- Asian bourses got off to a firm start to the week with the Nikkei 225 supported by domestic trade data
- In FX markets, USD remains a key riving force after recouping opening losses ahead of the EU open
- Today sees a lack of tier 1 highlights with US participants away from market for President’s Day
Asian bourses get off to a firm start to the week, with the ASX 200 (+0.6%), Nikkei 225 (+2.0%) and KOSPI (+0.4%) trading with modest gains. ASX 200 has been supported by strength observed in financial, subsequently offsetting the losses in Woodside Petroleum (-6%) following AUD 2.5bln capital raising. South Korean participants have return from their elongated break to catch up with last weeks global equity recovery. Nikkei 225 has been buoyed by encouraging trade data, whereby exports rose for a 14th consecutive month. Markets have been somewhat quiet given the Lunar New Year holiday with Chinese markets out of action until Wednesday (HK reopens tomorrow)
Very quiet session in the fixed income space with Japanese yields relatively flat across the curve. Elsewhere, Aussie yields have shown a slight bull flattening bias today. AU-US 10 spreads (+0.1bps) continue to remain at the tightest levels since 1998.
Japanese Trade Balance (JPY)(Jan) Y/Y -943B vs. Exp. -1,002B (Prev. 359B)
Adjusted Trade Balance (JPY)(Jan) Y/Y 370bln vs. Exp. 140bln (Prev. 90bln)
Exports (Jan) Y/Y 12.2% Exp. 10.3% (Prev. 9.3%)
Import (Jan) Y/Y 7.9% Exp. 8.3% (Prev. 14.9%)
UK’s Brexit trade deal with the EU will not be finalised before exit day, warns EU Negotiator, Verhofstadt. Instead there will be an “annex” inside the withdrawal agreement which will set out what a future relationship might look like, to be thrashed out during the transitional period while current rules remain in place. (Telegraph)
ECB’s Rimsevics was detained by the anti-graft bureau, in a flurry of actions by officials with the financial regulator imposing payment restrictions on third-biggest lender ABLV Bank AS. (Newswires)
UK Rightmove House Price Index (Jan) M/M 0.8% (Prev. 0.7%). (Newswires)
IHS Survey: UK Feb Household Finance Index 42.2 (Prev. 42.9); lowest since July. 60% of households see BoE hiking rates in 6-months (Prev. 45%).
S&P affirms Hungary at BBB-, outlook positive. Fitch upgrades Greece to B (Prev. B-), Outlook positive.DBRS affirms Belgium at AA(High); stable trend. DBRS affirms Ireland at A(High); stable trend
A familiar story for the USD for much of the session, which had been on the back foot against its major counterparts after slipping through the 89.00 figure, potentially setting another retest around key support at 88.25-30. However, the greenback (+0.6%) did catch a late bid to make a move back above 89.00. Commodity currencies had been tracking oil prices higher today with WTI making a break above USD 62, largely owing to the risk tone. Eyes on AUD this week, with RBA minutes due out tomorrow, alongside key wage data later this week. Cross-related buying in AUD/NZD kept AUD above 0.79 for now.
Across Asia FX, the SGD will come into focus later today with the finance minister set to announce the latest budget at 0730GMT. Expectations are for the finance minister to hike the GST by 1-2%, which some suggest may increase speculation that the MAS could potentially tighten monetary policy in April. The appreciation in the THB seems to have had a dampening effect on Thailand’s growth in Q4, as the latest figures missed analyst estimates, which resulted in USD/THB pulling off the lows.
Brent and WTI crude futures advanced in Asian trade with prices supported by the improvement in risk sentiment as the latter breached above USD 62/bbl. Elsewhere, earlier gains in the precious dissipated amid the recovery in the USD index.
US Baker Hughes Total Rig Count (16 Feb) 975 (Prev. 975)
– Baker Hughes Oil Rig Count (16 Feb) 798 (Prev. 791)
– Baker Hughes Gas Rig Count (16 Feb) 177 (Prev. 184)
OPEC and Russia are considering options for cooperation after 2018, according to UAE. (Newswires)
Late Friday: US Commerce Department mulling 7.7% aluminium tariff, to recommend 23.5% tariff on all aluminium products from China, Russia, Venezuela and Vietnam. (Newswires)
EQUITIES: SPX +0.1% at 2739, DJI +0.1% at 25281, NDX -0.1% at 6785
Top sectors: Healthcare +0.9%, Telecoms +0.9%, Utilities +0.9%
Bottom sectors: Cons Disc -0.3%, Materials -0.1% Energy -0.1%
SPX prints its sixth straight day of gains, as traders question whether the recent VIX-inspired sell-off can actually be considered anything close to “market turmoil,” though some traders still note that the ES is yet to fully pare back those losses, and reclaim the 2785 level. The risk tone was once again firm on Friday, until headlines hit stating that Special Counsel Mueller had indicted 13 Russians and three entities with regards to interference in the 2016 Presidential Election. At the time, stock indices were losing steam, with ES March’18 contract struggling to negotiate the 2750 handle, and the news brought out the sellers. The indictments contained no allegations that an American citizen was knowingly involved in US election meddling, and after stocks skidded lower into negative territory, buyers emerged around the key 2725 level, and stocks once again found themselves in positive territory, though the social media names weighed on the Nasdaq, which finished red.
The US Treasury complex was immune to headlines that Special Counsel Mueller had indicted 13 Russians and three entities for meddling in the 2016 US Presidential Election. The curve was slightly higher pre-market, though buyers emerged for a second day, with no specific news catalyst. Some had rationalised the moves by suggesting that US Treasuries were oversold in many places, from a technical perspective. Either way, the net impact was narrowing in major curve spreads (2s10s -c4bps, 2s30s -c3bps, hough 5s30s was up slightly)
US Special Counsel Mueller has indicted 13 Russian nationals and three entities over conspiracy to defraud the US. Additionally, US Deputy AG Rosenstein says there is no allegation in today’s indictments that an American was knowingly involved in US election meddling. (Newswires)