ASIA STOCKS: Asian Equites Lower Ahead Of Non Farms Later
Feb-07 01:02
Asian equities edged lower on Friday as investors awaited the U.S. nonfarm payrolls report, which could shape expectations for future Fed rate cuts.
- South Korea's KOSPI opened slightly lower (-0.20%) as investors took profits after three straight days of gains. Large caps like SK hynix (-0.25%) and LG Electronics (-0.50%) declined, while battery and steel stocks such as LG Energy Solution (+0.73%) and POSCO Holdings (+0.62%) advanced.
- Japan's Nikkei 225 (-0.6%) and Topix (-0.65%) fell as a stronger yen weighed on exporters, with Toyota down 1.4%. Investors remained cautious ahead of U.S. jobs data.
- Elsewhere, Australian and New Zealand equities also declined, while Hong Kong futures pointed lower. Investors are reassessing their stance on Chinese equities, with some seeing value in consumption-related names amid Beijing’s policy adjustments.
Sentiment remains cautious, with traders closely watching U.S. payroll data for signals on Fed policy, while Asian markets show signs of bottoming despite weak positioning.
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AUSSIE BONDS: Richer As Trimmed Mean CPI Declines
Jan-08 00:56
ACGBs (YM +1.0 & XM -2.0) are 4-5bps stronger after today’s CPI Monthly data for November.
- Headline CPI rose 2.3% y/y (estimate +2.2%) in November versus +2.1% in October. Trimmed mean CPI rose 3.2% y/y versus +3.5% in October.
- "The CPI excluding volatile items and holiday travel rose 2.8 per cent in the 12 months to November, compared to a 2.4 per cent rise in the 12 months to October. The increase in the annual movement is primarily due to changes in electricity prices." (per ABS)
- "Rents rose 6.6 per cent in the 12 months to November, following a similar annual rise of 6.7 per cent to October.
- Cash ACGBs are 1bp richer to 2bps cheaper, with a steeper curve. The AU-US 10-year yield differential is at -18bps.
- The swaps curve has twist-steepened, with rates 1bp lower to 2bps higher.
- The bills strip is 2-4bps richer after the data.
- RBA-dated OIS pricing is 1-4bps softer across meetings after the data, with July leading. A 25bp rate cut is back to being more than fully priced by April (107%), with the probability of a February cut standing at 61%.
- Before the data, the likelihood of a 25bp cut in April had slipped to 98%, with the February cut probability at 57%.
FOREX: A$ Lower Post CPI, But Limited Follow Through, Steady Trends Elsewhere
Jan-08 00:52
Early FX trends are relatively muted in the G10 FX space. The BBDXY USD index is little changed, last just under 1307.
- AUD/USD was above 0.6240 prior to monthly Nov inflation figures, but eased to lows of 0.6221 after the trimmed mean lost further momentum in y/y terms. Still the A$ is only down slightly for the session, last back near 0.6225. NZD/USD is also off modestly last near 0.5630/35.
- Other majors are a tick higher against the USD, but USD/JPY is near 158.00 (earlier highs were at 158.24), so remaining within recent ranges. EUR/USD is up a touch, close to 1.0350.
- US yields are down a touch, but losses are less than 1bps at this stage, following gains in Tuesday US trade (post stronger US data). US equity futures are higher, with Nasdaq futures up around 0.25% at this stage. Regional equity trends are mixed.
- The data calendar is light for the remainder of today's Asia Pac session (with just Japan consumer confidence on tap).
STIR: RBA Dated OIS Softer After Trimmed Mean CPI Declines
Jan-08 00:43
Headline CPI rose 2.3% y/y (estimate +2.2%) in November versus +2.1% in October. Trimmed mean CPI rose 3.2% y/y versus +3.5% in October.
- RBA-dated OIS pricing is 1-5bps softer across contracts after the data.
- A 25bp rate cut is back to being more than fully priced by April (110%), with the probability of a February cut standing at 61%.
- Before the data, the likelihood of a 25bp cut in April had slipped to 98%, with the February cut probability at 57%.
- For additional context, 32bps of easing was priced for April just a week ago.
Figure 1: RBA-Dated OIS – Today Vs. Yesterday
Source: MNI – Market News / Bloomberg
