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StreetAccount Summary - Asian Market Recap: Nikkei +0.15%, Australia ASX +0.45% as of 03:10 ET

Jan 31 ,2025

• Synopsis:

  • Asia equities ended mostly higher Friday. Japan ended higher for a third consecutive session but is still locked in its four-month trading range. Australia ended at fresh record high. Gains for Singapore and India. South Korea fell as it reopened post the holidays and marked-to-market the tech rout earlier in the week, with SK Hynix weighing. Southeast Asia mixed, India rallying. US futures higher, Europe opened with more solid gains. US dollar higher on Trump's insistence Canada and Mexico tariffs will start tomorrow, yen weaker on dovish Ueda comments, yuan weaker, won at two-week lows, rupee at fresh record low. Treasury yields higher across tenors. Crude and precious metals higher, base metals flat.

  • Asia benchmarks that were open and not playing catch up after the LNY holiday were largely higher today despite a spike in the US dollar that followed Trump's insistence a 25% tariff on Mexican and Canadian products would begin tomorrow. He also repeated a 10% flat tariff would be imposed on China-made products. Adding to the dollar upside pressure were comments from BOJ governor Ueda who said the bank must maintain loose monetary policy. But to offset all this downward pressure on regional equities are US futures that point to a higher opening with Alphabet, Apple and Intel gaining in afterhours trading.

  • In regional developments, Tokyo core inflation rose to its highest since Feb-2024. Japan industrial production fell on lower auto output while retail sales growth also declined; unemployment unexpectedly fell. Bank of Korea Deputy Governor Ryoo said the bank is closely monitoring domestic spillovers from US tech sector volatility. Australia PPI inflation eased though still at elevated level. Thailand industrial production fell by more than expected. Indonesia FDI rose to a fresh record high.

  • Nissan Motor (7201.JP) and Honda Motor (7267.JP) said they would announce the future direction of their possible integration by the middle of February. SoftBank (9984.JP) is said to be in discussions to lead a funding round of up to $40B in OpenAI which would value the company at $300B. Mitsubishi Chemical (4188.JP) has abandoned a US plant project on the grounds of high costs. Samsung Electronics (005930.KS) has received approval from Nvidia to supply less advanced version of AI memory; Q4 profits and revenue missed estimates. Tata Technologies (544028.IN) said it had been hit by a ransomware attack and had temporarily suspended its IT services.

• Digest:

  • US probing DeepSeek's access to Nvidia chips as officials eye tightening export curbs:

    • DeepSeek breakthrough was expected to gain attention of Washington following claim it used older model NVDA H800 chips to produce its AI model. White House confirmed it was assessing national security implications. Crypto/AI czar David Sacks floating possibility of IP theft (Reuters), while Microsoft and OpenAI suspect DeepSeek may have improperly obtained OpenAI data (FT, Bloomberg). Momentum to tighten export controls seems to growing with GOP Chair of House select committee on China repeating calls for Trump administration to consider broadening curbs to cover NVDA's H20 chip (Reuters). Bloomberg had earlier cited sources who said Trump officials were exploring expanding curbs to H20s, which NVDA designed for China market after H800s were banned in Oct-2023. Bloomberg also cited people familiar with the matter who said White House and FBI investigating whether DeepSeek circumvented export controls by obtaining NVDA chips via third parties in Singapore. Unclear whether probe will lead to action though Commerce Secretary nominee Howard Lutnick on Wednesday suggested DeepSeek evaded export controls and vowed to address it.

  • Trump advisers leave open possibility of averting or scaling back tariffs on Canada and Mexico:

    • Tariff headlines remain volatile with press sources noting Trump advisers exploring ways to dial back or avert tariffs on Mexico and Canada after president earlier said 25% tariffs would be going ahead on 1-Feb. Options discussed include targeting tariffs towards sectors such as steel and aluminum while sparing oil (Trump said he would likely decide Thursday night whether to subject oil to tariffs). Tariffs could still be announced for Saturday but with period before implementation to allow negotiations to continue. Fits with ongoing debate whether Trump will follow through on tariffs or keep threat alive as leverage in negotiations. Trump officials recently noted both countries making progress on Trump's demands with Commerce Secretary nominee Howard Lutnick on Wednesday leaving open possibility of tariffs being avoided (Reuters). Still a lot of uncertainty, including whether China tariffs will be avoided as well (Trump said earlier China tariffs were going ahead), and fate of universal tariffs after Trump said he wanted them to be much bigger than 2.5% (Bloomberg) reportedly favored by Treasury Secretary Bessent (FT).

  • BOK warns on growing US stock volatility and monetary policy uncertainty ahead:

    • Bank of Korea Friday said it would closely monitor increased volatility in US stock market and its potential impact on domestic markets. Deputy Governor Ryoo said bank would watch for possible repercussions as uncertainties remain high with timing, pace of Federal Reserve rate cuts adding to uncertainties. Bank would watch for impact of such risk factors (Yonhap). Meanwhile, South Korea equity markets reopened this morning following four-day holiday with steep losses on Kospi, led lower by AI-related tech names such as SK Hynix (000660.KS), down more than 8% in early trading. Samsung Electronics (005930.KS) also lower after missing on quarterly earnings. Won slumped 1.6% as dollar surged after Trump insisted tariffs would against Mexico and Canada would proceed although domestic South Korea economic issues also continue to weigh on won. South Korea sovereign yields also lower.

  • Samsung earnings disappoint, Nvidia HBM3 approval gains little traction:

    • Samsung Electronics (005930.KS) Q4 earnings missed StreetAccount consensus on operating earnings and revenue, while net income came in somewhat higher. Early reactions bearish, highlighting notable miss in semiconductor segment and largely downbeat guidance. Memory division was a relative bright spot, achieving record Q4 revenues backed by higher DRAM ASP, stemming from growth in HBM and high-density DDR5. Segment guidance noted efforts in Q1 to accelerate advanced node migration and expand sales of high value-added products. 2025 priorities include reducing proportion of legacy products in DRAM/NAND and optimize portfolio centered on advanced node-based HBM, LPDDRx, QLC SSD. Other segments softer amid broad headwinds from weak mobile and PC demand, though large displays offering some support. Memory division head Kim Jae-june said DeepSeek presents a "short-term risk" and vowed to adapt to the changing landscape (Nikkei). Earnings announcement preceded by a Bloomberg story citing sources saying Samsung obtained approval from Nvidia (NVDA) in December to supply 8-layer HBM3E chips. However, this was long in the works, lagging far behind rival SK Hynix (000660.KS), and this classification is less advanced than the cutting edge 12-layer variant.

  • China remains a drag on Apple's revenue:

    • Apple (AAPL) up 3% in afterhours trade with market welcoming company's guidance for current quarter sales (Bloomberg, Reuters). Services revenue growth another bright spot. However, iPhone sales disappointed over Q1 with China remaining a source of weakness. Revenue in China shrunk by a larger-than-forecast 11% y/y, compared to total revenue growth of 4%. CEO Tim Cook attributed half of China sales decline to changes in reseller inventory mix. China's weak economy has long been a challenge for retailers, though competitive pressures have seen Apple lose share to domestic rivals (Reuters). Vivo and Huawei smartphone shipments rose 14% y/y and 22.8% respectively in Q4 according to preliminary figures from IDC, compared to Apple's 9.6% drop. Both companies overtook Apple in terms of China market share in 2024. Pace of Apple Intelligence rollout also faces questions. Apple still yet to provide timeline on when service will be available in China with Cook citing regulatory obstacles (Reuters).

  • Notable Gainers:

    • +18.4% 6701.JP (NEC Corp): reports Q3 earnings with revenue beating FactSet estimates; approves 5-for-1 stock split

    • +5.8% 4519.JP (Chugai Pharmaceutical): reports Q4 earnings with core revenue and core operating income ahead of FactSet consensus

    • +1.2% 9984.JP (SoftBank Group): reportedly in talks to lead funding round of up to $40B in OpenAI at post-money valuation of $300B

    • +0.7% 4502.JP (Takeda Pharmaceutical): reports Q3 earnings with revenue ahead of FactSet estimates; to launch up-to-¥100.00B buyback; CEO Christophe Weber to retire in Jun-26; Julie Kim, president of the US business unit, to succeed Weber

  • Notable Decliners:

    • -9.9% 000660.KS (SK Hynix): shares fall on DeepSeek developments as market in South Korea reopens following four-day holiday

    • -5.3% 4661.JP (Oriental Land): reports 9M results with year-on-year decline in operating income

    • -2.4% 005930.KS (Samsung Electronics): repots Q4 operating profit KRW6.493T vs preliminary KRW6.50T and StreetAccount KRW8.385T

    • -1.8% 6902.JP (DENSO Corp.): reports 9M results; confirms FY guidance

• Data:

  • Economic:

    • Japan

      • January Tokyo core CPI +2.5% y/y vs consensus +2.5% and +2.4% in prior month

        • CPI excl. fresh food & energy +1.9% y/y vs consensus +1.9% and +1.8% in prior month

        • Overall CPI +3.4% y/y vs consensus +3.0% and revised +3.1% in prior month

      • December industrial production +0.3% m/m vs consensus +0.2% and (2.2%) in prior month

        • METI survey projections +1.0% in January, +1.2% in February

      • December retail sales (0.7%) m/m vs consensus +0.1% and revised +1.9% in prior month

        • Retail sales +3.7% y/y vs consensus +3.2% and +2.8% in prior month

      • December unemployment rate 2.4% vs consensus 2.5% and 2.5% in prior month

        • Job offers to applicants ratio 1.25 vs consensus 1.25 vs 1.25 in prior month

    • Australia

      • December private sector credit +0.6% m/m vs consensus +0.5% and +0.5% in November

  • Markets:

    • Nikkei: 58.52 or +0.15% to 39572.49

    • Hang Seng: Closed

    • Shanghai Composite: Closed

    • Shenzhen Composite: Closed

    • ASX200: 38.60 or +0.45% to 8532.30

    • KOSPI: (19.43) or (0.77%) to 2517.37

    • SENSEX: 736.36 or +0.96% to 77496.17

  • Currencies:

    • $-¥: +0.49 or +0.32% to 154.7830

    • $-KRW: +4.07 or +0.28% to 1449.6400

    • A$-$: +0.00 or +0.43% to 0.6231

    • $-INR: (0.03) or (0.03%) to 86.6383

    • $-CNY: +0.01 or +0.16% to 7.1854