ASIA STOCKS: Equities Slightly Higher, Majority Of Asia Out For LNY
Asian equities are higher this morning, following Wall Street’s tech-led rebound after a sharp selloff. Japan and Australia led gains, while most regional markets were closed for Lunar New Year. The recovery came as Nvidia surged 8.9%, easing concerns over AI-driven valuations that had rattled investors earlier in the week. Australian inflation data showed a sharper-than-expected slowdown, pushing the Australian dollar lower and fueling bets on RBA rate cuts.
- Japan's TOPIX is up 0.35%, while the Nikkei is 0.50% higher. Australia's ASX 200 is 0.80% higher and New Zealand's NZX 50 is 0.10% higher.
- US equity futures are slightly lower this morning after the NASDAQ jumped 2% overnight, while the S&P 500 close 0.90% higher.
- Markets are watching the Fed's rate decision on Wednesday, where rates are expected to remain unchanged but Powell’s guidance on a possible March cut will be key. Major US tech earnings from Tesla, Microsoft, and Meta are due the same day, followed by Apple on Thursday. The ECB will also announce its policy decision on Thursday, alongside Eurozone GDP and unemployment data. Other notable releases include US Q4 GDP (Thursday), PCE inflation, and employment cost index (Friday), which will shape expectations for Fed policy in 2025.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUSSIE BONDS: Subdued Start To Week
In Tokyo morning trade, JGB futures are weaker but off session lows, -7 compared to settlement levels.
- The Jibun Bank/S&P Global Manufacturing PMI Index for December rose to 49.6 from 49 in November.
- Cash US tsys are slightly richer, with a steepening bias, in today’s Asia-Pac session after Friday’s heavy session.
- Cash JGBs are little changed across benchmarks. The benchmark 10-year yield is 0.4bp lower at 1.121% versus the cycle high of 1.1330% set earlier today.
- Swap rates are little changed apart from the 30-year (-3bps). Swap spreads are mixed.
KOREA: KRW Volatile As Political Uncertainty Continues
USDKRW finished Friday little changed at 1470.90 following a low of 1466.55 but has started today volatile rising to 1475.45 and then declining to 1468.55 and is currently around 1470, as political instability continues. The fatal crash of a Korean plane weighed on the won earlier but coordinated verbal support for markets has left USDKRW little changed and equities higher.
- Acting President Han Duck-soo was impeached on Friday and there were reports over the weekend that former president Yoon Suk Yeol ordered the use of guns to subdue politicians when he announced martial law.
- Han Duck-soo was impeached for apparently delaying the removal of Yoon Suk Yeol following his failed attempt to implement martial law early in December. The finance minister, Choi Sang-mok has become the third president this month.
- The government, Bank of Korea and regulators stated that markets will be monitored and action will be taken to ensure stability if needed.
- November IP was softer than expected falling 0.7% m/m to be up only 0.1% y/y after being unchanged and +6.3% y/y in October.
- Acting president Choi has called for a “strict” investigation” into Sunday’s fatal Jeju plane crash. Yonhap news reported today that another Jeju flight had to turn around due to a landing-equipment problem.
- Korean equities are rallying with the KOSPI up 0.8% and the KOSDAQ +1.4%.
US TSYS: Cash Bonds Slightly Mixed After Friday’s Heavy Close
TYH5 is 108-13, -0-01 from NY closing levels.
- Cash US tsys have opened to the week slightly mixed across benchmarks after closing last week with another heavy session.
- The US tsy 10Y yield climbed to 4.625% (+4bps) on Friday - the highest since late May'24.
- Markets will be closed on Wednesday for the New Year's Day holiday; otherwise, they will have full sessions for the balance of the week. Data includes MNI PMI and Pending Home Sales on Monday, FHFA housing data on Tuesday, weekly claims and construction spending on Thursday, and ISMs on Friday.
