Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei (0.94%), Hang Seng (0.20%), Shanghai Composite (0.58%) as of 03:10 ET

Jan 09 ,2025

• Synopsis:

  • Asia equities ended largely lower Thursday as the risk-off momentum continued: Among the major benchmarks that ended lower were those in Japan, Hong Kong, Shanghai, Taiwan and Australia. Shenzhen was slightly higher and South Korea's Kospi continued its bounce back with a modest gain. India trading down to six-week lows, Southeast Asia also mainly down. US futures lower, Europe flat in opening trades. US dollar consolidating overnight gains, yen coming off lows but AUD and NZD weaker; the yuan was flat. Treasury yields lower at the long end, higher at the short. Crude flat, precious metals a smidge higher, base metals mixed as copper reached a month-long high but iron ore fell to a three-month low. Cryptocurrencies notably weaker.

  • Asia equities again under pressure Thursday from renewed strength in the US dollar and worries over China's economic recovery. Today, China's consumer inflation weakened to just 0.1% in December despite the autumn's stimulus programs while producer prices fell for a 27th consecutive month, albeit at a slower pace. Although both were near expectations, the data plays into fears of China falling into stagflation that could take years to remedy.

  • The yuan was flat today but the PBOC confirmed today it would issue CNY60B in six-month yuan bills to mop excess liquidity and effectively making shorting more expensive. CGB yields rose a tad. In other developments, Japan's nominal wages rose 3% to beat forecasts but real wages fell by 0.3%. Australia's retail sales growth hit a ten-month high in November but fell short of expectations.

  • Fast Retailing (9983.JP) said strong sales in Japan, North America and Europe had helped to offset a sustained slowdown in China. Softbank (9984.JP) through its ARM Holdings is considering a deal to buy chip designer Ampere Computing. Japan's economy minister said the overseas takeover of Seven & I Holdings (3382.JP) was a national security risk. SK Group (034730.KS; SK Hynix, 000660.KS) chairman Chey Tae-won met with Nvidia CEO Huang to discuss how to move AI into physical world. Star Entertainment (SGR.AU) said it is running low on cash just months after receiving a financial lifeline; stock lost third of its value. India's market regulator warned Ola Electric (544225.IN) over disclosure lapses.

• Digest:

  • China inflation data remain soft as expected:

    • CPI rose 0.1% y/y in December, matching expectations, following 0.2% in the prior month. Latest reading lowest since March. Sluggish headline reflects goods prices driven by declines in food and fuel. Main support coming from moderately higher services. NBS noted prices starting to pick up in travel, leisure and household services with Lunar New Year holidays approaching. Core inflation edged up to 0.4% from 0.3%. PPI fell 2.3% vs expectations of a 2.4% decline. Follows 2.5% drop in November and marks the smallest decrease since August. Marginal improvement driven by upstream segments while downstream deflation remained steady. NBS said coal demand limited with power plants holding sufficient reserves, as well as broader winding down of industrial activity in the traditional off-season. Recall contours of PMI inflation metrics were mixed across official/Caixin series and manufacturing/nonmanufacturing dissection. Overall little change in inflation benchmarks leaves deflation risk narrative intact, partly explaining bond market strength.

  • China deepens support for yuan with record bill issue in Hong Kong:

    • Beijing signaled broader support for yuan Thursday, confirming reports earlier this week to announce sale of CNY 60B ($8.2B) six-month yuan bills to soak up excess liquidity in Hong Kong. Issuance will effectively reduce yuan liquidity in offshore markets, making it more expensive to borrow and short currency. Bloomberg calculated issuance set to be largest on record since PBOC began bill issuance in Hong Kong regularly in 2018. PBOC to date largely stuck to defending yuan via daily fixing rate but last week allowed yuan to slip below 7.3 per dollar. Analysts said combination of actions indicate PBOC wants to stabilize yuan. HIBOR rate already at 3.5-year high this week, set to increase further. Added yuan likely to come under more pressure as Trump's inauguration approaches, should China economic recovery falter further. Thursday, yuan trading flat but again close to weaker end of 2% trading band.

  • Japan nominal base wages grow at 32-year high, but real earnings remain negative:

    • Nominal average wages rose 3.0% y/y in November (four-month high), above consensus 2.7%, following revised 2.2% in the previous month. Details positive with base earnings logging fastest increase in 32 years and overtime payments firmer. However, real wages fell 0.3% vs revised 0.4% decline in October, remaining negative for the fourth straight month. Main factor was acceleration in deflator to +3.4% from +2.6% amid surging rice prices and waning energy subsidies. Total hours worked remained marginally negative mainly reflecting overtime declines. Employment growth was steady. Wage focus intensifying after BOJ Governor Ueda said board members held off on a December rate hike as they are looking ahead to wage momentum heading into the 2025 shunto talks as well as clarity on Trump policies. Press sources indicated New Year corporate rhetoric and BOJ branch managers meeting would be the main sources of information. Recall major industry groups offered bullish indications on wage hikes that were consistent with Rengo's mission statement for increases of at least 5%.

  • BOJ regional economic report broadly upbeat:

    • BOJ regional economic report for January showed overall assessments were upgraded in two out of nine regions, with the remainder unchanged. All nine regions reported some degree of positive momentum, although some weakness was observed in part. Summaries of employment and income conditions unanimously indicated improvements, though Hokuriku region still seeing lingering impacts from the Noto earthquake. Japanese-language version included an executive summary noting some caution, particularly among small firms, though many recognized the need for sustained wage hikes amid labor shortages and increase in minimum wage. Private consumption also broadly positive, though with some qualification noting inflation headwinds. Key anecdotal responses on pricing behavior were mixed with some sectors more aggressive on price hikes than others. Some firms being forced to pass on material/labor cost increases. Attention to be concentrated on wages after BOJ Governor Ueda said board members held off on a December rate hike as they are looking ahead to wage momentum heading into the 2025 shunto talks as well as clarity on Trump policies. Recall major industry groups offered bullish indications on wage hikes in recent New Year ceremonies that were consistent with Rengo's mission statement for increases of at least 5%.

  • Australia retail sales growth on Black Friday sales, trade boosted by solid exports:

    • Retail sales rose 0.8% m/m in November, slightly below consensus 1.0% and follows revised 0.5% in the previous month. All major categories were positive, led by department stores, apparel and dining. ABS highlighted support from Black Friday sales with promotions now stretching across the whole month. Added discounting was applied to a wide range of products. Q4 tracking marginally firmer than 1.1% q/q growth in Q3. Early takeaways on the bearish side (Bloomberg), though implications limited ahead of more comprehensive household spending report due Friday and retail sales to be phased out mid-year. Trade balance was A$7.08B in November, above consensus A$5.75B and follows revised A$5.67B in October. Main driver was exports, up 4.8% m/m, stronger than revised 3.5% in October, marking strongest since Aug-23. Strength attributed to commodities and China demand. Outpaced 1.7% increase in imports after prior month was revised to unchanged. Growth in fixed assets outweighed slight easing in consumer goods.

  • Notable Gainers:

    • +5.3% 000660.KS (SK Hynix): SK Group chairman Chey Tae-won reportedly meets with Nvidia CEO Jensen Huang at CES 2025

    • +4.7% 2020.HK (ANTA Sports Products): reports Q4 operational update; ANTA retail sales posts high-single digit positive y/y growth

    • +0.9% 1368.HK (Xtep International Holdings): reports Q4 mainland China operational update for core Xtep brand with retail sell-through growth of high single digit y/y

  • Notable Decliners:

    • -7.3% 7581.JP (Saizeriya): reports Q1 earnings ahead of FactSet estimates; some analysts highlight overseas same-store-sales weakness and decline in domestic GPM

    • -5.1% 6669.TT (Wiwynn): reports Q4 earnings with operating income below FactSet estimates

    • -4% 373220.KS (LG Energy Solution): reports preliminary Q4 operating profit (KRW225.5B) vs StreetAccount (KRW162.01B); revenue KRW6.451T vs StreetAccount KRW6.809T

    • -0.4% 9984.JP (SoftBank Group): together with Arm Holdings reportedly exploring deal for semiconductor designer Ampere Computing

    • -0.2% 005380.KS (Hyundai Motor): to invest KRW24.3T domestically in 2025; KRW11.5T earmarked for R&D, KRW12T for ordinary expenses and KRW800B for strategic investment

• Data:

  • Economic:

    • China December

      • CPI +0.1% y/y vs consensus +0.1% and +0.2% in prior month

        • PPI (2.3%) y/y vs consensus (2.4%) and (2.5%) in prior month

    • Japan November

      • Average nominal wages +3.0% y/y vs consensus +2.7% and revised +2.2% in prior month

        • Real wages (0.3%) y/y vs consensus (0.6%) and revised (0.4%) in prior month

    • Australia November

      • Trade balance A$7.08B vs consensus $5.75B and revised A$5.67B in October

        • Exports +4.8% m/m vs revised +3.5% in October

        • Imports +1.7% m/m vs revised 0.0% in October

      • Retail sales +0.8% m/m vs consensus +1.0% and revised +0.5% in October

  • Markets:

    • Nikkei: (375.97) or (0.94%) to 39605.09

    • Hang Seng: (38.95) or (0.20%) to 19240.89

    • Shanghai Composite: (18.77) or (0.58%) to 3211.39

    • Shenzhen Composite: 5.55 or +0.30% to 1878.93

    • ASX200: (19.90) or (0.24%) to 8329.20

    • KOSPI: 0.85 or +0.03% to 2521.90

    • SENSEX: (499.13) or (0.64%) to 77649.37

  • Currencies:

    • $-¥: (0.16) or (0.10%) to 158.2000

    • $-KRW: +4.73 or +0.32% to 1462.9100

    • A$-$: (0.00) or (0.60%) to 0.6178

    • $-INR: +0.02 or +0.02% to 85.9279

    • $-CNY: (0.00) or (0.01%) to 7.3310