK): Will take market stabilizing steps if needed.

- (KR) South Korea reports record high covid cases, 14.5K.

- (KR) South Korea Dec Department Store Sales Y/Y: 36.5% v 9.6% prior; Discount Store Sales Y/Y: -6.1% v -10.3% prior.

- (KR) South Korea Dec Terms of Trade 87.7, -10.4% y/y (9-year low).

China/Hong Kong

- Hang Seng opened -1.4%; Shanghai Composite opened 0.0%.

- (CN) China Foreign Min Wang: US Tone on China policy is unchanged, Wrong behaviors from US on China hurt bilateral ties, Urges US to stop playing cards on Taiwan.

- (HK) Hong Kong Monetary Authority (HKMA) Will monitor market developments as Fed sees rate hikes; Money markets operating normally.

- (CN) China Gold Association: 2021 gold consumption 1,120.9t v 820.9t y/y; gold production 328.9K oz v 365.3t y/y.

- (CN) China PBOC sets Yuan reference rate: 6.3382 v 6.3246 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY200B in 14-day reverse repos v CNY200B prior; Net inject CNY100B v inject CNY100B prior.

- (CN) China Dec Industrial Profits Y/Y: 4.2% v 9.0% prior (slowest pace since Apr 2020).

- (CN) China Market Regulator Vice Min Pu Chun: China to help market entities to continue recovering; China to improve anti monopoly enforcement.

- 3333.HK China speculated to consider breaking up company to contain a real estate crisis - Press.

- (HK) Hong Kong Chief Exec Lam to provide an update on coronavirus restrictions in the afternoon - SCMP.

North America

- (US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25%; AS EXPECTED; SAYS 'IT WILL SOON BE APPROPRIATE' TO RAISE RATES.

- (US) Fed Chair Powell: With elevated inflation and strong labor market, Fed will continue to adapt policy; Policy has been adapting to an evolving environment - post rate decision statement.

- (US) Fed Chair Powell: It is not possible to predict the path of policy rates; Will be guided by data and evolving outlook - post rate decision Q&A.

- MRNA Does first person in omicron vaccine trial, no timetable given for when results will be available.

- TSLA Reports Q4 $2.54 v $2.11e, Rev $17.7B v $16.1Be; CEO: Sees volume to grow 'comfortably above 50%' in 2022- earnings call comments.

Europe

- (UK) Sue Gray report on alleged Downing Street lockdown restriction violations now expected to be published Monday (prior thought to be today) – press.

- (UK) Dec Car Manufacturing 62.3K unit , -12.7% y/y; 2021 Car Manufacturing 859.6K unit (lowest annual figure since 1956), -6.7% y/y SMMT.

Levels as of 00:15ET

- Hang Seng -2.7%; Shanghai Composite -1.1%; Kospi -3.2%; Nikkei225 -3.4%; ASX 200 -1.8%.

- Equity Futures: S&P500 -1.3%; Nasdaq100 -1.5%, Dax -2.0%; FTSE100 -2.0%.

- EUR 1.1243-1.1215; JPY 114.79-114.47; AUD 0.7122-0.7069; NZD 0.6661-0.6601.

- Commodity Futures: Gold -0.9% at $1,813/oz; Crude Oil -0.9% at $86.54/brl; Copper -0.6% at $4.43/lb.