Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei (0.72%), Hang Seng +1.16%, Shanghai Composite +1.01% as of 03:10 ET

Feb 07 ,2025

• Synopsis:

  • Asia equities ended mixed Friday. Japan's Nikkei and Topix gave up some of yesterday's gains but still ended with a positive week. Greater China boards were higher but were well off their peaks by the close. South Korea and Australia dipped but Taiwan ended positively. Southeast Asia tilted lower. India trading around the flatline for now. US futures a little lower, Europe paring early losses. US dollar unchanged, yen weakening a smidge, little movement of note elsewhere. Treasury yields higher, JGB yields also strong. Crude oil, precious and base metals all higher. Cryptocurrencies higher.

  • Asia stocks drifted into the end of the week with little clear direction ahead of US non-farm payrolls later today. Consensus forecast leans towards a step down in headline job growth and an unchanged unemployment rate but impact likely to be tempered as Fed rate expectations unlikely to be influenced by this reading with no change in rates expected in March's meeting. China's benchmarks notable again with Hong Kong-listed technology and internet names surging again to give the Hang Seng a 4.6% gain over the week.

  • In regional developments, the RBI cut its base policy rate by 25 bp, as largely expected with few surprises in its accompanying commentary with the cut well flagged in the days leading up to the decision. Japan household spending spiked amid another rise in real household incomes. Malaysia's industrial output rose by the strongest since last July; Indonesia's forex reserves rose to a record high despite BI rupiah intervention.

  • Hyundai Motor (005380.KS) is to temporarily suspend production of some EV models on slowing demand. SingTel (Z74.SP) has secured a $476M green loan to develop a Singapore-based data center. Foxconn (Hon Hai, 2317.TT) could renew its interest in Nissan Motor (7201.JP) after the breakdown of Nissan-Honda Motor merger talks, according to press reports. Nippon Steel (5401.JP) says its bid for US Steel has matched goals set by President Trump.

• Digest:

  • RBI cuts base rate for first time in five years:

    • India's central bank monetary policy committee voted unanimously to cut benchmark repo rate 25 bp to 6.25% Friday, as expected by majority of economists. It also maintained its neutral stance, adding less restrictive monetary policy was more appropriate 'at this juncture'. New Governor Sanjay Malhotra said economic backdrop remained challenging, India economy not immune to global uncertainties with excessive volatility in financial markets, trade uncertainties posing risks to outlook (EconomicTimes). Said bank expected inflation to moderate to 4.2% in FY26 led by sharp food price declines, FY26 GDP growth forecast at 6.7% from earlier 6.6%. Said forex policy to stay focused on smoothing out excess volatility. Announced RBI would undertake review of trading, settlement timings. RBI also indicated that domestic lending banks would be given more time to meet the liquidity coverage ratio (LCR) announced last July. Market reaction was mixed as IGB yields rose the most in a month, the rupee also gained but equities edged lower except for banks, which rose in response to the LCR news.

  • Tech stock rally lifts Hang Seng to three-month high:

    • Hang Seng Index touched highest level since November on Friday, boosted by tech stocks. Hang Seng Tech Index has entered technical bull and come close to reclaiming its October peak. On mainland, tech-focused ChiNext and STAR 50 both advanced as well. Chinese tech names have been beneficiaries of newly popular DeepSeek theme with its cheap AI model reigniting interest. SCMP citing HSBC noted investors increasingly recognize China's innovation capability while valuation gap between China and EM can narrow with more foreign fund inflows. Another SCMP article notes success of DeepSeek prompts reassessment of China's tech companies that trade at half of Mag 7. Rebound may have more legs due to appealing valuation and breakthrough despite US curbs. Deutsche Bank called the technology China's "Sputnik moment" and stressed country's dominance in global manufacturing and services. Added "China discount" will disappear and bull run in Hong Kong and China can reach new highs (TMTPost). Meanwhile investors still look for more policy measures to shore up its struggling property sector and consumer demand at March's NPC against backdrop of US-China trade tensions.

  • IMF expects BOJ rates to go beyond 0.5% by year-end, reaching neutral by 2027-end:

    • Reuters cited comments from IMF Japan mission chief Nada Choueiri estimating Japan's neutral rate in a range of 1%~2% with a midpoint of 1.5%, emphasizing significant uncertainty. Also projected policy increases beyond 0.5% by the end of this year and reach neutral by 2027-end. Expressed support for the course of monetary policy and how the BOJ is handling it. GDP likely to expand 1.1% this year as rising wages underpin consumption and stay on course to sustainably achieve the 2% inflation target. However, cautioned that economic risks skewed to the downside as heightened uncertainty and geopolitical fragmentation could hurt global demand and affect companies with global supply chains. On fiscal policy, continued to endorse progress towards austerity to lower the debt ratio over coming years. Called for Japan to remove energy subsidies and shift spending to areas with a clearer impact on long-term growth. Suggested that rate hike expectations and JGB purchase tapering likely to push up bond yields and increase debt costs. But sees a low risk of an abrupt spike in bond yields for now due to the very gradual pace of rate adjustments and QT, providing a narrow window of opportunity to speed up fiscal reform.

  • Yen support factors building, though further upside may be limited:

    • Hawkish remarks from BOJ board member Tamura added support for yen Thursday (Reuters). Discussion of the negative output gap constrained by labor shortages (Reuters) directly matched a recent Nikkei piece on the topic, with the main implication that traditional central bank attention on the metric may be diluted, and rate hikes will continue. Nikkei noted yen strength was amplified by stop-losses on short positions as the 200-day moving average crossed the 100-day average. Yet there were some thoughts near term upside is limited due to negative carry on short USD/JPY trades. Separately, Nikkei discussed yen's notable YTD outperformance among G10 currencies based on the Nikkei FX index. While acknowledging BOJ rate hike expectations as the latest catalyst, market perceptions of Japan being relatively sheltered from Trump tariff risks also encouraging a rotation into yen. Recalled President Trump imposed some tariffs on Japan in his first term, though scale was small relative to other countries. Yet, article cited skepticism toward further yen appreciation, considering BOJ still expected to hike at a gradual pace, while recent yen strength has been largely a function of unwinding long dollar positions rather than a meaningful bullish shift in yen.

  • Hon Hai back in the spotlight as potential partner for Nissan:

    • Nikkei discussed prospects for Nissan (7201.JP) to partner with Hon Hai (2317.TT) after merger talks with Honda (7267.JP) were halted. Outlined two scenarios for how Hon Hai might approach Nissan: (1) Could wait for an invitation from Nissan amid restructuring efforts and propose a strategic investment, (2) Fast-track an acquisition including an unsolicited takeover bid. Synergies based around Hon Hai's access to the EV market while Nissan could be supplied with a high volume of cutting-edge semiconductors. Hon Hai could also use Nissan's surplus production capacity for its contract manufacturing business. Noted Hon Hai's plan to invest in Nissan had been progressing behind the scenes before Nissan-Honda merger discussions began. Recalled a report that Hon Hai held talks with Renault (RNO.FP) in mid-December to acquire Nissan shares. Key figure seen as Hon Hai's EV division chief strategy officer Jun Seki, who was previously Nissan's third-ranked executive as well as Nidec (6594.JP) president. Reuters sources also mentioned Hon Hai as a potential new partner for Nissan with the latter eyeing tech firms among candidates to adapt to the shift in market towards EVs and software-driven cars.

  • Notable Gainers:

    • +5.1% 9987.HK (Yum China Holdings): reports adjusted EPS ahead of FactSet estimates; analysts broadly positive on the results, highlight narrowing KFC and PH SSS decline

    • +4.0% 5401.JP (NIPPON STEEL): reports Q3 results with business profit ahead of FactSet estimates; several analysts find the print reassuring; Trump reportedly to meet with CEOs of US Steel, FedEx today

    • +3.9% 2702.JP (McDonald's Holdings): reports FY results with operating profit ahead of FactSet estimates; provides 2025-27 medium-term management plan; president/CEO Tamotsu Hiiro to retire with director Thomas Koh appointed replacement

    • +3.7% 4452.JP (Kao): reports Q4 revenue, operating income ahead of FactSet estimates; several brokers note guidance came in ahead of expectations

    • +2.9% 2317.TT (Hon Hai Precision Industry): reportedly back in the spotlight as potential partner for Nissan

  • Notable Decliners:

    • -13.8% 036460.KS (Korea Gas): Korea energy ministry reportedly fails to confirm economic feasibility of Blue Whale offshore gas project

    • -6.0% 090430.KS (Amorepacific): reports Q4 earnings with operating profit below StreetAccount estimates; COSRX weakness widely highlighted by brokers

    • -4.1% 8035.JP (Tokyo Electron): reports 9M earnings and confirms FY guidance; analysts generally note the results met expectations

    • -3.1% 033780.KS (KT&G Corp): reports Q4 operating profit below StreetAccount estimates; analysts generally positive on tobacco performance, note operating profit impacted by one-offs

    • -2.8% 035420.KS (NAVER): reports Q4 earnings

• Data:

  • Economic:

    • Japan December

      • Household spending +2.7% y/y vs consensus +0.5% and (0.4%) in prior month

      • Spending +2.3% m/m vs +0.4% in prior month

  • Markets:

    • Nikkei: (279.51) or (0.72%) to 38787.02

    • Hang Seng: 241.92 or +1.16% to 21133.54

    • Shanghai Composite: 33.01 or +1.01% to 3303.67

    • Shenzhen Composite: 31.69 or +1.61% to 1996.24

    • ASX200: (9.30) or (0.11%) to 8511.40

    • KOSPI: (14.83) or (0.58%) to 2521.92

    • SENSEX: (224.36) or (0.29%) to 77833.80

  • Currencies:

    • $-¥: +0.33 or +0.22% to 151.7910

    • $-KRW: (1.89) or (0.13%) to 1444.2700

    • A$-$: +0.00 or +0.08% to 0.6288

    • $-INR: (0.15) or (0.17%) to 87.4335

    • $-CNY: (0.00) or (0.05%) to 7.2854