Hike rates

US stocks erased earlier gains as the Fed prepares to raise rates

Asian Market Update: US stocks erased earlier gains as Fed prepares to hike rates; Asian stocks post big losses, UST 2-year yield extends rise [curve flattens]; The hottest New Zealand CPI is generally ignored; Samsung dropped amid cautious advice.

General trend

– Commodity currencies fall with focus on higher interest rates, stocks fall.

– Metals are also retreating.

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

– US stock FUTs erased gains amid a volatile session, Nasdaq FUTs fell 2%.

– Nikkei 225 fell >3%, despite opening higher [Tech declines weigh on big component Softbank Group; Fanuc rises on guidance].

– Will be BOJ buy ETFs today?

– Japanese companies that must declare their profits include Canon Inc, Fujitsu, Shin-Etsu Chemical, Advantest, Fuji Electric, Japan Exchange.

– The Hang Seng fell more than 2.5% [Mainland Property and TECH indices lag].

– Evergrande falls amid ongoing restructuring concerns; Hong Kong property developers continue to raise capital [Times China, Logan Property].

– Shanghai Composite was down >1% after opening flat.

– The S&P ASX 200 fell more than 2.9% after the holidays [Higher rates weighed on the Telecom, REIT and Consumer Indices].

– LG Energy Solutions starts operations in South Korea [LG Chem drops >7%].

– The Chinese Ministry of Commerce (MOFCOM) sometimes holds weekly press conferences on Thursdays.

– Companies due to report during the New York 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.

Securities/Economic data

Australia/New Zealand

The ASX 200 opened +0.2%.

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

– OZL.AU announces a copper production of 125.5 Kt against 97.6 Kt for the financial year 21; gold production 237.3K oz v 258.0K a/y.

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

– (AU) Australia Dec Westpac Leading Index: -0.03% vs. 0.22% previously.

– (NZ) New Zealand sells NZ$200m of bonds against NZ$200m listed.

(NZ) New Zealand Q4 RBNZ Sectoral Factor Model inflation Index Y/Y: 3.2% vs. 3.0% prior (highest since Q1 2009); Sector factor model Core non-tradable Y/Y: 5.3% vs. 4.5% before.

Japan

The Nikkei 225 opened +0.5%.

– (JP) Net purchases of foreign bonds by Japanese investors: -¥107.1bn versus +¥928.2bn previously; Net foreign purchase of Japanese stocks: ¥10.2 billion vs. ¥562.9 billion previously.

– (JP) Japanese MOF sells ¥3.0T against ¥3.0T indicated in JGBs at 0.00% over 2 years: average return: -0.0540% against -0.093% before; bid to cover: 3.87xv 4.25x before.

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 a/a, Rev ¥100.6 v ¥97.3 a/y; Cancellation of 1.5% of the shares on February 10.

Korea

Kospi opened 0.0%.

005930.KR reports net final T4 (KRW) 10.8 T against 6.6 T a/y (v 11.1 Te); 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 a projectile towards the East Sea and lands just outside Japan’s EEZ – Yonhap.

– (KR) South Korea Vice Fin Min Lee: South Korea will try to split the bond sales with the balance; Coordinate with the Bank of Korea government bond purchases if necessary.

– (KR) Bank of Korea (BOK): will take market stabilization measures if necessary.

– (KR) South Korea reports record number of covid cases, 14.5K.

– (KR) Department store sales in South Korea in December: 36.5% vs. 9.6% before; Y/Y discount store sales: -6.1% vs. -10.3% before.

(KR) South Korea Terms of trade Dec. 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: The tone of the United States on China policy is unchanged, the bad behavior of the United States towards China damages bilateral relations, Urge the United States to stop playing cards on Taiwan.

(HK) Hong Kong Monetary Authority (HKMA) Will watch market developments as Fed anticipates rate hikes; Money markets are functioning normally.

(CN) China Gold Association: gold consumption 2021 1,120.9tv 820.9ty/year; gold production 328.9K oz v 365.3ty/year.

– (CN) The Chinese PBOC sets the reference rate for the yuan: 6.3382 against 6.3246 previously.

– (CN) China PBOC Open Market Operation (OMO): sells 200 billion yuan in 14-day reverse repos against 200 billion yuan previously; Net inject CNY100B v inject CNY100B before.

(CN) China Y/Y December industrial profits: 4.2% vs. 9.0% previously (slowest pace since April 2020).

(CN) Vice Min Pu Chun, Chinese Market Regulator: China Will Help Market Entities Continue Recovery; China will improve anti-monopoly law enforcement.

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

– (HK) Hong Kong Chief Exec Lam to provide 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 high inflation and a solid labor market, the Fed will continue to adjust its policy; The policy adapted to a changing environment – after the Tariff Decision Statement.

– (United States) President of the Fed, Powell: It is not possible to predict the trajectory of key rates; Will be driven by data and evolutionary insights – questions and answers after tariff decision.

– MRNA doing first person in omicron vaccine trial, no timeline given for when results will be available.

– TSLA Q4 reports $2.54 vs. $2.11, Rev $17.7 billion vs. $16.1 billion; CEO: Sees volume grow ‘comfortably above 50%’ in 2022 – earnings call comments.

Europe

– (UK) Sue Gray’s report into alleged breaches of Downing Street lockdown restrictions is now due out on Monday (thought to be today) – press.

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

Levels from 12:15 a.m. ET

– Hang Seng -2.7%; Shanghai Compound -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%.

– €1.1243-1.1215; JPY114.79-114.47; AU$0.7122-0.7069; NZD 0.6661-0.6601.

– Commodity futures: Gold -0.9% at $1,813/oz; Crude Oil -0.9% to $86.54/bl; Copper -0.6% to $4.43/lb.