ASIA STOCKS: Asian Equities Open Lower, As Tech Plunges & Trumps Tariffs
Feb-28 01:21
Asian equities are lower today, following a significant sell-off on Wall Street triggered by disappointing Nvidia earnings, which saw its stock drop 8.5%, and renewed concerns over US tariffs. Markets in Japan, Australia & South Korea opened lower, with the Topix falling 1.9%, Nikkei -2.70%, ASX 200 slipping 0.7% & the KOSPI down 2.2%, reflecting broader unease as the S&P 500 erased its year-to-date gains.
- President Trump’s confirmation of 25% tariffs on Canada and Mexico starting March 4, alongside an additional 10% levy on Chinese imports, has heightened fears of economic fallout, pushing oil prices up and pressuring export-sensitive sectors like electronics and automobiles in Japan.
- Chip-related stocks in Japan and South Korea, such as Advantest and SK Hynix, saw sharp declines of up to 10% and 4.1%, respectively, amid worries of overvaluation and a gloomy semiconductor outlook. Overnight, the SOX fell 6.09% and now trades 11.75% lower over the past 5 sessions.
- India is exploring tariff reductions on imports like cars and chemicals to mitigate potential U.S. reciprocal levies, signaling a regional scramble to adapt to shifting trade dynamics.
- The yen weakened as Tokyo’s inflation slowed more than expected, though the BoJ remains poised for potential rate hikes, adding another layer of complexity to the region’s economic landscape.
- Overall, Asian markets are grappling with a mix of corporate earnings disappointment, geopolitical trade tensions, and cautious monetary policy responses.
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ASIA STOCKS: Equities Slightly Higher, Majority Of Asia Out For LNY
Jan-29 01:13
Asian equities are higher this morning, following Wall Street’s tech-led rebound after a sharp selloff. Japan and Australia led gains, while most regional markets were closed for Lunar New Year. The recovery came as Nvidia surged 8.9%, easing concerns over AI-driven valuations that had rattled investors earlier in the week. Australian inflation data showed a sharper-than-expected slowdown, pushing the Australian dollar lower and fueling bets on RBA rate cuts.
- Japan's TOPIX is up 0.35%, while the Nikkei is 0.50% higher. Australia's ASX 200 is 0.80% higher and New Zealand's NZX 50 is 0.10% higher.
- US equity futures are slightly lower this morning after the NASDAQ jumped 2% overnight, while the S&P 500 close 0.90% higher.
- Markets are watching the Fed's rate decision on Wednesday, where rates are expected to remain unchanged but Powell’s guidance on a possible March cut will be key. Major US tech earnings from Tesla, Microsoft, and Meta are due the same day, followed by Apple on Thursday. The ECB will also announce its policy decision on Thursday, alongside Eurozone GDP and unemployment data. Other notable releases include US Q4 GDP (Thursday), PCE inflation, and employment cost index (Friday), which will shape expectations for Fed policy in 2025.
AUSSIE BONDS: Richer After Q4 CPI Lower Than Expected
Jan-29 00:43
ACGBs (YM +6.0 & XM +4.5) are sharply higher after Q4 CPI data came in slightly below expectations across most metrics:
- Trimmed Mean CPI rose 0.5% q/q (vs. est. +0.6%) and 3.2% y/y (vs. est. +3.3%).
- Weighted Median CPI increased 0.5% q/q (vs. est. +0.6%) and 3.4% y/y (vs. est. +3.5%).
- Headline Consumer Prices rose 0.2% q/q (vs. est. +0.3%) and 2.4% y/y (vs. est. +2.5%).
- December's annual headline CPI matched estimates at +2.5% y/y.
- “The trimmed mean excluded price falls in both Electricity and Automotive fuel this quarter, alongside other large price rises and falls.” (ABS)
- Cash ACGBs are 4-6bps richer after the data with the AU-US 10-year yield differential at -15bps versus -10bps pre-data.
- Swap rates are 5-7bps lower, with the 3s10s curve steeper.
- The bills strip is richer, with pricing +4 to +7.
- RBA-dated OIS pricing is 3-7bps softer across meetings after the data. A 25bp rate cut is more than fully priced for April (136%), with the probability of a February cut at 89% (based on an effective cash rate of 4.34%). February was at 76% before the data.
AUSTRALIA DATA: A$ & Local Yields Softer Post Q4 CPI Miss
Jan-29 00:35
The A$ is weaker in the aftermath of the Q4 CPI print. We are back around 0.6225/30, off close to 0.40%. Jan 21 lows at 0.6209 will be in focus on a further pull back. In the bond futures space, ym +7 xm +5, slightly off best levels. OIS is 3 to 7bps softer across RBA meeting dates.
- Q4 CPI was weaker than forecast across both headline and trimmed mean. More details to follow.
