AUSTRALIA DATA: Strong Jobs Growth Continued Into 2025

India continues to see heavy outflows, while other regions in Asia saw mixed flows on Monday as investors were cautious ahead of Trumps Inauguration. 

• South Korea: Saw outflows of -$345m yesterday, contributing to a 5-day total of -$206m. YTD flows are slightly negative at -$57m. The 5-day average is -$41m, worse than the 20-day average of -$24m but better than the 100-day average of -$156m.
• Taiwan: Saw inflows of +$385m yesterday, leading to a 5-day total of +$442m. YTD flows are negative at -$1.77b. The 5-day average is +$88m, better than the 20-day average of -$21m and the 100-day average of -$122m.
• India: Saw outflows of -$419m Friday, resulting in a 5-day total of -$2.82b. YTD flows are deeply negative at -$4.95b. The 5-day average is -$564m, worse than the 20-day average of -$316m and the 100-day average of -$76m.
• Indonesia: Saw outflows of -$17m yesterday, bringing the 5-day total to +$21m. YTD flows remain negative at -$183m. The 5-day average is +$4m, better than the 20-day average of -$13m and the 100-day average of +$1m.
• Thailand: Saw inflows of +$13m yesterday, contributing to a 5-day total of -$150m. YTD flows are negative at -$209m. The 5-day average is -$30m, worse than the 20-day average of -$12m and the 100-day average of -$9m.
• Malaysia: Saw outflows of -$31m yesterday, leading to a 5-day total of -$254m. YTD flows are negative at -$460m. The 5-day average is -$51m, worse than the 20-day average of -$27m and the 100-day average of -$18m.
• Philippines: Saw outflows of -$2m yesterday, bringing the 5-day total to -$47m. YTD flows are negative at -$83m. The 5-day average is -$9m, worse than the 20-day average of -$7m and the 100-day average of -$1m.

Table 1: EM Asia Equity Flows

ANZ is forecasting Q4 headline CPI to rise 0.5% q/q and 2.2% y/y, the same as Q3 but slightly above the RBNZ’s 2.1% y/y. It is in line with the central bank for non-tradeables (+0.8%/4.7%) but stronger for tradeables (+0.2%/-1.2%). It expects the Stats NZ underlying measures to be towards the upper end of the RBNZ’s 1-3% target band. Assuming that the data print close to expectations, ANZ continues to forecast a 50bp rate cut on February 19 with the outlook dependent on core/domestic inflation.

• ANZ notes that non-tradeables inflation is likely to remain “well above the goldilocks ~3% level that’s typically been associated with headline inflation running around 2%”.
• “The pace of disinflation across non-tradable and core inflation measures is ultimately going to determine where the OCR settles. … Given upside sticky domestic inflation risks, we remain comfortable with our terminal OCR assumption of 3.5%.”
• “Tradable deflation is typically short-lived, meaning the RBNZ still needs to see further progress on the non-tradables front over 2025. And with recent GDP data and key capacity indicators (eg out of the NZIER’s QSBO) suggesting the economy is operating with a considerable degree of spare capacity, we think they’ll get it.”
• “Looking to the CPI outlook for 2025, it’s fair to say that recent NZD weakness and strength in oil prices could see annual headline inflation reaccelerate for a time. … it’s very common for tradable inflation to prove more volatile than forecast (given how hard it is to forecast the exchange rate and global commodity prices), and the RBNZ tends to look through the bulk of temporary fluctuations in tradable prices.”

Natural gas prices were mixed with Europe rising but the US falling as President Trump talked about the US becoming a major energy producer and exporter. Europe and Asia are looking to increase LNG imports from the US to reduce the risk of hefty tariffs. Trump plans to lift the ban on new LNG export licences imminently.

• European gas rose 1.8% on Monday to EUR 47.75 after a high of EUR 48.08, but they are still down 2.3% in January. Cold weather and lower supplies have resulted in a faster drawdown from storage with EU levels at around 61% compared with the 5-year average of 68%.
• The EU has a 47% storage goal and the Netherlands and Croatia are below it and France is also likely to move below by month-end. Supplies for the winter are unlikely to be a problem but refilling in the spring/summer will be more difficult due to low storage levels thus boosting prices.
• US gas fell 3.0% to $3.83 but is still up 5.4% this month. Output is expected to rise under Trump for domestic use and exporting.
• Trump wants to use a “national energy emergency” to be able to increase domestic oil and gas production and reverse Biden’s climate change policies, according to Bloomberg. Uncertainty remains elevated though with no details on how this declaration would be used or its impact on domestic and global markets or if he will even be able to use it.