Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei (0.27%), Hang Seng (0.14%), Shanghai Composite +0.81% as of 03:10 ET

Feb 19 ,2025

• Synopsis:

  • Asian equities mixed Wednesday. Hang Seng fell slightly while its tech index continued rally to new three-year high and mainland rebounded. Korea outperformed, Taiwan and Japan saw mild declines, Australia weighed down by financials. India trading flat. US futures marginally higher. Treasury yields little changed before FOMC meeting minutes. Yen stronger against dollar, kiwi pared earlier losses following RBNZ rate cut. Crude and gold higher. Bitcoin edging up.

  • Tariffs back into focus after Trump floated 25% tariffs on auto, pharma and semi imports with final details on 2-April in his latest salvo to reshape America's trading relationship with rest of the world. Warned rate would rise substantially over the year. However, Trump also flagged grace period for companies to relocate operations to US. Trump has said previously these would be on top of reciprocal tariffs that are planned to go into effect in April.

  • RBNZ cut OCR by 50 bp to 3.75% as expected. The statement foreshadowed further easing through 2025 if economic conditions continue to evolve as projected, citing inflation target sustainably achieved and an economy operating with significant spare capacity. BOJ board member Takata endorsed gradual rate hikes if prices, economy track in line with outlook. Japan exports rose for fourth straight month in January and growth hit six-month high, led by auto shipments to US. Core machinery orders fell in December while Japan manufacturer sentiment improved in February Reuters Tankan. Australian Q4 wage growth slowed to weakest since Q3 2022. China's new home prices were flat in January while existing-home prices continued to fall with narrower declines. Bank Indonesia kept 7D repo rate steady 5.75%, as expected.

  • Baidu (9888.HK) reported lower revenue, though better-than-expected, for third straight quarter while profits doubled as its AI business offset weak ad sales. HSBC (5.HK) shares touched highest since 2013 after profit beat. Announced $2B buyback and targeted $1.8B cost cut by 2026. National Australia Bank (NAB.AU) recording its largest daily drop since Mar-2020 Wednesday after Q1 trading update that revealed net interest margins had shrunk amid higher wholesale funding costs and competition for loans and deposits. UOB (U11.SP) will distribute S$3B over next three years via buybacks and special dividends to shareholders after record profit in 2024.

• Digest:

  • Trump says tariffs on auto, chip and pharma imports will be in vicinity of 25% and higher:

    • Speaking to reporters on Tuesday, President Trump foreshadowed 2-Apr announcement on auto, semiconductor and pharmaceutical tariffs that will be in vicinity of 25% and higher (Bloomberg, Reuters). Trump added tariffs would rise substantially over the course of a year. About half of US auto sales in 2024 were imported vehicles, leaving German and South Korean carmakers particularly exposed (Bloomberg). Still a lot of unknowns, including whether auto tariffs will apply globally or only to certain countries, and whether there will be exemptions such as for cars produced in Mexico and Canada under USMCA. However, Trump did flag grace period for companies to move their operations to US to avoid the tariffs. Trump also repeated that reciprocal tariffs will go into effect in April. Commerce Secretary Howard Lutnick last week said studies on reciprocal tariff implementation will be complete by 1-Apr (Reuters) and Trump has warned auto, semi and pharma tariffs will be over and above any reciprocal tariffs imposed.

  • RBNZ cuts OCR by 50 bp, sees scope for more rate cuts:

    • RBNZ cut official cash rate (OCR) by 50 bp to 3.75% as expected. Statement foreshadowed further easing through 2025 if economic conditions continue to evolve as projected, citing inflation target sustainably achieved and an economy operating with significant spare capacity. Updated OCR profile modelled trough of 3.10% by Q1 2026 and remaining there through forecast horizon, implying ~65 bp of additional rate cuts. In his press conference, Governor Orr flagged further 50 bp of easing by mid-year though in 25 bp increments over coming meetings. Headline inflation expected to increase in coming quarters, reflecting weaker exchange rate and higher oil prices, but remain near 2% target midpoint as non-tradeables inflation falls slightly more quickly than assumed in November due to negative output gap. Expects rate cuts to aid recovery in economy and household spending, though speed and timing is uncertain. Labor market remains weak with unemployment rate seen peaking slightly above 5.1% in early 2025 before recovery in H2. Trade restrictions likely to reduce domestic economic activity, but inflation impact uncertain. Tighter financial conditions another downside risk to global growth.

  • BOJ's Takata endorses gradual rate hikes if prices, economy track in line with outlook:

    • In a speech, BOJ board member Takata repeatedly said further adjustment of monetary accommodation is necessary provided there is confirmation that prices are developing generally in line with the Bank's outlook and positive corporate behavior is maintained. Noted risk of FX market volatility reflecting opposing rate cycles between Japan and abroad, though current differences relative to US has narrowed given absence of private sector balance sheet pressures in either country and reconfirmation of a US economic recovery. With a smaller gap, believes there is more flexibility in BOJ policy. If conditions are conducive for rate hikes, highlighted importance in monitoring permeation of wage hikes and cost pass-through to smaller and regional firms. Noted upside risks to inflation forecasts from intensifying virtuous wage-price cycle, domestic inflationary pressure especially toward FY25, and FX market volatility (implying dollar strength) caused by an increased likelihood of the US economy returning to a recovery path. Downplayed the viability of neutral rate estimates and argued against BOJ specifying a level as it could be interpreted as forward guidance and hamper policy flexibility.

  • China new home prices flat for second month in January:

    • New home prices in China were flat m/m in January based on Reuters calculations of NBS data, the same in December after falling for 17 straight months from Jun-2023 to Nov-2024. New home prices were down 5.0% y/y, narrowing from 5.3% y/y drop in previous month. NBS statistician said top-tier cities continued to outperform lower-tier cities in both new home and existing-home prices however gains top-tier cities narrowed in January. 24 out of 70 cities monitored by NBS reported m/m price increases in new home prices, one more than in December while seven cities reported m/m increase in existing-home prices, two down from prior month. Moody's Ratings said sustainable recovery in property market remains uncertain given key indicators and added watch for positive income expectations, stable or rising home price expectations and lower inventory levels. Bloomberg noted figures hinted some hope for policymakers trying to end yearslong housing slump while Citi analyst said there are early signs on path to stabilization.

  • Japan imports notably stronger than expected, machinery orders fall back:

    • Customs exports rose 7.2% y/y in January, below consensus 7.7%. Follows 2.8% in the prior month, marking the strongest growth in six months. Main drivers were autos, marine vessels and drugs. By region, US shipments turned positive for the first time since July, offsetting second straight decline in China and sharp drop in EU. Imports increased sharp 16.7%, well above consensus 9.3%, following 1.7% in November. Biggest contributors were telecommunications equipment, PCs and drugs. Regional growth was broad-based, led by a surge in EU alongside sharp gains in China (typically sees LNY volatility over Jan-Feb). BOJ real trade indices magnified the relative contrast with exports down 5.5% m/m and imports up 6.4%, marking a notably negative start to Q1 external demand. Core machinery orders fell 1.2% m/m in December, contrasting with expectations of 0.5% growth. Follows prior month's 3.4% drop for the first decline in three months. Sharp drop in manufacturing sector outweighed strength in nonmanufacturing. Q4 aggregate rose 2.9% q/q, missing survey projection of 5.7%, and Q1 guidance points to negative payback of 2.3%.

  • Notable Gainers:

    • +13% 4911.JP (Shiseido): holder Independent Franchise Partners discloses 5.20% stake

    • +7% 4626.JP (Taiyo Holdings): Oasis Management discloses 8.00% stake

    • +7% 2875.JP (Toyo Suisan Kaisha): Nihon Global Growth Partners urges company to review underperforming units, increase capital return via buybacks and higher dividends, and unsure board composition aligns with opportunities and challenges

    • +6.7% 2501.JP (Sapporo Holdings): 3D Investment Partners issues open letter to company's board reiterating concerns regarding company's severe lack of capital discipline amid repeated large-scale M&A impairments

    • +1.4% 5.HK (HSBC Holdings): reports FY EPS $1.24 vs consensus $1.23; intends to initiate share buyback of up to $2B

    • +0.9% Z74.SP (Singtel): reports Q3 results; expects FY EBIT growth in high-teens to low 20s growth y/y vs prior guidance low double digits growth y/y

    • +0.2% 068270.KS (Celltrion): launches KRW100.00B buyback; to run from tomorrow through 19-May

  • Notable Decliners:

    • -3.9% 11.HK (Hang Seng Bank): reports FY net interest income below StreetAccount estimates

    • -2.1% 9888.HK (Baidu): reports Q4 earnings with adjusted EBITDA below FactSet estimates

    • -1.4% 8031.JP (Mitsui & Co.): to acquire 40% interest in Rhodes Ridge iron ore project in Australia for $5.34B (about ¥800B)

    • -0.9% 4967.JP (Kobayashi Pharmaceutical): reportedly rejects proposal from Oasis at EGM to appoint lawyer to reinvestigate red yeast rice scandal

• Data:

  • Economic

    • China

      • January new house prices 0.0% m/m vs 0.0% in prior month (Reuters)

    • Japan

      • January trade balance (¥2,758.8B) vs consensus (¥2,102.8B) and revised ¥132.5B in prior month

        • Exports +7.2% y/y vs consensus +7.7% and +2.8% in prior month

        • Imports +16.7% y/y vs consensus +9.3% and revised +1.7% in prior month

      • December core machinery orders (1.2%) m/m vs consensus +0.5% and +3.4% in prior month

        • Q1 survey projection (2.3%) q/q vs actual +2.9% in Q4

      • February Reuters Tankan manufacturers sentiment index +3 vs +2 in prior month

        • Service sector index +30 vs +31 in prior month

    • Australia

      • Q4 wage price index +0.7% q/q vs consensus +0.8% and +0.8% in Q3

        • Wage price index +3.2% y/y vs consensus +3.2% and +3.5% in Q3

  • Markets:

    • Nikkei: (105.79) or (0.27%) to 39164.61

    • Hang Seng: (32.57) or (0.14%) to 22944.24

    • Shanghai Composite: 27.05 or +0.81% to 3351.54

    • Shenzhen Composite: 38.21 or +1.90% to 2045.55

    • ASX200: (61.80) or (0.73%) to 8419.20

    • KOSPI: 44.71 or +1.70% to 2671.52

    • SENSEX: (36.51) or (0.05%) to 75930.88

  • Currencies:

    • $-¥: (0.40) or (0.27%) to 151.6610

    • $-KRW: (2.40) or (0.17%) to 1439.4900

    • A$-$: +0.00 or +0.12% to 0.6361

    • $-INR: (0.08) or (0.09%) to 86.8493

    • $-CNY: +0.00 or +0.07% to 7.2845