Asia Market Update: Quiet news day sees Asian equities follow on from US; KR BOK cuts, inline; Currencies range; AU Jan CPI tomorrow.
– Hang Seng opened -2.7% and HK Tech Index -4.3% on falls in US tech, with Alibaba falling nearly -8% at the open. JD.com -5%, Bilibili -9.4%, Tencent -3.9%. Prices pared most losses as the session continued, even as Asia overall found itself in the red again as per yesterday.
– However, Japanese trading houses up on the Japan market reopening after Berkshire Hathaway reported over the weekend that it was open to going over the previously self-imposed 10% limit of holdings in the five trading houses that BH has exposure to. [Mitsubishi 6%, Itochu 5% Sumitomo 4% Marubeni +3%, Mitsui +8.0%].
– Today’s BOK cut was unanimous (and expected). However, Gov Rhee said that 4 of 6 members open to rate hold in next 3 months, while two are open to a further cut. No major news seen in BOK decision other than forward guidance.
– Japanese 10-year bond yields at one point -6bps to 1.37% with 2 yr JGB yields down to 0.789% as Japanese JPY/USD initially lost -0.5% but came back to be even on the day as Japanese yields also crept back up. JGB yields off lows post enhanced auction.
– Even as initial peace talks continue, Ukraine air force warned of Russian missile attacks across ‘all of Ukraine’.
– Australian weekly Consumer Confidence rose to nearly three-year highs following the RBA cutting rates early last week. Aussie energy co Woodside Energy +2.4% on doubling of Net earnings for the year.
– China PBOC kept policy rate steady in the Feb MLF operations. Net drained in both MLF and the 7-day reverse repos, amid a liquidity shortage that has seen China bond yields rise strongly in recent weeks off record lows. CN 10-years as high as 1.81% the past day, but fell back to 1.75% amid the bond ops today.
– US equity FUTs up slightly during Asian trading.
Looking ahead (Asian time zone)
– Wed 26th AU Jan CPI, (Wed eve DE Mar Consumer confidence).
– Thu 27th NZ Feb Business Confidence, (Thu night US Q4 GDP (2nd est).
– Fri 28th JP Jan Retail Sales, (Fri night Feb DE CPI, Jan Core PCE).
– Sat 1st (CN Feb NBS Mfg PMI).
Holidays in Asia this week
– Mon Feb 24th Japan.
– Tue Feb 25th Philippines.
– Wed Feb 26th India.
– Fri Feb 28th Taiwan.
Headlines/economic data
Australia/New Zealand
– ASX 200 opens -0.2% at 8,288.
– Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 89.8 v 85.1 prior (highest since May 2022) – update.
– New Zealand Treasury Fortnightly Economic Update: Expects housing prices to weigh on consumption; expects housing activity to continue recovering over 2025 as demand returns.
China/Hong Kong
– Hang Seng opens -2.7% at 22,716; Shanghai Composite opens -0.8% at 3,345.
– CHINA PBOC 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) SETTING: LEAVES RATE UNCHANGED AT 2.00%; CONDUCTS CNY300B; NET DRAINS CNY200B IN LIQUIDITY.
– Huawei said to improve production of AI chips in ‘breakthrough’, increased AI chip yield to ~40% – FT.
– US said to have imposed New sanctions on Chinese and Indian companies for ‘helping’ Iranian oil sales – SCMP.
– China PBOC may relax the implicit limit of 5.0% RRR for banks amid surging NCD yields – China Securities Times.
– (US) Congress introducing bipartisan legislation to toughen trade enforcement laws and address concerns about China’s trade practices.
– China President Xi: Russia/China ties have a strong driving force with unique strategic value – following call with Putin.
– China proposes to revise law in order to enhance ‘low-altitude’ economy; the proposed revisions to the civil aviation legislation has been submitted to the Standing Committee of the NPC – Xinhua.
– China PBOC sets Yuan reference rate: 7.1726 v 7.1717 prior.
– China PBOC Open Market Operation (OMO): Injects CNY319B in 7-day reverse repos; Net drains CNY171B v prior injects CNY102B.
Japan
– Nikkei 225 reopens -1.1% at 38,359.
– Japan Jan PPI Services Y/Y: 3.1% v 3.1%e.
– Japan Fin Min Kato: Reiterates to analyse impact of Trump tariffs – financial press.
– Japan govt reportedly nears votes required for budget (as expected) – financial press.
– Japan MOF sells ¥400B v ¥400B indicated in 20-year, 30-year and 40-year JGBs in liquidity enhancement auction; Highest avg accepted spread -0.024%.
Korea
– Kospi opens -1.0% at 2,617.
– South Korea Jan Retail Sales Y/Y: 11.7% v 8.9% prior.
– BANK OF KOREA (BOK) CUTS 7-DAY REPO RATE BY 25BPS TO 2.75%; AS EXPECTED.
– Bank of Korea (BOK): To determine timing and pace of any further cuts – post-rate decision comments.
– Bank of Korea (BOK) Gov Rhee: Today’s decision was unanimous; 4 of 6 members open to rate hold in next 3 months – post-rate decision press conference.
– South Korea Acting Pres Choi: Urges parliament to approve Chips Act and extra budget – Korean press.
– South Korea Fin Ministry: To create KRW1.0T fund to invest in AI, quantum startups – statement.
– Follow up: Korean ruling party said to be seeking veto on Commercial Act revision – South Korea press.
Other Asia
– Taiwan Digital Ministry: Undersea cable connecting Penghu Island has been broken; [Third such report in 2025 to date] – financial press.
– Taiwan Central Bank (CBC) board member Chang Chien-Yi: Taiwan faces pressures to hike rates.
– Taiwan Jan M2 Money Supply Y/Y: 5.5% v 5.5% prior; M1 Money Supply Y/Y: 4.4% v 4.0% prior.
North America
– US said to be ‘pressing’ Japan, Netherlands to align on China restrictions; Weighs tighter controls on Nvidia chip exports to China – financial press.
– (US) Pres Trump: Want Keystone XL Pipeline built… NOW! – Truth Social post.
– (US) Elon Musk: Subject to the discretion of President Trump, [federal] employees will be given ‘another chance’, failure to respond second time will result in ‘termination’.
– (US) Fed’s Goolsbee (voter): If Trump Admin enacts policies that drive up prices, by law the Fed has to think about it – TN interview.
– (US) Reportedly House Speaker Johnson and the House GOP leadership are planning on putting their multi-trillion dollar budget resolution on the floor on Tuesday, Feb 25th; If this vote goes forward, it’ll be after 6 p.m – Punchbowl [**Note: Johnson can only afford to lose one member’s vote to pass reconciliation blueprint].
– (US) Trump National Security Adviser Waltz: Reiterates expectation to reach rare earths deal with Ukraine; NATO membership is not on the table.
– (US) Jan Chicago Fed National Activity Index: -0.03 v -0.05e.
– (US) FEB DALLAS FED MANUFACTURING ACTIVITY: -8.3 V 6.4E.
– (UR) US Pres Trump: Talks on Ukraine are proceeding very well – Truth Social.
– (FR) US Pres Trump: Speaking with French Pres Macron about trade deals; Ukrainian Pres Zelenskiy may come this week or next to sign a minerals deal.
– *(US) TREASURY $69B 2-YEAR NOTE AUCTION DRAWS 4.169% V 4.211% PRIOR; BID-TO-COVER RATIO: 2.56 V 2.66 PRIOR AND 2.64 OVER THE LAST 12.
Europe
– (UR) Ukraine air force warns of Russian missile attacks across ‘all of Ukraine’ – financial press.
– (DE) German Bundesbank Monthly Report: Q1 GDP may growth slightly but still stuck in stagflation.
– (DE) German Left Party’s Schwerdtner: Backing debt brake reform for infrastructure but on certain conditions; expected to be involved on such talks.
– (UK) BOE’s Dhingra (dovish dissenter) re-appointed to MPC through Aug 2028.
– (DE) German SPD Party Co-Leader Klingbeil: Unclear if SPD will be part of future govt.
– (DE) German CDU Party Leader Merz: Have a clear mandate to form a govt; Want to form a coalition with SPD by Easter.
– (IL) ISRAEL CENTRAL BANK (BOI) LEAVES BASE RATE UNCHANGED AT 4.50%; AS EXPECTED.
– (UK) Bank of England (BOE) Exec Dir Saporta: WE are monitoring rise in SONIA rate.
– (DE) German CDU Party Leader Merz said to be in talks with German SPD party to rush defense spending – press.
– (UK) BOE’s Dhingra (dovish dissenter): We’re already at a high level of monetary policy restrictiveness, medium-term inflation pressures are easing.
– (DE) Germany said to be discussing €200B in emergency defense spending press.
Levels as of 00:20 ET
– Nikkei 225 -1.1%, ASX 200 -0.7%, Hang Seng -0.9%; Shanghai Composite -0.3%; Kospi -0.6%.
– Equity S&P500 Futures +0.2%; Nasdaq100 +0.1%; Dax +0.2%; FTSE100 +0.1%.
– EUR 1.0460-1.0478; JPY 149.46-150.30; AUD 0.6337-0.6357; NZD 0.5723-0.5738.
– Gold -0.3% at $2,954/oz; Crude Oil +0.7% at $71.18/brl; Copper -0.4% at $4.5418/lb.