Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei +0.09%, Hang Seng (0.93%), Shanghai Composite (0.65%) as of 03:10 ET

Feb 05 ,2025

• Synopsis:

  • Asia markets ended mixed Wednesday. Mainland China markets reopened following their extended LNY holiday and ended mostly lower despite a bright opening. Hong Kong also gave up some of its recent gains. Japan's Nikkei was flat while the Topix rose a few points, Australia's ASX, the Kospi and Taiex benchmarks all ended higher. Southeast Asia was mixed while India is trading a smidge lower. US futures lower, Europe opened with modest losses. US dollar dipping again to follow overnight losses, onshore yuan weaker as it trades for the first time post LNY, yen at its strongest in two months. Treasury yields higher at the short end, lower at the long end, Asia sovereigns quiet. Crude oil seeing more losses, precious metals higher again as gold trades at a fresh record high, base metals supported.

  • Asia equities without a firm direction Wednesday to follow a stronger session on Wall Street but declines in several heavyweight names during afterhours trading. The US dollar fell for a third consecutive day Tuesday and is lower again in Asia trading as tariff talk cools slightly, giving Asia currencies and equity markets a boost for the time being but the specter of tariffs still hanging over the region. Trump's attention focused late Tuesday on the Middle East, giving tariff-watchers a break. China's mainland markets reopened sans the volatility Hong Kong and several developed markets witnessed last week but finished mostly lower. Hong Kong consumer stocks underperformed on reports the US postal service was to suspend delivery of parcels from China and Hong Kong.

  • In other developments, China's services PMI declined to a still expansive 51.0 but it compared with December's seven-month high reading of 52.2 and was also below expectations. Singapore's January PMI fell into contraction for the first time in two years while separate government data showed retail sales unexpectedly fell in January. Japan's real wages surged, South Korea inflation rose to a six-month high on the weaker won just as its forex reserves fell to a five-year low. Indonesia's full-year 2024 GDP came in within expectations at 5.0%.

  • Toyota Motor (7203.JP) raised its annual profit forecast despite recent dip in output and sales. Nissan Motor (7201.JP) has reportedly withdrawn its MoU for its merger with and Honda Motor (7267.JP), Honda reportedly said the talks were not progressing as it had hoped. Panasonic (6752.JP) announced management reshuffle and goal to improve profitability by more than ¥150B by 2027; announced operating profit ahead of forecasts. CATL (300750.CH) is considering filing for its Hong Kong listing as soon as this month or in March. JD.com (9818.HK) among the China consumer names to trade lower on reports the US postal service was to suspend incoming inbound parcels from China and Hong Kong. LG CNS (064400.KS) fell sharply in its trading debut in Seoul in the exchange's largest listing in more than three years.

• Digest:

  • China markets calm as trade resumes after LNY holidays:

    • Mainland China resumed trading Wednesday following extended LNY holidays, and were relatively calm to contrast some wild swings in markets last week and this. By the close, Shanghai's composite and CSI 300 indexes were down around 0.6% albeit with significant outperformance in IT stocks, mirroring the surge in Hong Kong in IT stocks since last Friday. The Hang Seng, meanwhile, underperformed with consumer stocks notably lower on reports US postal service suspended delivery of China and Hong Kong parcels. In forex markets, onshore yuan traded 1.2% weaker as it partly marked-to-market offshore movement last week; offshore yuan was slightly stronger, in line with dollar DXY index movements. Also follows surprisingly tight yuan fixing first thing by PBOC, which marginally strengthened mid-point despite onset of tariffs on its exports by US, imposition of its own tariffs on US energy products. Analysts still expect PBOC to set yuan to below 7.2 per dollar in coming weeks, months to support exports. Sovereign bonds were largely unchanged with the 10Y yield continuing to hover around record low 1.63%.

  • Trump in no hurry to talk to Xi:

    • Reuters cited comments by President Trump at the White House, saying he is in no hurry to speak to China President Xi to try to defuse a new trade war. White House spokeswoman Leavitt said a call still needed to be scheduled, though noted earlier that Xi reached out to Trump perhaps to start negotiations. Beijing's response to Trump tariffs were widely described as limited (FT, Bloomberg) to avoid a tariff war ahead of Trump-Xi talks, taking a different approach compared to Trump's first term in office. Analysts estimated China's new tariffs would apply only to about $20B of annual imports, compared with $450B worth of Chinese goods affected by Trump tariffs. According to EIA data, China accounted for 11% of US coal exports during the first three quarters of 2024 (second largest behind India) and 2.9% of LNG exports over Jan-Nov. Increasing restrictions of critical minerals pose a concern, though there were no macro-level estimates. Monday deadline for China tariffs to come into effect still provide some time for dialogue. Full implications of Beijing's probe into Google (GOOGL) seen unclear until Trump-Xi talks. In breaking news, Bloomberg cited a USPS statement temporarily suspending international packages from China and Hong Kong, seen as consistent with the US abolition of de-minimis exemptions.

  • China Caixin services PMI weaker than expected:

    • Caixin services PMI was 51.0 in January, below consensus 52.3 and prior month's 52.2. Reading showed services activities in expansion since Jan-2023 but pace of growth fell to slowest since September. New business growth eased to four-month low while new export business returned to growth after falling at end-2024. Unfinished business recorded first decline since July due to softening of new business growth and better efficiency at service providers. Employment levels dropped at fastest pace since April amid lack of capacity pressure that led to further job cuts. Cost pressure intensified with rate of cost inflation at highest in three months. Meanwhile service providers raised selling prices for second straight month in January, but increase was only marginal. Level of confidence remained below average as firms expressed concerns over competition and trade uncertainties. Caixin Composite PMI slowed to 51.1 from December's 51.4. Economists noted Beijing's stimulus blitz in late September has delivered tangible results, but effects likely to diminish in 2025. Pointed to challenges facing economy amid growing external uncertainties.

  • Nissan trading halted after report merger talks with Honda set to be suspended:

    • Nissan (7201.JP) trading halted after Nikkei reported merger talks with Honda (7267.JP) broke down amid ongoing disagreement over ownership ratios and other terms. Honda said to have floated idea of making Nissan a subsidiary but was met with strong opposition from Nissan. Article noted parties will now consider a reset in negotiations or continue independent cooperation in the EV segment. The agreement was predicated on Nissan restructuring; while a broad plan was launched, Nissan was delayed by resistance at the local level. Honda determined that a Nissan rebuild will take time, so offered to lead by making Nissan a subsidiary. Yet Nissan remained insistent on an equal partnership, leaving the two sides too far apart to continue negotiations. Article was consistent with several earlier reports indicating talks could be scrapped as Nissan board members were likely to vote against Honda taking control. Follows recent delay in the merger update originally scheduled for January, though was postponed to mid-February as Honda was dissatisfied with Nissan's restructuring progress. Mitsubishi (7211.JP) earlier reportedly decided against joining the alliance and stated this week a final decision would be made once Honda and Nissan reach an agreement.

  • Yen strengthens on BOJ, geopolitics, flows:

    • Yen notably firmer early Wednesday. A number of factors mainly boiled down to the notable beat in wage data (albeit driven mostly by lumpy bonuses), fanning BOJ rate hike expectations. This theme also triggered JGB declines. Swaps-implied probability of the baseline July scenario now at about 78% and prospects of an earlier move starting to emerge into the narrative. Cabinet minister rhetoric sharing Governor Ueda's recent remarks in parliament that Japan is in inflation, not deflation, also seen as conducive for further adjustments. Some earlier attention on geopolitical risks back on the radar after latest Trump rhetoric on the Middle East encouraged risk aversion trades favoring yen. While most of the attention went to Trump's reinstatement of a "maximum pressure" policy on Iran, he also indicated aims to "take over" Gaza to oversee the rebuilding process and suggested Palestinians should permanently leave the area (FT). Flows/positioning also supporting yen with exporter demand seemingly outweighing ongoing dollar shortages among importers. Latest CFTC data published yesterday showed hedge funds reduced yen shorts for the second straight week, though traction was limited as attention was overshadowed by tariff headlines.

  • Notable Gainers:

    • +18.2% 688111.CH (Beijing Kingsoft Office Software): reaction to last week's DeepSeek news

    • +13.7% 6752.JP (Panasonic): reports Q3 earnings with operating profit ahead of StreetAccount estimates; announces management reform; to improve profitability by more than ¥150B by FY27 and an additional ¥150B by FY29

    • +8.2% 7267.JP (Honda Motor): Nissan Motor reportedly to withdraw MoU for business integration with Honda

    • +7.9% 688981.CH (SMIC): reaction to last week's DeepSeek news

    • +7.3% 323410.KS (KakaoBank): reports Q4 earnings with net income ahead of FactSet estimates

    • +4.8% 035420.KS (NAVER): founder Lee Hae-jin reportedly to return as chairman

    • +3.1% 7203.JP (Toyota Motor): reports Q3 revenue ahead of StreetAccount estimates; raises guidance

    • +2.9% 7974.JP (Nintendo): reports 9M earnings

  • Notable Decliners:

    • -5.7% 161390.KS (HANKOOK TIRE & TECHNOLOGY Co.): reports Q4 earnings with net income attributable below StreetAccount estimates

    • -3.5% 9618.HK (JD.com): US Postal Service to temporarily suspend inbound parcels from China and Hong Kong until further notice, effective 4-Feb

• Data:

  • Economic:

    • China January

      • Caixin services PMI 51.0 vs consensus 52.3 and 52.2 in prior month

        • Caixin Composite PMI 51.1 vs 51.4 in prior month

    • Japan

      • December average nominal wages +4.8% y/y vs consensus +3.7% and revised +3.9% in prior month

        • Real wages +0.6% y/y vs consensus (0.1%) and revised +0.5% in prior month

      • January final services PMI 53.0 vs preliminary 52.7 and 50.9 in prior month

        • Composite PMI 51.1 vs preliminary 51.1 and 50.5 in prior month

    • South Korea January

      • CPI +2.2% y/y vs FactSet consensus +2.1% and +1.9% in prior month

        • CPI ex-food & energy +1.9% y/y vs +1.8% in prior month

    • New Zealand Q4

      • Employment (0.1%) q/q vs consensus (0.2%) and (0.5%) in Q3

        • Unemployment rate 5.1% vs consensus 5.1% and 4.8% in Q3

    • Singapore December

      • Retail sales nominal (2.9%) y/y versus (0.5%) in prior month

  • Markets:

    • Nikkei: 33.11 or +0.09% to 38831.48

    • Hang Seng: (192.87) or (0.93%) to 20597.09

    • Shanghai Composite: (21.11) or (0.65%) to 3229.49

    • Shenzhen Composite: 8.50 or +0.44% to 1919.59

    • ASX200: 42.90 or +0.51% to 8416.90

    • KOSPI: 27.58 or +1.11% to 2509.27

    • SENSEX: (146.55) or (0.19%) to 78437.26

  • Currencies:

    • $-¥: (1.10) or (0.71%) to 153.2420

    • $-KRW: (8.96) or (0.62%) to 1444.5800

    • A$-$: +0.00 or +0.27% to 0.6272

    • $-INR: +0.30 or +0.35% to 87.4232

    • $-CNY: +0.09 or +1.19% to 7.2703